Accounting Videos & Articles for Medical Professionals

June 23 2026

featured article — ATO Crackdown on Holiday Homes: What Property Owners Need to Know

The Australian Taxation Office (ATO) has introduced a significant shift in how tax deductions apply to holiday homes. These changes, outlined in TR 2026/1, are designed to address widespread errors in claiming deductions and represent a much stricter approach than in the past.

If you own a holiday rental property, it’s critical to understand how these changes may affect your tax position.

A Fundamental Change in Approach

Historically, the ATO allowed owners to apportion expenses based on rental versus private use.

Under the new approach, the ATO may instead apply Section 26-50, which treats holiday homes as a “leisure facility”.

This means that most property-related deductions can be denied entirely, even if the property generates some rental income.

What Is Considered a Holiday Home?

A property is likely to be classified as a holiday home (leisure facility) if it is used for private purposes at any time, including:

Use by the owner or family
Use by friends or relatives (free or discounted)
Even minimal private use (e.g. a few nights per year)

Importantly, the ATO looks at the overall pattern of use, not just the number of days.

When Are Deductions Denied?

If a property is classified as a holiday home and is not mainly used to derive rental income, Section 26-50 can apply.

Deductions that may be denied:

Interest on loans
Council rates
Land tax
Insurance
Repairs and maintenance

These are typically the largest deductions claimed by property owners.

Deductions that may still be claimed:

Platform fees (Airbnb, Stayz)
Property management fees
Advertising costs
Cleaning between tenants

The Key Test: “Mainly Used to Derive Rental Income”

The critical factor is whether the property is mainly used to earn rental income.
If the answer is yes:

Normal deduction rules apply (with apportionment where relevant)

If the answer is no:

Most deductions are denied under Section 26-50

How the ATO Determines “Mainly Used”

The ATO applies a holistic assessment, not just a simple time-based calculation.
Key factors include:

Actual pattern of use throughout the year
Whether the property is available during peak rental periods (e.g. Christmas, school holidays)
Level of private use or availability for private use
Efforts to maximise rental income (pricing, responsiveness, marketing)

Important:

Even if a property is rented or available for rent more than 50% of the year, it may still fail this test—particularly if the owner blocks out peak periods for private use.

ATO Compliance Focus: High-Risk Behaviours

The ATO is specifically targeting arrangements where:

Peak periods (e.g. Christmas, Easter, school holidays) are blocked out for private use
The property is not genuinely available for rent
Owners impose unreasonable restrictions (e.g. excessive pricing or conditions)
Rental activity is passive or limited
Private use is prioritised over commercial returns

These cases are more likely to result in denied deductions and potential audit activity.

Risk Rating: Green, Amber, Red

The ATO has introduced a practical compliance framework to assess risk:

Low Risk (Green Zone)

High occupancy, especially during peak periods
Minimal private use
Clear focus on maximising rental income

Medium Risk (Amber Zone)

Increased private use by owners, family or friends
Some missed rental opportunities
Property is used during peak income-producing periods
Less active management

High Risk (Red Zone)

Property primarily used for personal holidays
Peak periods blocked out
Limited effort to rent commercially
Unreasonable restrictions are placed on potential renters
Limited or no attempt to increase the occupancy of the property

Red zone arrangements are most likely to attract ATO scrutiny.

When Do These Changes Apply?

The ATO confirms they will not devote compliance resources for expenses incurred in relation to holiday homes before 1 July 2026, unless there is evidence of avoidance, fraud or inappropriate advantages gained from this transitional compliance approach.

What You Should Do Now

If you own a holiday rental property, consider:

Reviewing how often the property is used privately
Ensuring it is available for rent during peak demand periods
Minimising non-commercial use
Actively managing listings to maximise occupancy
Keeping detailed records of availability and bookings

If you have any questions in relation to these changes, please contact your Smith Coffey advisor or email info@smithcoffey.com.au

by the admin
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June 11 2026

featured article — Personal Services Income for Doctors & Dentists: Your Questions Answered

If you work as a doctor, dentist, locum, or contractor, particularly through a company or trust, you have certainly come across the term Personal Services Income (PSI), one of the most important tax concepts affecting healthcare professionals in Australia. For many healthcare professionals, it is one of the most misunderstood areas of Australian tax law, and getting it wrong can be costly. This guide answers the most common questions we hear from doctors and dentists about PSI rules in Australia, including what is personal services income, how the Personal Services Business (PSB) tests work, what happens if the rules apply to your income, when to seek professional advice, and more. Let’s explore answers for them here.

