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Re: Dentist Facility Arrangement

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Newbie

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Hi All

Good Day

 

I have a question and I am hoping this forum will be able to help me with my query. This is in regards to my income as a Dentist (Sole Trader). Kindly refer to the below table - 

 

Patient Reciepts  = 1000

 

Clinic Fee (i.e. Management fee: 60 % of Patient Reciepts) =  600

GST On Clinic Fee = 60

Total Clinic Fee = 660

 

Total Owing to the Dentist (me): (Patient Reciepts - Total Clinic Fee) = 340

 

Now this GST of $60 I was able to claim back from ATO (via my Quarterly BAS).

Now in order to file my Yearly tax return - Does it mean this GST of $60 is now part of my Taxable Income and I have to declare it as such. i.e In this case is my Taxable Income 

- $340 Or

- $340 + $60 = $400 

 

What is even more confusing is that different tax professionals have told me different things and I am even more confused. Thanks for your help in advance.

Regards

Prashant

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Devotee

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GST claimed does not form part of your taxable income.

 

Your Taxable income should not include any GST.

 

So all payments received and deductions are minus GST.

 

https://www.hrblock.com.au/tax-tips/beginners-guide-to-gst

 

 

4 REPLIES 4

Best answer

Devotee

Replies 2

GST claimed does not form part of your taxable income.

 

Your Taxable income should not include any GST.

 

So all payments received and deductions are minus GST.

 

https://www.hrblock.com.au/tax-tips/beginners-guide-to-gst

 

 

Newbie

Replies 1

Hi macfanboy

Thanks for coming back to me. To be honest - I am so consufed - even now when I have posted the same query on whirlpool forum, I have other professionals telling me differently. I quote from there - 

 

"As you are registered for GST the $60 input tax credit portion of the management fee isn't deductable for income tax purposes. Therefore taxable income is 1000 – 600 = 400."

 

Another comment -

 

"Since I am registered for GST and hold the $60 GST on the practice fee as a GST credit for up to 4 years and use it to offset any GST you collect. In your example - you hold the GST as a credit, thus your taxable income would be $1000-$600 = $400."

 

My apologies, if I am being naive and missing something that's obvious to you. Thanks in advance for your help.

 

Devotee

Replies 0

@pra5hant 

 

I saw it on Whirlpool..

 

Not sure how you tell the Amateurs from the professionals.....

 

So basically registered for GST and receive $1000 in income.

 

Therefore $100 was collected for GST (10%) and paid to the ATO (via BAS), so now $900 goes in Tax Return as income.

 

Expenses:

Management Fee 60% of $1000 = $600 (claim 10% in BAS) = $60, so $540 goes in Tax Return as expenses.

 

Net Effect:

BAS ---- Pay $100, get $60 back (-$40)

Tax Return Income = $900, expenses = $540, so total taxable income = $460

 

I am sure that there are other expenses that you need to include in your BAS and Tax returns also.

 

 

 

 

 

 

 

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Replies 0

Hi @pra5hant,

 

Thanks for your question!

 

@macfanboy has provided some great information, but I'd just like to clarify a little.

 

GST does not form part of your income or deductions, because it is money that you are collecting on behalf of the ATO.

 

You can see here under "What to include in your business' assessable income" that gross income doesn't include GST, and under "Business tax deductions" that you can't claim the GST component of a purchase as a deduction if you can claim it as a GST credit on your BAS.

 

Hope this helps,

 

Rachael B.

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