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Surviving your medical fellowship on reduced or no income

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If you’re approaching the final years of your advanced training, you are likely considering your options regarding completing a medical fellowship. You may be weighing up whether to complete it locally or relocate overseas for a chance to work with the best in your field.

Local fellowships seem to be increasingly popular (especially considering the current environment!) With so many well renowned doctors based here, and the ability to maintain a good salary while learning from the best, it is certainly an attractive option. Relocating interstate, particularly with young families, is a lot easier than relocating internationally.

However, if the best in your chosen specialty is located overseas, and you are offered the rare opportunity to learn from them, then it can make sense to go. The chance to learn cutting edge techniques, methods or treatments and bring those abilities back with you to Australia, can make you a lot more marketable, particularly if you are considering going into private practice upon returning to Australia.

Either way, if you are considering going on fellowship it is critical that you plan ahead. Your expenses are likely to increase during this time and if you are going overseas, you may be earning little to no income.

Some of the considerations you will need to think about are:

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What your income is likely to be during your medical fellowship?

How much will you need to save to be able to pay for all of your personal and professional expenses? Fellowships typically last between six months and two years so you will need enough cash to cover this period plus any time taken for relocation (both before commencing and after completion).

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What to do with your home?

If you own a property, you’ll also need to consider what to do with it while you’re completing your fellowship. Renting it out can help with cash flow, but keep in mind the rental income you receive and the expenses incurred during this period will need to be declared on your tax return. There is also Capital Gains Tax to consider. Renting out your property and becoming a foreign resident, both affect your ability to claim the property as your main residence. Effective planning can potentially help avoid a Capital Gains Tax bill so speak to your accountant about determining the best way forward.

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How can you boost your savings before you go?

Is there time between the end of your training program and the beginning of the fellowship? You might consider doing some locum or private assisting work to earn some extra money. Keep in mind that this will be ABN income where no tax is withheld, so you will need to pay tax on this income when you lodge your tax return. It is important to factor this tax bill into your budget.

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What are your tax considerations?

Some other planning items that should be considered are:

  • Will your fellowship costs be tax deductible?
  • Will you remain an Australian tax resident?
  • What are your overseas tax obligations
  • How do they interact with the Australian tax system?

Each of these factors will depend entirely on your individual circumstances so it is important that you seek professional advice. What was applicable to a colleague may not be appropriate for your personal situation and could lead to unplanned tax implications.

At DPM, our specialist tax consultants can provide strategic advice for your individual circumstances and build a tailored plan to get you through your fellowship years in the best position possible. Click here to book a free no-obligation initial consultation and start your medical fellowship planning today.

 

Disclaimer: * The information contained in this site is general and is not intended to serve as advice as your personal circumstances have not been considered. DPM Financial Services Group recommends you obtain personal advice concerning specific matters before making a decision.

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