What is Personal Services Income (PSI)?

Personal services income is an income you earn mainly through your individual skills, knowledge, or efforts, rather than through the sale of goods or assets. Personal services income for dentists and doctors commonly includes:

Medical consulting
Dental services
Locum work
Contracting arrangements
Specialist services
Sole practitioner work

Under the Australian Taxation Office’s (ATO) definition, your income is classified as PSI when more than 50% of what you receive under a contract is for your personal effort or skills. For most doctors, dentists, locums, and healthcare contractors, this threshold is easily met. For example: A locum doctor contracted to provide services at multiple clinics may earn PSI because the income depends on their personal expertise and labour. A common misconception is that using a company or trust automatically avoids PSI rules. It does not. The ATO can still treat your income as PSI if it flows through a business entity, called a Personal Services Entity (PSE). The PSI rules are specifically designed to prevent individuals from using such structures to reduce their personal tax obligations unless they genuinely qualify for an exemption.

Does PSI Apply to Doctors and Dentists in Australia?

Yes, PSI rules in Australia apply to the majority of doctors and dentists, particularly if you work as a locum, contractor, or through a private practice structure. Here are some common examples where PSI is likely to apply:

Scenario	PSI Applicability
Locum doctor working short-term contracts	Yes
A dentist contracted to one clinic	Yes
Specialist billing through own company	Often yes
Medical practice employing multiple practitioners and staff	Possibly not

Even if you are running a thriving private practice, the ATO's approach to personal services income for medical professionals focuses on whether income is genuinely tied to a business or to the individual personally. Understanding this distinction is the starting point for any sound tax strategy. If you want tailored advice on how PSI affects your specific situation, our team provides specialist tax advice for doctors and tax advice for dentists across Western Australia.

What is the Difference Between PSI and a Personal Services Business (PSB)?

PSI (Personal Services Income) is a classification of income, specifically, the income derived from your personal skills or efforts. And PSB (Personal Services Business) is a tax status that can exempt you from the PSI rules for a given income year. Think of it this way: PSI describes what your income is; PSB status determines whether the restrictions that normally come with that income apply to you.

Scenario	PSI Applicability
Locum doctor working short-term contracts	Yes
A dentist contracted to one clinic	Yes
Specialist billing through own company	Often yes
Medical practice employing multiple practitioners and staff	Possibly not

In short, if you pass the ATO’s personal services business tests, the PSI rules, including restrictions on deductions and income splitting, do not apply to your income for that year. If you do not qualify, they do. Further guidance is available through the ATO Personal Services Income guidance.

What Are the PSB Tests and How Do I Know If I Pass?

There are four Personal Services Business tests set out by the ATO. Passing one (plus satisfying the 80% rule where required) allows you to self-assess as a PSB for that income year.

The 80% Rule

Before looking at each test, it is important to understand the 80% rule. This rule states that no more than 80% of your PSI in an income year can come from a single client (and their associates). If more than 80% comes from one source, you cannot use most of the PSB tests unless you also apply for a PSB Determination from the ATO This is particularly important for healthcare professionals who work predominantly at one hospital, clinic, or dental practice. Now, let’s understand all four PSB tests.

Personal Services Business tests	Key Requirements	80% Rule Needed?
Results Test	75%+ of PSI paid for specific results, with own tools, rectifying errors at own cost	No. Pass this, and you can self-assess as a PSB
Unrelated Clients Test	PSI received from 2+ unrelated clients via genuine offers to the public	Yes. Must also pass the 80% rule
Employment Test	20%+ of principal work done by others, or at least one apprentice for 6+ months	Yes. Must also pass the 80% rule
Business Premises Test	Dedicated business premises used solely to earn PSI, separate from home and clients	Yes. Must also pass the 80% rule

What Happens if the PSI Rules Apply to My Income?

