Easy Tax Deductions Many Doctors are Missing Out On
When it comes to tax, doctors are spinning so many plates at once, that simple – yet significant – tax savings are often overlooked.
That’s why it’s important you have a 3rd party expert such as WRCQS eyeball your property to let you know what kind of tax savings you can get through the savvy use of a tax depreciation schedule.
What can Medical Centres claim in Tax depreciation
Tax depreciation items are broken into two categories.
- Capital Works (Division 43)
- Plant and Equipment (Division 40)
Typically, medical suites and centres have plenty of tax depreciation deductions available to them in both categories.
Here’s some examples:
Capital Works:
- Car parks
- Lobbies
- Billboard signage
- Internal partition walls
Plant and Equipment:
- Patient furniture
- Staff amenities
- Medical beds and equipment
This is just a very brief list but should give you the idea
But like Einstein said “the best way to teach is through example” so here’s an example of what a recent client on the Gold Coast received in tax deductions for their medical suite.
Note: bear in mind, this was a private medical suite within a hospital.
So the client didn’t own any of the building. But they did still get to claim the depreciation on the suite fitout and shared common items outside the suite footprint.
Their Capital Works Deductions:
Building Allowance Items
As he didn’t own the suite itself he couldn’t claim depreciation deductions for the building costs. But he could claim for the custom suite fitout. This cost him $225,000.
Making his yearly deductions on construction works $5,625
Their Plant and Equipment Deductions:
As this is considered a commercial property, the client is entitled to claim the tax depreciation deductions on any plant and equipment items.
New or old. This is not the case in residential property.
Low Value Pool Items
This particular specialist doctor had $14,501 in LVP items. Including some instant asset write-off items
This meant in the first year he could claim $4,969 as a tax deduction and further $3,443 in the 2nd year.
Diminishing Value Method items
Here he had some specialist equipment and patient use items – such as loose furniture.
His total claimable Diminishing Value items was $55,300 – which worked out to $7,850 in deductions in the first year and $6,637 in the second year.
Summary of Deductions
Year One:
Total deductions on a 120 sqm medical suite in a hospital specialists suite building:$18,444
Year Two:
Total Year 2 deductions: $15,705
Return on Investment
This doctor paid $767 incl. GST for his report and got $34,149 in tax deductions in the first 2-years alone
That’s a pretty good return on investment
Having the right Accountant
As a doctor, it’s important to have a great accountant working for you. One that really knows tax depreciation for commercial property and can get it all sorted for you without much input from yourself.
So If you’re in need of a good name, simply get in touch with me and I’ll point you in the right direction.
I’ve worked closely with many accountants who help doctors just like you to maximise their tax refunds.
Have any Questions?
Simply get in touch with me here and I’ll personally address any questions you have.
If you found this helpful, you may also find some of my other articles beneficial too. And to see some real life examples of what our clients have been receiving in tax depreciation deductions, check out our Client Portfolio page here
For more info specific to your property you may find what you’re looking for here
This article was written by William Callaghan A.A.I.Q.S.
2nd generation Quantity Surveyor and founder of WRC Quantity Surveying
