Taxes for New GPs | Accounting 101
In this video I share the notes from my first meeting with my accountant. Covering important questions I had but couldn’t find concrete answers for them online. If you have any questions feel free to ask in the comments section below.
Please note, this is based on my personal circumstances, and you should always seek professional guidance.
Part 1: https://youtu.be/F9ntbi8A0eM
- Is a GP always classified as PSI (Personal Services Income) or can they be PSB (Personal Services Business)?
Yes, a GP can be a PSB, depending on the answers given to the personal services income tool: https://www.ato.gov.au/Calculators-and-tools/Personal-services-income-tool/?PSBDcontent
- Which expenses can you claim from before you set up your ABN (Australian Business Number)?
You can’t claim your VISA 457 expenses, but you can claim your AHPRA registration expenses.
- What expenses can you claim back on your car?
You can claim 100% of your GST on purchase of your car (note: my car cost less than the Luxury car threshold, luxury cars may have different rules).
You need to keep a log book for 12 weeks usage of the car, recording the start milage of the car and every work related trip (eg. training events, graduation events, home visits).
However: You cannot claim miles for drives to your regular place of work.
- Can you claim marketing expenses?
- Can you work with your spouse on projects?
If you’re PSI classified you cannot hire your spouse to do secretarial work. But if your spouse is skilled in other fields, eg. IT/Accounting/Legal/Marketing, you can hire your spouse. However, your spouse should treat the work as a professional business and work at least 20% with other clients.
- What expenses can you claim for home office use?
You can determine your home office usage usually by measuring the work space area in your home vs the total area of your home.
- How detailed do you need to track your billings, is your pay invoice good enough?
The more data the better, but generally if your practice invoice provides you with the total billed, and the hours worked, and the GST charged, this should be good enough.
- How much of your Super payments can be tax deductible?
As a sole trader, making super payments is optional, you can claim 100% of your super payments, up to the threshold amount, even if your Super includes insurance. Note: please check the terms and conditions of your Super’s insurance, as some provides require a monthly transfer.
- Join bank accounts? Do they cause extra admin work?
No, the tax returns are mainly for business earnings and expenses, not personal.
- What are your fees, are you fixed fee or per hour?
My accountant which I highly recommend charge a fixed fee. Their fees vary depending on how much work you do to prepare your accountants. For me, as I had my books prepared and my TFN/ABN set up, they charge me $440 for the annual return and $220 for the quarterly GST.
- My book keeping method
- Benefits of using an accountant
By having your accounts professionally prepared, you reduce the risk of an audit, you can pay your fees at a later date and you get extra time to file your returns. Your Accounting fees are also tax deductible. By using a Chartered Accountant and Advisor, you also get extra benefits such as general business and financial investment advice, you traditionally wouldn’t get by doing it yourself.
If you own foreign property or investments worth more than $50k, they should be declared.