2014 ATO audit activity – Doctors, what do you need to know?
In late 2014 the ATO announced they will be conducting audits and associated activity within the medical area (mainly GPs and Specialist physicians) the 2014 ATO Audit activity – Doctors will be focusing on income splitting arrangements and the use of companies and associated entities in the industry. The have made clear this will include “seeking clarification from the courts” ie they will persue some unfortunate individuals all the way to court to prove their point of view.
The issue is with the use of structures in this industry is that there are rulings that were applied to doctors by the ATO in conjunction with the AMA way back in the 1980s and these rulings while now out of date based on current business practices both within the medical industry as well as other professional fields. You can see the old key rulings form the 1980s here:
So what do you need to do? Review your current arrangements – current data from the ATO indicates that they are not happy with the 1980’s rulings and realise they are out of line with modern business practices but also they have seen some aggressive tax planning that they feel is not appropriate. If you are at either end of the spectrum you may have issues as if too aggressive you are going ot be targeted for legal action – while those who rely on the 1980s rulings will often pay far far too much tax, disadvantaging you and your family.
At MAS Tax Accountants we work with a range of medical professionals and are working with the ATO as they clarify the law in this area so we can make the most of the changes while also ensuring our clients are classified as low risk audit targets.