Doctors on the Move has created this section to provide some of the tips and tricks about the non-clinical side of working in medicine.
This comes from our personal experience over the years, and we hope that it can be helpful to both new and seasoned doctors alike.
We would often find out about these things many years down the line, so we thought it might give you a head start...
Disclaimer: The information provided in the following section is only a reflection of our personal experience and in intended as a general introduction to the financial aspects of working as a doctor in Australia.
This is not professional financial advice and should not be taken as such. Please speak to a financial adviser early on in your career in order to determine the best course of action given your specific personal situation. The information contained on this website may not apply to everyone, and is only a rough guide to the financial implications of working in medicine.
Doctors on the Move pty ltd takes no responsibility for any financial and non-financial decisions made in relation to the information provided on the website.
Superannuation (or Super) is your pension find. When you start work your employer will typically provide you with a specific superannuation company (fund) that your health service works with. They will create an account for you, and the health service will contribute into this account every pay cycle (9.5% of your salary at the time of writing).
These payments will accumulate over time, but more importantly the super fund will also invest your money and pay you returns on the investment. Typically you are "forced" to use the super fund linked with the health service. However, if you have the choice, you can select your own fund. To compare funds please visit the ASIC page.
You should definitely consult a financial adviser if you are planning on setting up your own super fund.
Once you have set up a super fund, you now need to choose how you would like the fund to invest your money. The funds typically provide you with 5 or 6 different investment options, which range from low risk & low return to high risk & high return.
Some of the thing to consider when making you choice are:
- Past performance (% return on investment) of the investment options
- Annual fee - higher risk often means higher fees too
- How is the money invested? Do you agree with the companies used by the fund?
The advice we received was to invest in high return options early in our career, since this should provide a greater long term return despite potential for short term losses.
When you are nearing retirement and plan to access your super funds, it might be safer to move the investment to a low risk option in order to avoid any sudden losses in capital due to stock market crashes or similar events.
You can change investment options, and also split your funds into various investments using the online portal for the specific super fund.
Moving to a new super fund:
When you move to a new health service provider or interstate, you will probably need to create a new super fund. You then have the option of moving all your super balance to that new fund or keeping it in the original account. This will depend on long term plans, fees, performance and weather you prefer to have one since account or not.
As always, please seek financial advice when making these decisions.
Salary sacrificing is essentially a way to avoid paying tax on certain parts of your salary. It is a benefit given to certain professions, and works as follows:
- Sign up with a salary sacrificing company, typically linked to your employer
- Decide which items you would like to claim (aka sacrifice). These include rent, credit card bills and mobile phone plans.
- There is an annual cap that you are able to sacrifice up to, and the salary sacrificing company will split your refund to make sure you stay within that cap.
- When you are paid, the salary sacrificing amount will be removed from your pay BEFORE it is is taxed, and then returned to your account a few days later untaxed (minus a processing fee by the salary sacrificing company).
An important thing to remember is that the salary sacrificing tax (FBT) year is not the same as the end of financial year.
FBT year finishes March 31st
Financial year finishes on July 31st
This means that if you start with a new employer in early February, you might be able to claim you entire salary sacrificing cap between starting and March 31st and pay almost no tax during that time. This only works if you are moving interstate or to a new health service though.
If you incur any expense between July 1st and June 31st that is in any way associated with work, you will be able to claim the tax back on that amount.
The typical items to claim include:
- Course fees
- Exam fees
- AHPRA registration
- Medical indemnity fee
- Travel to courses or exams
- Meals, accommodation, parking at courses or exams
- Buying scrubs, work shoes, stethoscopes and other work related gear
- You home internet costs (as a proportion of time used for work related affairs)
- Subscriptions to journals and other publications
At times, the tax office (ATO) may audit your tax return. It is therefore wise to keep receipts and records for the major costs you are claiming back. However, when submitting your return you are not requried to send all the individual receipts to the tax agent unless you are audited.
Income Protection & Life Insurance
Income protection is a form of insurance that protects your income in the event that you are unable to work for a certain period of time (severe illness or injury)
Life insurance provides financial assistance to your family in the unfortunate event of your death.
Although these are not topics that we like to think about, they are nevertheless very important and we should all have plans in place to deal with these potential events.
You superannuation account typically provides some level of life insurance. However, make sure to read the find print to ensure that the cover meets your requirements.
You can increase your level of life insurance by paying a supplement to the insurer, and this is often quite cost effective.
What should we think about when setting up life insurance:
- Total amount of debt you presently have (mortgages, car loans, Hex debts etc)
- How much money your dependents would need if you were no longer around.
Income protection is slightly more complicated, and as with life insurance make sure to use a reputable insurance broker or provider with professional financial advisory services.
Income protection provides you with a percentage of your monthly salary in the event that you are unable to work for a period of time. The amount can be negotiated, but it typically capped at 75% of your salary.
The potential issue in medicine is that unless your insurance cover specifically covers you for time away from your SUB-SPECIALITY job (see example below), it might mean that you might not have the recquried cover.
Let's take the case of a trainee in general surgery who is unfortunately involved in car accident, and loses their dominant hand.
He or she will no longer be able to operate, and will therefore not be able to continue their training. Although this should be covered by income protection, if the wording in the policy does not specify that the cover is for general surgery training this might not happen.
The insurer could argue that the junior doctor can still work in medicine, such as general medicine, psychiatry or a similar role where the lack of a hand may not be as limiting.
It is therefore important to ensure that you choose and insurer that will cover for these specific details.