If the PSI rules apply and you do not qualify as a PSB, there are important tax consequences:

Income attribution: Your income is attributed back to you as an individual, even if it has been paid to a company or trust.
Restricted deductions: You cannot claim many deductions you might otherwise claim through a business entity. Expenses such as rent, mortgage interest, and some home office costs are typically off the table.
No income splitting: You cannot distribute income to a spouse, family member, or beneficiary at a lower tax rate via a trust or company.
Personal tax rates apply: The full income is taxed at your marginal rate as an individual.

For example: A doctor earning $400,000 through a discretionary trust, hoping to split income with their lower-earning spouse, may find the ATO attributes all $400,000 back to them personally if PSI rules apply and no PSB status is confirmed. The expected tax savings disappear, and penalties may apply if the return was filed incorrectly. This is one of the most common consequences of personal services income for doctors operating through a discretionary trust. That’s why having the right accounting advice for doctors and dentists makes the difference between a structure that saves tax and one that creates liability.

Can I Still Use a Company or Trust if I Earn PSI?

Yes. A company or trust can still be used for operational, legal, or administrative reasons. But it is important to understand what having a structure does and does not do for you. If the PSI rules do apply:

The income is attributed back to you personally, regardless of the entity
You cannot use the structure to split income with associates or beneficiaries
Certain deductions available to the entity are disallowed

If you qualify as a PSB:

The PSI restrictions do not apply for that income year
You can legitimately retain income in the structure
You have more flexibility around distributions and deductions

Having a company or trust is not a problem, but the issue is whether you have correctly established your PSB status.

How Do I Apply for a Personal Services Business Determination (PSBD)?

A Personal Services Business Determination (PSBD) is a formal decision made by the Commissioner of Taxation that grants you PSB status for a specific income year, even if you cannot self-assess as a PSB using the standard tests. You may want to apply for a PSBD if:

You are uncertain whether you will pass any of the four PSB tests
Unusual circumstances (such as a pandemic, illness, or industry disruption) prevented you from passing a test you would otherwise meet
You passed the Unrelated Clients Test but failed the 80% rule due to circumstances beyond your control

The application is submitted directly to the ATO, and the Commissioner will review your situation and determine whether PSB status is appropriate. If granted, you receive a PSBD notice that exempts you from PSI rules for that year. Given the complexity of the application and the nuances the ATO considers, we strongly recommend getting specialist healthcare tax advice from Smith Coffey before lodging a PSBD request.

by the FSD Team
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June 10 2026

featured article — Accounting & Tax for Medical Professionals in Australia: A Complete Guide

Medical professionals in Australia are among the highest earners in the country, which means they are also among those who gain the most from specialist accounting advice and the most to lose from a general accountant. This guide explains what a medical tax accountant in Australia actually does, how your accounting needs shift across each stage of your career, and what tax considerations matter most for doctors and dentists in Australia. Whether you are a junior registrar still figuring out how Personal Services Income (PSI) rules apply to you, or an established specialist thinking about practice structures and Self-Managed Super Fund (SMSF) contributions, this article is designed to give you a clear and practical starting point.

Why Medical Professionals Need a Specialist Accountant

A general accountant can lodge a tax return, but a specialist accountant for medical professionals can do significantly more than that, and the difference is rarely trivial. General accountants typically lack deep knowledge of the ATO rules that apply specifically to doctors. For example, PSI rules are frequently misunderstood or misapplied, and an incorrect self-assessment can trigger audits or penalties. Similarly, salary packaging arrangements available through public hospitals, fringe benefits tax (FBT) implications for private practices, and the interaction between superannuation strategies and a doctor's income trajectory all require sector-specific expertise that a suburban generalist firm is unlikely to have. Beyond technical compliance, a medical accountant understands how your income changes over time, from the modest wages of a hospital intern through to the six-figure earnings of a specialist or private practice owner. Working with a medical tax accountant in Australia who understands these transitions can help avoid costly mistakes while supporting long-term wealth planning. At Smith Coffey, we've spent 50+ years working exclusively with medical and dental professionals across Australia. We understand the ATO rules that apply to your income, the deductions you're entitled to claim, and the structural decisions that need to be made at every stage of your career. The consequences of non-specialist advice accumulate year after year. But working with a specialist accountant for doctors like Smith Coffey can become the highest-return financial decision you'll make.

