Understand the rules at your hospital
Each individual hospital will set the rules for salary packaging and the allowable items that employees can access. Understanding the available items will give you a good idea of expenses you should be paying attention to. The main rule difference between hospitals is whether you can backdate your expenses and claim items you incur prior to starting.
What is salary packaging?
Salary packaging is a unique way of reducing your tax when working in the public health system. It allows you to earn a portion of your income tax-free by paying for certain expenses with pre-taxed dollars. If done correctly, you could save thousands of dollars.
Receiving your letter of offer is the trigger point to start educating yourself around the rules and setting up your salary packaging.
There are a number of variables to consider with salary packaging for doctors and we have listed the main items below to help you prepare:
Align your spending habits
Once you understand the rules available at your internship hospital you can start planning your claim. Doing this early will allow you to alter your spending in line with these rules to maximise your available items prior to starting in January.
Getting in touch with your administrator
Each hospital has its own administrator that can be either internal or external to the hospital. The administrator facilitates the salary packaging process. You will need to set up an account with them and submit all your claims through them. The administrator can provide you all the information you need regarding the rules and process for salary packaging at your internship hospital.
Evidence and record keeping
Each of the items you salary package needs specific documents and evidence that you will have to submit when making a claim. Understanding these requirements will allow you to update any contracts and keep track of any receipts to ensure you can claim the items you wish. This becomes particularly important for those wanting to take advantage of backdating as you must make sure you have the specific documents set out correctly now to claim these next year.
Understanding the different timelines
The Fringe Benefit Tax (FBT) year and the financial year play a role in maximising your tax savings during your intern year.
Salary packaging runs on the FBT year which starts on 1 April every year. This timing difference with your internship year will allow you access, a minimum of two spending caps during your internship. The financial year which runs from 1 July to 30 June each year, means you could potentially package at two different tax rates, as your intern year will fall into two financial years. As your intern year, FBT & financial year run off different timelines, it is important to set a plan around your rotations so you can take full advantage of this benefit.
Speak to a medical accountant
If you want to learn more about salary packaging for doctors and how to maximise your benefits, it’s best to speak to an expert. Medical accountants are specialised and licensed to give tax advice, therefore they can tell you when and how to maximise your benefits. At DPM, we offer complimentary, no-obligation initial consultations in which we run through what salary packaging is and how you could go about packaging to maximise your tax savings.
Book in a no-obligation initial consultation with one of our tax specialists to receive all the information you need to help you understand what salary packaging is and how to get started.
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.