Going from Senior Registrar to Surgeon isn’t only about your surgical skills
Being a senior registrar brings additional responsibilities when it comes to your role and the work environment you’re in.
Suddenly, you find that you are the “go-to” person on the ward for increasingly more of your junior colleagues and it often also involves you undertaking some additional work in the form of locum or private assisting work.
The latter, often being organised at short notice where you are invited to assist your supervising consultant with a procedure as part of honing your skills and gaining experience in your field.
There are a few things to know and do ahead of time so you set yourself up in the most effective possible way.
What you can do, as a senior registrar
Typically, the locum or assisting work will not be through an employment position and therefore you will not be set up as an employee on payroll. You will be expected to have an Australian Business Number (ABN) and either invoice for your work, or provide the relevant details to a locum agency or medical billing services provider to raise an invoice on your behalf.
At this stage, structuring and using other entities (e.g. a company) is not beneficial since the Personal Services Income (PSI) rules dictate that any income earned as a direct result of your personal skills, knowledge and effort has to be assessed in your name for income tax purposes.
It means that as a senior registrar working privately, you will likely be operating as a “sole-trader” under your personal ABN.
The 4 obligations for senior registrars working privately
Earning private income through an ABN has implications regarding your obligations and taxation including:
- Australian Business Number (ABN)
- Goods and Services Tax (GST)
- Invoicing; and
- Tax planning
1. Australian Business Number (ABN)
In order to apply for an ABN, a senior registrar needs to meet the eligibility requirements.
There is an electronic application form accessible via the Australian Business Register (ABR) which includes a statutory declaration that you have undertaken steps to commence a business activity.
If you are unsure of completing this yourself then you can engage the services of a medical tax accountant or tax agent to do this for you.
Your ABN will be a unique identifier (like your TFN for your personal tax) that will remain the same for life. If you cease conducting business activity, cancel your ABN registration but then wish to recommence at a future date – you would just be reactivating the same number.
2. Goods and Services Tax (GST)
If your gross turnover from ABN work is expected to exceed $75,000 per annum, then you are legally required to be registered for GST.
GST registration involves collecting 10% GST on business sales/revenue and claiming it back on any business-related expenses or outgoings that include it. While there is a specific exception from charging GST on medical services, it is important as a senior registrar to receive advice on your private work arrangement and understand whether you need to invoice and collect GST on sales income.
By being registered you will need to complete either quarterly Business Activity Statements (BAS) or an Annual GST Return – depending on your circumstances. Even if you earn and receive GST-free income (such as payments from Medicare, patients and health funds), you will still be required to prepare and lodge these statements if you are registered.
Read more on our article The Basics of GST.
By working privately you will be earning income by invoicing for the work that you perform. This involves issuing invoices yourself or engaging the services of a medical billing services provider to do this on your behalf.
Regardless of whether you are creating an invoice or someone else is doing this on your behalf, it is your responsibility as the ABN-holder to ensure all details are correct, GST is included correctly (if applicable) and that it adheres to the ATO’s requirements in order to be a valid tax invoice.
4. Tax Planning
Unlike salary and wages from employment, private or business income earned via an ABN does not have any tax withheld at the source. Income tax, Medicare Levy and any HELP student loan repayments (if applicable) will typically be payable when you complete and lodge your income tax return. It is important to plan ahead to ensure that you have saved and set aside enough cash to meet any tax liability after year end. This is crucial where you expect to earn a material amount of private assisting/locuming income and this exceeds your income tax deductions for the period.
A great tip to track your private income and manage tax planning is to set up a dedicated bank account that is solely used for your business activity. This will make it easier to ensure you are setting aside a proportion of receipts for tax purposes throughout the year, as well as easily reconciling and collating your information for the tax return at year-end.
Whilst being a senior registrar now, once you complete training and receive your letters as a fully qualified consultant, there is an increased likelihood that you will be involved in private practice and earning business income.
By understanding how to manage your business activity and obligations now, you will be better placed to ensure that you are tax compliant and manage your finances effectively then.
What you can do then, when going from Senior Registrar to Consultant
You’ve arrived and you’ve worked hard to get here! Now it’s time for you to reap the rewards. As your wealth continues to grow, your finances will become more complex and the change to consulting should prompt a review of the following items.
- Does your ABN need to be reactivated?
- Does GST registration need to be completed due to higher turnover?
2. Contracts and Agreements
- Are the necessary agreements in place?
e.g. service fee, VMO or Visiting Medical Officer work, contractor agreement or lease?
- Do any contracts need to be reviewed by a specialised medical legal practitioner?
3. Software and technology
- Is it time to use accounting software to collate financial and tax information?
- Can technology be used to more efficiently keep records and documentation of income and expenses?
If you have any questions regarding your financial obligations for doing private assisting or locum work as a senior registrar or just want to enquire about how we can help setting it all up, get in touch with us on 1800 376 376 or book a free initial consultation.
Disclaimer: This article contains general information only and does not consider your personal objectives, financial situation or needs. You should assess whether the information contained in this communication is appropriate in relation to your own objectives, financial situation or needs.