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Re: Family Trusts for Medical practitioners

Enthusiast

Views 86

Replies 9

 

Hi

 

Can Medical practitioners have family trusts to run their business? Are there any exceptions (certain professions are not allowed to have family trusts for run businesses)?

 

Thanks 

 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Devotee Registered Tax Practitioner

Replies 6

Need to check with their state registration board- any reason? 

Any special rules for certain professions?

 

Actually RACGP rather than state boards   -   www.racgp.org.audocuments › Business-structures

 

https://www.ato.gov.au/law/view/document?docid=ITR/IT2503/NAT/ATO/00001

 

https://www.tved.net.au/index.cfm?

SimpleDisplay=PaperDisplay.cfm&PaperDisplay=https://www.tved.net.au/PublicPapers/May_2007,_Sound_Education_in_Taxation,_Establishing_Medical_Pra...

 

But, they still cannot directly split income -  it is more usual that the family trust provides services to the practice

- can you please explain a little bit more why & how ?

 

https://www.ato.gov.au/Business/Income-and-deductions-for-business/In-detail/Service-entities/FAQs-o...

 

https://www.enterprise1.com.au/single-post/2018/04/12/tax-traps-for-medical-professionals

 

https://www.ldb.com.au/tax-compliance/tax-for-medical-professionals-personal-services-income-psi-and...

 

https://lawcrest.com.au/2019/11/26/does-your-medical-clinics-service-agreement-stack-up/

 

9 REPLIES 9

Devotee Registered Tax Practitioner

Replies 8

Can Medical practitioners have family trusts to run their business?

They need to check with their state registration board.

But, they still cannot directly split income  -  it is more usual that the family trust provides services to the practice.

 

 

 

Enthusiast

Replies 7

Hi Bruce4,

Thank you very much for your support, need some further clarification please.

 

Need to check with their state registration board- any reason? 

Any special rules for certain professions?

 

But, they still cannot directly split income -  it is more usual that the family trust provides services to the practice- can you please explain a little bit more why & how ?

 

Thanks 

 

Most helpful response

Devotee Registered Tax Practitioner

Replies 6

Need to check with their state registration board- any reason? 

Any special rules for certain professions?

 

Actually RACGP rather than state boards   -   www.racgp.org.audocuments › Business-structures

 

https://www.ato.gov.au/law/view/document?docid=ITR/IT2503/NAT/ATO/00001

 

https://www.tved.net.au/index.cfm?

SimpleDisplay=PaperDisplay.cfm&PaperDisplay=https://www.tved.net.au/PublicPapers/May_2007,_Sound_Education_in_Taxation,_Establishing_Medical_Pra...

 

But, they still cannot directly split income -  it is more usual that the family trust provides services to the practice

- can you please explain a little bit more why & how ?

 

https://www.ato.gov.au/Business/Income-and-deductions-for-business/In-detail/Service-entities/FAQs-o...

 

https://www.enterprise1.com.au/single-post/2018/04/12/tax-traps-for-medical-professionals

 

https://www.ldb.com.au/tax-compliance/tax-for-medical-professionals-personal-services-income-psi-and...

 

https://lawcrest.com.au/2019/11/26/does-your-medical-clinics-service-agreement-stack-up/

 

Enthusiast

Replies 0

Thank you very much. I really appreciate your support. 

Enthusiast

Replies 4

Hi, 

80% Rule:

Please explain this for the following scenario. Thanks 

If a doctor works for a practice (like a contract), see number of unrelated patients every day, company bills patients to the relevant doctor’s registration and handle all the Medicare dealings, recover certain % (30%) for admin and other costs and credit doctor’s account with the remining (70%).

For this situation: To satisfy 80% rule- one client means – number of practices she works for or the source which is Medicare (all her income receives through Medicare)? Or number of individual patients?

She doesn’t do any public offers (advertising), company handle it.

 

Thanks 

Devotee Registered Tax Practitioner

Replies 3

If a doctor works for a practice (like a contract), see number of unrelated patients every day, company bills patients to the relevant doctor’s registration and handle all the Medicare dealings, recover certain % (30%) for admin and other costs and credit doctor’s account with the remining (70%).

 

Even if doctor can pass PSI tests, they will still be a PSB  -  so no income splitting.

 

You need to read all of the links below and apply to your facts.

 

https://www.mediqfinancial.com.au/blog/personal-services-income-psi-what-is-it-and-how-does-it-affec...

 

https://www.ato.gov.au/business/personal-services-income/working-out-if-the-psi-rules-apply/

 

https://www.williambuck.com/income-splitting-the-facts-vs-the-fiction/

 

https://www.ato.gov.au/law/view/document?DocID=TXR/TR20018/NAT/ATO/00001

 

Enthusiast

Replies 2

Thanks.

I went through so many articles including the ones you have mentioned, they all have different views, some says it’s the Medicare, gaps, private insurance etc while some says it’s the number of individual patients that you have the contractual relationship with.

 

Just wanted to know the ATO view. 

(I understand the Anti-Avoidance provisions contained in Part IVA of the Income Tax Assessment Act)

 

Anyway, thanks a lot for your support. 

Community Support

Replies 1

Hi @Mala14

 

If you're still unsure and reading conflicting information I recommend getting advice from our Early engagement team.

 

You can find more information about requesting an Early engagement discussion on our website.

 

Ari

Enthusiast

Replies 0

Thanks AriH.