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Dental Accountant

The problems or concerns:

Most dentists perform their dental practices as sole traders because it’s easier to manage their tax matters. However, when they hear their colleagues talking about business structures, they begin wondering about their own taxation planning. This is why it is important to have a Dentist Accountant who understands the specific needs that specialised accountant for dentists do. They may come across questions such as:

  • Should a company be set up?
  • Are there any benefits to setting up a business structure?
  • Should I be buying my car under the business structure?
  • What is personal service income and how does that impact my earnings?
  • My dental colleagues have set up a family trust for asset protection purposes and to save some taxes – is this legit? Should I use the same strategy?
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How we help our clients:

We understand how each industry works differently. We first understand your current arrangements and your objectives. Then, we go through personal service income (PSI) provisions with you, being:

  • Is your income PSI?
  • Have you passed PSI tests and become PSB?
  • Are anti-avoidance rules applicable in your case when income splitting occurs?
  • Does new ATO draft PCG “application of professional firm profits” apply in your case?

Once we formulate your personal service income position, the next step is to determine whether a business structure (e.g. a company) can be of beneficial option for you. We will then address the initial set up and ongoing requirements of the structure with you so you are fully informed to make the decision.

If the purchase of a vehicle under the structure is one of your objectives, we will obtain further information from you as the option may suit someone but may not be suitable for you. The reason being that fringe benefit tax issues should be taken into account as well. We assist our clients to do some projections, analysis and compare different options so you know whether this option is better for you or not.

Should a company be set up for dentists?

Setting up a company for dentists can be a suitable business structure depending on various factors and the specific circumstances of the dental practice. Incorporating a company might provide liability protection and potential tax benefits, but it's important to consider factors like the size of the practice, ownership structure, regulatory requirements, and long-term business goals. Seeking advice from professionals familiar with the dental industry can help you determine whether a company structure aligns with your practice's needs and objectives.

Are there any benefits to setting up a business structure for a dentist?

Yes, setting up a business structure for a dentist can offer several benefits, depending on the specific circumstances and goals of the dental practice. Incorporating the practice as a business entity can provide liability protection, potential tax advantages, easier access to financing, and the ability to create a structured ownership and management framework that supports growth and succession planning. It's recommended to consult with professionals to determine the most suitable business structure that aligns with your practice's objectives and regulatory requirements.

Should I be buying my car under the business structure as a dentist?

Whether to buy a car under a business structure as a dentist depends on your specific circumstances and how the car will be used. If the car will primarily serve business purposes, such as patient visits or practice-related travel, purchasing it under the business can potentially offer tax deductions and other financial advantages. However, it's crucial to assess the tax implications, consider your personal and professional needs, and consult with a tax professional to make an informed decision aligned with your overall financial strategy.

What is personal service income and how does that impact my earnings as a dentist?

Personal Services Income (PSI) refers to income generated by an individual's personal efforts or skills, where more than 50% of that income is directly related to their own skills, expertise, or labor. This income is often earned through the rendering of personal services, such as professional services provided by dentists, doctors, consultants, freelancers, and other service-based professions. For dentists, PSI rules can impact how income is treated for tax purposes, affecting deductions, allowable expenses, and income splitting. It's important to understand these regulations and work with a tax advisor to ensure compliance while optimising your earnings and tax strategy.

My dental colleagues have set up a family trust for asset protection purposes and to save some taxes – is this legit? Should I use the same strategy?

Setting up a family trust for asset protection purposes and potential tax benefits can be a legitimate strategy for some dental professionals, depending on their specific circumstances. However, whether you should use the same strategy depends on various factors unique to your situation, such as your financial goals and income level. It's crucial to consult with professionals well-versed in dental industry intricacies to determine if this approach aligns with your objectives.

Disclaimer: the information contained above is for guidance only. It should not be relied upon without obtaining professional advice regarding your circumstances. No responsibility for loss occasioned directly or indirectly to any person acting or refraining from acting wholly or partially open or as a result of the above material can be accepted by the author of any company referred to herein.
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