#331 Tax honeymoon
11 August 2021
Dr Maria Travis is a dermatologist who returned home to Melbourne after completing her fellowship in the United Kingdom.
On 1 July 2020, she commenced in private practice and, while keeping her public appointments at the hospital, she reduced her sessions to allow time to build her private practice.
Shortly after, Maria met with her accountant to discuss what she needed to do to ensure a successful transition from public to private practice.
Maria’s first financial year in private practice ended on 30 June 2021 and she will have 12 months of untaxed patient fee income.
And so the tax honeymoon begins.
Maria referred to the tax timeline provided by her accountant illustrating that the due date for lodging her 30 June 2021 tax return will be due 15 May 2022. That is a total of 23 months of untaxed patient fee income that Maria will receive.
And so the tax honeymoon will end after 23 months.
Maria’s accountant highlighted that the Australian Tax Office (ATO) would issue a notice of assessment to pay $100,000 in early June 2022, following lodgement of her June 2021 tax return. This payment represents tax for the 2021 tax year.
In addition, Maria will commence paying the ATO quarterly tax instalments of $25,000, as reported on her business activity statements (BAS), with June 2022 being the first quarter.
As Maria was aware of her income tax obligations from the beginning, together with her accountant, careful budgeting allowed her to prepare for the large tax repayment and avoid any nasty surprises.
Jim Tsirtsakis BBus (Acc), DipFP, CFP® FIPA FFA, CTA, Cert.IV FMB
Director, Bongiorno Group
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