What Does a Medical Tax Accountant Actually Do? (Beyond Tax Returns)

Many doctors think accountants only prepare annual tax returns. In reality, specialist accountants for doctors provide strategic financial guidance throughout the year. An accountant for medical professionals may assist you with:

Tax Planning

Tax planning goes beyond calculating taxable income. It involves multiple processes, such as:

Managing super contributions
Structuring income streams
Planning for large equipment purchases
Reviewing trust or company arrangements
Managing capital gains tax implications

Business Structure Advice

Healthcare professionals often operate under complex structures. Some work as employees, while others operate as sole traders, partnerships, trusts, or companies. Choosing the wrong structure can affect:

Asset protection
Tax efficiency
Superannuation
Compliance obligations
Future business growth

A specialist accountant can assess which structure best suits your situation and career goals.

BAS and GST Compliance

Private practice owners and contractors may need to manage GST registration, Business Activity Statements (BAS), and bookkeeping obligations. Errors in GST reporting are common among medical professionals who are unfamiliar with exempt and taxable services.

Superannuation and Retirement Planning

Medical professionals often have irregular income patterns, especially early in their careers. Strategic superannuation planning can help maximise long-term wealth while reducing taxable income. Specialist accountants may also work alongside financial advisers to help with:

Self-managed super funds (SMSFs)
Retirement strategies
Insurance planning
Investment structures

Accounting Needs at Each Stage of a Medical Career

Your financial situation and the advice you need will change considerably across a medical career. Here is a practical overview of what to focus on at each stage.

Medical student: Income is minimal, but HECS-HELP debt is accumulating. The primary concern at this stage is understanding how repayment thresholds work and ensuring any part-time income is declared correctly. Early contact with a specialist accountant for medical professionals, even briefly, can help students understand what lies ahead.
Junior doctor and registrar: Income rises, HECS repayments kick in, and PSI rules start to matter. This is a critical stage to get right. Salary packaging through a hospital, correctly claiming tax deductions for registration fees, CPD, and work-related travel, and establishing basic superannuation habits are the priorities here.
Established specialist: Earnings are significantly higher, which means the tax exposure is also greater. At this stage, structuring income correctly, maximising concessional super contributions, and considering an SMSF can deliver meaningful long-term benefits. Income protection insurance and estate planning also become relevant.
Private practice owner: Running a private practice introduces a new layer of complexity: practice structure, FBT, payroll tax, management service fee agreements, GST exemptions, and business succession planning. A medical accountant with practice experience is essential at this stage. Refer to the private practice accounting page to understand more about it in detail.
Approaching retirement: Transitioning from full-time practice to retirement involves decisions around super pension phase, practice sale or succession, and asset protection. Early planning here ensures that decades of wealth-building are not eroded in the final years.

Key Tax Deductions for Doctors in Australia

One of the most common areas where doctors miss out financially is in failing to claim all legitimate deductions. The ATO allows medical professionals to claim a range of work-related expenses, provided they are directly connected to earning income and supported by records. Common tax deductions for healthcare professionals include:

CPD and education costs: Course fees, conference registrations, and study materials directly related to your medical practice are generally deductible.
Professional registration and memberships: AHPRA registration fees, specialist college memberships, and union or professional association fees are claimable.
Work-related travel: Travel between workplaces (not home to work) and travel for CPD are generally deductible. Keep a log of kilometres and destinations.
Uniforms and protective clothing: Scrubs, surgical gowns, and other clothing specific to your role and not suitable for everyday wear can be claimed, along with laundry costs.
Medical equipment and tools: Stethoscopes, ophthalmoscopes, surgical instruments, and similar items purchased for work are deductible, either immediately or via depreciation, depending on cost.
Home office expenses: If you complete administrative work, research, or telehealth consultations from home, you may be able to claim a portion of relevant costs using the ATO's fixed rate or actual cost method.

