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News Bulletin : ADA News Bulletin February 2011
26 FEBRUARY 2011 Tax compliance is important and while it requires our attention we can draw some comfort from the fact that it's a lot easier than extracting teeth. Here are some basic things that dentists in practice and in employment need to consider so that they meet their tax obligations. WHEN DO YOU NEED TO DO YOUR TAX? If you are an individual or in business and have worked out that you are required to lodge a tax return and are not using a tax agent, you have until 31 October 2011 to lodge your 2011 income tax return. If you are planning to use a tax agent you should check with your agent to find out when you are required to lodge your 2011 income tax return. If you are going to a new tax agent or using a tax agent for the first time you should contact the agent before 31 October to be included in the agent's lodgment program. WHAT SPECIFIC DEDUCTIONS CAN YOU CLAIM AS AN EMPLOYEE DENTIST? • You can claim the cost of buying, renting, repairing and cleaning occupation-specific clothing and protective clothing. • A deduction is allowable for the cost of attending conferences, seminars and training courses to maintain or increase your dental knowledge, ability or skills. There must be a relevant connection with your current work activities as a dentist. • A deduction is generally allowable for the decline in value of a depreciating asset you hold, to the extent that you used it for a taxable purpose. An immediate deduction may be able to be claimed for certain depreciating assets whose costs (when added to the cost of other substantially identical assets or assets that make up a set) does not exceed $300. • A deduction is allowable for the cost of travelling between home and shifting places of work, where say a locum dentist is required by the nature of the job itself to do the job in more than one place. • A deduction is allowable for the cost of self-education if there is a direct connection between the self-education and the current income-earning activities. Self-education costs can include fees, travel, books and equipment. WHAT ELSE SHOULD YOU KNOW ABOUT CLAIMING WORK-RELATED EXPENSES AS DEDUCTIONS? • In order to claim work-related expenses as deductions you must have actually incurred the expense in 2010--11. • You cannot claim a deduction for an expense to the extent that: -- someone else paid the expense, or you were, or will be, reimbursed for the expense; and -- the payment or reimbursement is a fringe benefit (including an exempt benefit). • You must have incurred the expense in the course of earning your assessable income and it must not be private or domestic in nature such as costs of normal travel to and from work. • If you incurred an expense that was both work-related and private or domestic, you can only claim a deduction for the work- related portion of the expense. • You must be able to substantiate your claims with written evidence such as receipts, if the total you are claiming for expenses, not including claims for car, meal allowance, award transport payments allowance and travel allowance expenses, is greater than $300. • If the total you are claiming is $300 or less, you need to be able to show how you worked out your claims but you do not need written evidence. WHAT ARE YOUR BUSINESS TAX COMPLIANCE OBLIGATIONS? • Many dental practitioners operate businesses. Generally, they will need to register their business for a range of tax obligations including: -- a tax file number (TFN) for yourself. If you have chosen to operate your business through a partnership, company or trust, you will need a separate tax file number for the entity; -- an Australian business number (ABN); -- an Australian Company Number (ACN) if you choose a company structure; -- goods and services tax (GST); -- pay as you go (PAYG) withholding. • You must register your dental practice for GST if your current or projected annual turnover is $75,000 or more. If your annual GST turnover is below $75,000, you can choose to register for GST. You must continually monitor your turnover. As soon as you realise that your current or projected annual GST turnover is $75,000 or more, you have 21 days to register. Some supplies made by dentists are GST-free. For more information please visit our website www.ato. gov.au or seek assistance from your tax advisor. EMPLOYEE OR CONTRACTOR -- WHAT IS THE DIFFERENCE? • If you or your practice employs staff it is important to determine the correct status of the workers for PAYG withholding and superannuation guarantee purposes. Some employers avoid costs associated with employees by incorrectly treating them as contractors and pressuring them to apply for an ABN. ABN applications of this type are generally refused. Tax information Compliance with tax obligations by dentists
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