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3 Ways for Doctors & Dentists to save Tax and Build Wealth

The number one frustration for doctors and dentists is undoubtedly that you pay too much tax.

In fact, most medical professionals would pay 47% tax on the majority of their income. Whilst smart tax planning is essential to keep your fair share of your earnings, all too often people make financial decisions on the sole basis of a tax deduction.

This can lead to costly mistakes.

Instead, you should focus on implementing sustainable strategies that both help you reduce tax and save wealth.



Superannuation is still very attractive, despite the changes that see high income earners now pay up to 30% on their deductible super contributions.

Contribution limits are also much less than what they were a few years ago, unless you are lucky enough to be a member of a constitutionally protected government super fund like GESB West State in Western Australia.

The major attraction for superannuation lies in the low income tax rate of 15% during the accumulation/contribution phase and the 0% tax rate in pension/retirement phase.

Other powerful strategies include owning your rooms through super and thus paying rent to your own super fund.


Gearing is the commonly used term to describe the situation when someone borrows money to invest. It is sometimes also referred to as ‘leveraging’.

The most common assets people leverage into are properties, shares or managed funds. Gearing is often used as a tax-effective wealth accumulation strategy, for the following reasons:

  1. You are not limited to investing your own savings, as by borrowing you can achieve a higher initial investment balance. This may be attractive for young doctors who have not had the benefit of time to accumulate substantial savings. This might be a way to accelerate your wealth creation.

  2. As long as the investment was purchased with a view to producing assessable income, the interest costs on the loan should be tax deductible.

Most investors prefer to negatively gear their investment (usually property), as they want to be able to claim a tax deduction for the loss and reduce their tax. This is where the costs (e.g. interest, rates, insurance for a property) associated with the investment are greater than the cash flow return (rent).

However, gearing also comes with risk, as it can magnify your losses. You should always seek tax and financial advice before implementing such a strategy.


Family trusts can be very useful for tax planning. Whilst you can only do so much to reduce the tax on your exertion income, it is critical that you invest your after-tax savings in tax effective structures like trusts, investment bonds and superannuation, which also offer asset protection benefits. Many of our clients use a combination of these structures to maximise their tax planning options.


You should never invest purely on the basis of a tax deduction. I have seen too many people lose significant amounts of money just to save some tax.

If you are buying property, make sure you get some independent advice and don’t buy property from one of the many ‘spruikers’. Newly constructed property may seem attractive due to the high depreciation you can claim, but is it also a good long-term investment? And don’t forget that the depreciation claimed reduces your cost base, which means you will pay more capital gains tax when you sell.

If you would like to know more or discuss any of these strategies, please contact me via

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