AstuteMed FAQs for Medical Professionals

2. What are PAYG Instalments and why do I pay them quarterly?

PAYG Instalments are prepayments of your expected tax bill for the current financial year. You pay quarterly to avoid a large bill at year-end. The ATO bases these instalments on your most recent tax return to estimate how much you’ll likely owe, then sets a quarterly payment schedule. This means you’re paying tax as you earn, rather than being faced with a large bill at the end of the year.

You can vary to nil only if you expect to owe less than $1,000 or your income has dropped significantly.

💡 AstuteMed Tip: We can help you vary PAYG Instalments legally every quarter to match your income.

3. What is a BAS (Business Activity Statement)?

A BAS is lodged monthly or quarterly if you’re GST-registered or withhold tax from employees. It reports:

• GST collected and paid

• PAYG withholding

• PAYG instalments

• Total income and expenses for the period

4. What is Division 293 Tax?

Division 293 Tax applies if your income plus concessional super contributions exceeds $250,000 in a financial year. It adds an extra 15% tax to some or all your concessional contributions, making the effective tax rate on those contributions 30% instead of 15%.

5. What are Excess Concessional Contributions (ECC)?

If you contribute more than the $30,000 concessional superannuation contributions cap (2025–26), the excess is:

• Added to your assessable income

• Taxed at your marginal rate

• Offset with a 15% credit

• Potentially subject to an Excess Contributions Tax

You may release up to 85% of the excess from your super to help cover the ECC tax liability.

6. Why do I have to pay the Medicare Levy?

An individual who is a resident of Australia at any time during the income year is liable to pay a Medicare levy of 2% of their taxable income for the year, subject to some concessions. The Medicare levy helps fund some of the costs of Australia's public health system, known as Medicare.

7. What is the Medicare Levy Surcharge (MLS)?

The Medicare Levy Surcharge is an extra tax of 1% to 1.5% applied to Australian taxpayers who:

• Earn above a certain income threshold, and

• Don’t have adequate private hospital cover.

It’s designed to encourage high-income earners to take out private health insurance, reducing demand on the public system.

To avoid or reduce the surcharge, ensure you and your dependents maintain appropriate private hospital cover for the full financial year

Example: If you’re a single earning $110,000 without private hospital cover, you’ll pay 1% MLS in addition to the standard 2% Medicare Levy.

💡 AstuteMed Tip: If you’re close to or above the MLS threshold, taking out private hospital cover can often cost less than paying the surcharge. 

8. What is a Service Fee in Private Practice?

Most clinics charge a service fee (30–40%) of your gross billings in exchange for:

• Admin support

• Reception staff

• Facility use

• Clinical software

9. What are Gross Billings and why is it important?

Gross Billings are your total patient fees before service fees or GST.

Banks and advisors use them to assess:

• Borrowing capacity

• Business planning

• Super contributions

For healthcare professionals, Gross Billings provide a clear picture of your true income-generating capacity before practice expenses are applied.

💡 AstuteMed Advantage: We prepare a Profit & Loss statement and Balance Sheet for you each quarter, giving you up-to-date figures to support:

• Banking and finance applications

• Practice performance reviews

• Tax and super contribution planning

This regular reporting ensures you always have the financial data you need—when you need it—to make informed business and personal financial decisions.

10. Do I need to repay my HELP Debt (HECS)?

If your taxable income exceeds $67,000 (2025-2026), you must start repaying your HELP/HECS loan. Compulsory repayments are deducted via your tax return or PAYG withholding. Voluntary repayments can reduce your balance faster.

If your repayment income is $179,286 or more, your compulsory repayment will continue to be 10% of your total repayment income. 

This is to ensure you are not worse off because of the shift to marginal rates.

📌 AstuteMed Reminder: Inform your payroll if you have a HELP debt to ensure correct tax withholding.

11. I’m just starting private practice—what else should I know?

Choose the right structure (consider PSI rules):

• Meet BAS, GST, and PAYG obligations

• Have professional indemnity & income protection insurances

• Plan super contributions

• Have a Will and Power of Attorney

• Keep business and personal finances separate

12. I would like to buy into a practice—what should I do?

Buying into a medical practice is a significant financial and career decision. It’s essential to go beyond the asking price and understand the true value, the financial health, and the risks of the practice you’re joining.

Before making a commitment, you should:

• Obtain a professional valuation – This ensures you know exactly what you are paying for, including goodwill, assets, and patient base.

• Complete thorough due diligence – Review the practice’s financials, service agreements, lease terms, compliance record, and staff arrangements.

• Assess the ownership structure – Understand whether you will be entering as a partner, shareholder, or through a trust/service entity.

• Review the income split – Be clear on how income, expenses, and profits will be shared.

How AstuteMed can help:

We provide specialist valuation services and comprehensive due diligence reviews tailored to medical, dental, and specialist practices. Our experienced team will:

• Analyse the practice’s financial performance and stability

• Provide an objective valuation report you can rely on for negotiations

• Identify risks and improvement opportunities before you commit

• Ensure your buy-in is structured for tax efficiency and long-term growth

13. Can operating a medical practice through a company or trust result in lower taxes?

Not necessarily. While incorporating a medical practice is legally allowed, it often does not deliver the expected tax savings.

Most medical practitioners earn personal exertion income (from their own skill and effort), which is subject to the Personal Services Income (PSI) Rules and anti-avoidance provisions. These rules prevent redirecting income to family members or entities purely for tax benefits.

14. Can I pay my spouse $18,000 to save tax?

No — you cannot simply pay your spouse a set amount (such as $18,000) just to take advantage of the tax-free threshold.

The ATO requires that all payments to related parties (including spouses) must be:

• For genuine work performed

• Commercially reasonable in amount (i.e., what you would pay an unrelated person for the same work)

• Properly documented with timesheets, invoices, or employment agreements

If your spouse does not actually perform work, or if the payment is inflated beyond the market rate, the ATO can:

• Deny the deduction

• Apply penalties and interest for incorrect claims

• Treat the payment as non-deductible private expenditure

💡 AstuteMed Tip: If your spouse genuinely works in your practice — such as administration, bookkeeping, or patient support — you can pay them a fair market wage. We can help you set this up correctly to comply with ATO rules and avoid penalties.