5 Ways Doctors and Dentists can Pay Less Tax

The obligation to pay tax, while being for the benefit of the citizens, can also be a burden. In some cases, you will find out that what you pay in taxes is very significant, and when subtracted from your

earnings, you find it difficult to stay even or save. When this is the case, you might want to look for the best ways to pay less tax so that you can save more money.

When you do not pay taxes and you are caught, you will be charged for tax evasion, for which you can spend up to 10 years in jail. The same applies when you are not paying as much as you should pay. Here are some legal ways doctors and dentists can pay less tax.

1. Superannuation

Superannuation is a very effective option for doctors and dentists to pay less tax. It is reputed to be the most tax-effective means irrespective of the details for their employment.

Every doctor and dentist can contribute some money to superannuation before tax towards reducing their liability in taxes. Superannuation is known as sacrificing salary. Income prior to tax is utilized for the superannuation fund that attracts a tax rate of 15 percent as opposed to the marginal rate that could be as high as 46.5 percent.

2. Business Structures

Another effective strategy for legitimately reducing tax payments is through business structures. The business structure favors doctors that have employees and rooms as they can benefit up to 10 percent profit from tax payments. There are practice structures for doctors and dentists under service trust that allow for lower marginal tax rates.

However, it is important to make sure that you present the right motives when establishing this structure type. This would help to prevent a scenario where you could be charged for tax evasion. It should be clear that your motives are to attract other GPs' practice instead of trying to avoid tax payment.

3. Tax-friendly Investments

There are many tax-friendly investments that doctors and dentists can set up to help them minimize tax payments. Doctors and dentists can look out for investments that offer a tax advantage in the short term and long term investment interests. By delving into such investments, they would be able to reduce how much tax they would have to pay.

4. Talk to professionals

You could visit accountants, lawyers, and tax consultants that are experts in tax issues. You could discuss with them, and they would be able to discuss ways you can legitimately reduce your tax without having issues with the tax office or government.

Their professional knowledge will come in handy in exposing all the options you have to reduce your tax, how much it would cost you, how much you would save, and the option that would be the best for you in the short and long run.

5. Paying on time

Another way to at least make sure that your tax payments do not increase is to make sure that you pay what it is expected that you should pay and on time. You could use one or more of the strategies above to reduce how much you can pay in tax.

However, once you have done your calculation properly and know how much you are expected to pay, pay it up and on time. This would help avoid scenarios where the tax office could pick you up, where you would lose some productive time in the process. You might also be penalized, and this would require you to pay more.

Other professionals like Digital Marketing Consultants, Lawyers, Photographers, Engineers, Writers and more can also take advantage of some of these tips to pay less tax.