The Paediatrician’s Guide to Tax Planning & Family Trusts
- jenine496
- 18h
- 4 min read
Running a paediatric practice in Australia involves more than just caring for young patients; it also entails significant financial and tax responsibilities. For paediatricians in private practice or working as contractors, having a strategic tax structure can make a significant difference to your long-term financial outcomes.
One of the most powerful tools at your disposal? A well-structured family trust.
Let's explore how paediatricians can leverage family trusts and other tax strategies while remaining fully compliant with the Australian Taxation Office (ATO).
Why Tax Planning Is Critical for Paediatricians
As high-income earners, paediatricians are often subject to the top marginal tax rate, up to 47%, including the Medicare levy. Without proper planning, a large portion of your income may be lost to tax.
Smart tax planning allows you to:
Lower your overall tax liability using legitimate deductions
Protect your business and personal assets
Distribute income effectively across the household
Improve business cash flow and reinvest for growth
What Is a Family Trust and How Does It Work?
A family trust (or discretionary trust) is a legal structure that holds income or assets on behalf of beneficiaries, usually family members. A trustee controls the trust and decides how to distribute income each financial year.
Benefits for Paediatricians:
Income Splitting – Distribute income to lower-earning adult family members to reduce the overall family tax bill
Asset Protection – Safeguard business and personal assets from legal or creditor claims
Wealth Planning – Build long-term intergenerational wealth
Tax Flexibility – Trustees have discretion to allocate income each year based on tax efficiency
Example: A paediatrician may distribute part of the trust’s income to a non-working spouse or adult children (over 18) on lower tax rates. This reduces the family’s overall tax burden, a legitimate and strategic approach when used correctly.
ATO Compliance: What You Must Know
The ATO actively reviews income distribution practices of high-income professionals, especially when using trust structures. You must ensure your trust is set up and managed correctly to avoid penalties.
Key Compliance Requirements:
The trust must be established by a legal professional with a valid trust deed
Trustee resolutions for income distribution must be signed on or before 30 June each year
Distributions must align with the ATO’s guidance on professional profits
Personal Services Income (PSI) rules may apply if the income is primarily from your personal effort, and if your practice lacks employees, significant equipment, or business risk
✅ Tip: Most medical practices with staff, equipment and commercial leases are considered genuine businesses and may fall outside PSI rules, but it’s critical to seek expert advice to get this right.
Other Tax-Saving Strategies for Paediatricians
1. Maximise Business Deductions
Claim all eligible expenses, such as:
Medical equipment and consumables
Rent and clinic utilities
Admin and nursing staff wages and super
Professional indemnity insurance
CPD (Continuing Professional Development)
Accounting, legal, and software fees
2. Contribute to Superannuation
The concessional contributions cap is $30,000 for 2024–25. Contributions are taxed at just 15% and are fully deductible. If your Total Super Balance is under $500,000, you can also carry forward unused contribution caps from up to five previous years.
3. Use the Instant Asset Write-Off
In 2024–25, eligible small businesses (turnover under $10 million) can immediately deduct the full cost of assets under $20,000, if installed and ready for use by 30 June 2025. This can include equipment or clinic fit-outs.
Should You Use a Company + Trust Structure?
Some paediatricians choose to operate through a company acting as trustee for a family trust. This hybrid structure provides:
The flat 25% company tax rate for base rate entities
The asset protection and income distribution benefits of a trust
Enhanced commercial credibility
While this setup offers powerful tax flexibility, it does require more administration and may not suit all practices. It’s best for those with consistent, high income and multiple adult beneficiaries.
Get Ahead with Smart Structuring
A family trust can be a game-changer for paediatricians aiming to grow wealth, protect assets and legally minimise tax. When combined with tailored deductions, smart superannuation planning and proper ATO compliance, you can secure your financial future and reinvest in your practice with confidence.
📞 Need help structuring your paediatric practice for tax efficiency?
At Dolman Bateman, we specialise in helping doctors and medical professionals maximise their tax benefits through tailored advice and compliant structures.
Contact us today to book a consultation and build your personalised tax strategy.
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. All content relates to the current financial year only. Future changes to tax laws, thresholds or administrative requirements may affect the accuracy or relevance of this information, so you should always confirm that the guidance remains current. While every effort has been made to ensure accuracy at the time of publication, Dolman Bateman accepts no responsibility or liability for any loss or damage arising from reliance on this information. You should seek professional advice tailored to your circumstances before making any financial or tax decision.
