Tax gets complicated fast for doctors because your income rarely comes from one clean source. Whether you're a salaried registrar, a locum on ABN, or a GP running your own practice, your obligations — and your opportunities — are very different. This guide covers the main tax scenarios for Australian doctors and where to dig deeper.
Key Takeaways
- Your tax situation depends heavily on how you earn: PAYG, ABN, or through a company or trust each carry different obligations and opportunities.
- Locums working on ABN need to manage their own tax instalments and GST registration if turnover exceeds $75,000.
- Doctors have access to a long list of deductions — registration fees, CPD, professional indemnity, home office and more — but only if properly documented.
- A sole trader structure is a fine starting point but becomes limiting once income grows or asset protection becomes a concern.
- End of year planning isn't just for practice owners — even salaried doctors can reduce their tax bill with the right timing.
Quick Answer
Tax gets complicated fast for doctors because your income rarely comes from one clean source. Whether you're a salaried registrar, a locum on ABN, or a GP running your own practice, your obligations — and your opportunities — are very different. This guide covers the main tax scenarios for Australian doctors and where to dig deeper.
Why Tax Is More Complex for Doctors
Most Australians lodge a single employment tax return at the end of the year. Doctors often can't. You might be a hospital employee in the morning and a weekend locum under your own ABN in the afternoon. You might transition from registrar to fellow to consultant and then to private practice — each stage bringing different income types and different rules.
That complexity compounds during career transitions. When James finished his surgical training and started operating privately, he suddenly had to think about invoicing, GST, quarterly BAS statements, and whether his sole trader setup still made sense. None of that was covered in medical school.
The two biggest pressure points: income that crosses employment types within a single financial year, and the shift from being employed to running (or part-owning) a practice. Both require a different approach to tax from day one.
Tax Obligations by Employment Type
PAYG employees (hospital employed registrars, salaried consultants) have the simplest setup. Your employer withholds tax before you see a dollar. But you still have a tax return to lodge, and you're still entitled to deductions — more on that below.
ABN holders (locums, independent contractors) carry their own tax responsibilities. You invoice without tax withheld, which means you need to set aside roughly 30–47% of income for tax depending on what you earn. If your gross ABN income exceeds $75,000 in a year, you're required to register for GST and lodge quarterly BAS statements. The ATO also requires you to pay PAYG instalments — prepaid contributions toward your annual tax bill — once your income hits a certain threshold.
Locum arrangements have specific obligations that catch a lot of doctors off guard. We've written a full guide on locum tax obligations in Australia if that's your situation.
Practice owners and company structures add another layer. If you operate through a company or trust, you're looking at separate entity tax returns, shareholder or beneficiary distributions, franking credits, and payroll tax obligations if you have staff. Most GPs and specialists in private practice eventually move to a company structure — but the right time to do that varies.
Deductions Worth Knowing About
This is where a lot of doctors leave money on the table. The ATO allows deductions for expenses you incur in earning your income — and for doctors, that list is longer than most people realise.
Commonly claimed deductions include:
- AHPRA registration and specialist college fees — fully deductible
- Medical indemnity insurance — fully deductible
- CPD courses, conferences and associated travel — deductible if work-related
- Medical journals, textbooks and reference apps — deductible
- Work-related phone and internet costs — a portion based on usage
- Home office expenses — if you do administrative work at home
- Self-education expenses — courses that maintain or improve skills in your current role
What you can't claim: expenses for a qualification in a new field (i.e., retraining), private travel bolted onto a conference, or anything reimbursed by your employer.
Documentation matters. The ATO doesn't take your word for it — keep receipts and a log if the deduction involves mixed personal and professional use. See our full breakdown of tax deductions for doctors for specifics by category.
When a Sole Trader Structure Isn't Enough
Operating as a sole trader is the default starting point for most doctors who go into private practice or locum work. It's simple — your ABN is attached to your personal tax file number, you pay tax at your personal rate, and you lodge one return.
But the personal tax rate tops out at 47 cents in the dollar. For doctors earning above $180,000 — which is most consultants and many GPs in private practice — a sole trader structure means paying the maximum marginal rate on every extra dollar.
A company structure caps tax at 25–30%, with the ability to distribute income to lower-earning family members (within rules), retain profits for reinvestment, and separate personal assets from business risk. Trusts offer additional flexibility but come with setup and ongoing costs.
The trigger for most doctors to restructure isn't just income — it's when asset protection becomes relevant, when a spouse enters or exits the workforce, or when the practice grows enough that retained profits need somewhere to go.
This is a decision worth modelling properly before you commit. We've covered the main considerations in our guide to sole trader vs company structure for doctors.
End of Year Planning Basics
Tax planning isn't just for accountants in June. A few moves made before 30 June can meaningfully reduce your bill.
For salaried doctors: check whether you've maximised concessional super contributions (up to $30,000 in the 2024–25 year). Salary sacrificing into super before year-end reduces your taxable income at your marginal rate.
For ABN and private practice doctors: consider timing of expenses. If you're planning to buy equipment or upgrade your home office setup, bringing that forward into the current financial year brings the deduction with it. Pre-paying professional memberships or subscriptions due in July or August is another common move.
Also check your private health insurance status. Without an appropriate level of hospital cover, the Medicare Levy Surcharge applies at 1–1.5% of income over $93,000. For a doctor earning $250,000, that's $2,500–$3,750 extra tax per year for no benefit.
Finally, if you had low income during training and haven't been maxing out super, the carry-forward rule might let you make larger concessional contributions this year using unused cap from prior years. Your accountant or financial adviser can run the numbers.
Key Takeaways
- Your tax situation depends heavily on how you earn: PAYG, ABN, or through a company or trust each carry different obligations and opportunities.
- Locums working on ABN need to manage their own tax instalments and GST registration if turnover exceeds $75,000.
- Doctors have access to a long list of deductions — registration fees, CPD, professional indemnity, home office and more — but only if properly documented.
- A sole trader structure is a fine starting point but becomes limiting once income grows or asset protection becomes a concern.
- End of year planning isn't just for practice owners — even salaried doctors can reduce their tax bill with the right timing.
Talk to a broker who actually understands medical income. Book a free call with Voyage Financial. https://www.voyagefinancial.com.au/contact