The ATO requires records for all deduction claims. Receipts, invoices, logbooks, and bank statements should be retained for at least five years to support accurate reporting and compliance. Seeking professional tax advice for doctors can also help medical professionals understand which records to keep and how to maximise eligible deductions while meeting ATO requirements.

Key Tax Considerations for Medical Professionals

Beyond deductions, there are several larger tax considerations that significantly affect doctors and dentists in Australia.

Personal Services Income (PSI) rules: If more than 50% of your income comes from your personal services income, PSI rules may apply and limit your ability to split income with a spouse or distribute it through a trust. Correctly assessing whether PSI rules apply requires specialist knowledge, and errors can trigger ATO scrutiny.
Practice structure: Sole trader, trust, or company: Choosing the wrong structure is one of the most expensive mistakes a medical professional can make, and it can be difficult to unwind later. Each structure carries different tax rates, asset protection levels, and compliance obligations. A specialist accountant for doctors will model these scenarios based on your income, family situation, and long-term goals rather than applying a default approach.
Superannuation and SMSF options: Concessional contributions are taxed at 15% inside super, compared to marginal rates as high as 47% outside. For high-income doctors, maximising super contributions within annual caps is one of the most effective tax reduction strategies available. Division 293 tax applies to those earning above $250,000, adding a further 15% on contributions, which makes it essential to get expert financial planning for doctors before making contribution decisions.
Salary packaging: Salary packaging can significantly reduce taxable income for doctors working in public hospitals or not-for-profit settings. The rules around what can be packaged and how it interacts with fringe benefits tax are complex. Doctors running a private practice need to understand the FBT implications of offering packaging arrangements to staff before putting them in place.
Fringe Benefits Tax (FBT): FBT affects both employees benefiting from salary packaging and practice owners providing benefits to staff. The rates are high, and the rules are specific, so getting sound tax advice for doctors before offering or accepting benefits in kind is worthwhile.

How to Choose the Right Medical Accountant

Not all accountants who say they work with doctors are genuine specialists. Here is a practical checklist when evaluating your options.

Sector specialisation: Look for a firm that works predominantly or exclusively with medical and dental professionals.
CPA or CA qualifications: Your accountant should hold a Certified Practicing Accountant (CPA) or a Chartered Accountant (CA) designation as a minimum.
RG146 compliance and financial planning capability: The best specialist accountants for doctors in Perth are also qualified to advise on financial planning, not just tax. This allows for a more integrated approach to wealth-building.
Track record with medical clients: Ask how long the firm has worked in the medical sector and whether they have experience with clients at your specific career stage.
Proactive communication: A good medical accountant does not wait for you to ask questions. They reach out when legislation changes, when new strategies become available, or when your circumstances suggest a review is needed.

Smith Coffey has been providing specialist accounting, tax, and financial advice to medical and dental professionals since 1972. Our team of CPAs, CAs, and Chartered Tax Advisers are RG146 compliant and hold financial planning qualifications that place them in the top 1% of Australian accounting firms. If you are looking for an accountant for dentists or a specialist accountant for doctors in Perth and across Australia, Smith Coffey offers an initial consultation at no cost.

The Bottom Line

Accounting and taxation for medical professionals involve far more than annual tax returns. From PSI rules and salary packaging to practice structures and retirement planning, healthcare professionals face unique financial challenges that require specialist expertise. Whether you are an intern beginning your career, an established specialist, or a private practice owner, working with a medical tax accountant can help improve financial clarity, support compliance, and create better long-term outcomes. If you would like tailored advice for your medical career or practice, get in touch with the team at Smith Coffey to discuss your accounting, tax, and financial planning needs.