Financial Planning for Doctors and Medical Specialists

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General Advice Warning: Any advice on this site is general in nature only and has not been tailored to your situation and needs. Please seek personal advice prior to acting on this information. Before acting on this content, consider its appropriateness to your objectives, financial situation and needs.

Medicine produces a very particular financial shape. Income arrives late, then arrives fast. The training years are long and poorly paid, the consultant years are compressed, and the capacity to earn is concentrated almost entirely in one person and one set of hands. Most of the advice written for doctors treats that as a marketing angle. It is actually a structural problem, and it shows up in four places: how the income is taxed, how much of it survives an illness, where it accumulates, and who receives it.

This page works through the decisions that matter, with the arithmetic shown. It sits under our high income professionals advice, and it applies whether you are in Melbourne, regional Victoria or anywhere else in Australia.

I have just arrived in Australia to work as a doctor. What should I get right in the first year?

Four things, in this order.

Insurance, early and with full disclosure. Underwriting prices your health as it stands on the day you apply, and health rarely improves with age. A doctor who applies for cover in the first months of working in Australia, while healthy and before the pressures of a consultant workload arrive, will usually secure better terms than the same doctor applying years later. Disclose everything: every consultation, investigation and diagnosis, here or overseas. Cover that is later found to rest on an incomplete disclosure is cover you do not have. Take the largest income protection benefit your current income supports, with a guaranteed future insurability option so it can rise as your income does. This is the most time sensitive decision on the list, and the one most often deferred.

Understand your residency status before you buy anything. Tax residency is not the same as visa status. Two consequences bite hard. Foreign and temporary residents cannot access the main residence exemption on a sale made while non-resident. And under the capital gains tax rules that begin on 1 July 2027, cost base indexation is denied to anyone who was a foreign or temporary resident during the relevant period. A doctor who buys a growth asset while temporarily resident and sells it years later can therefore end up worse off than a colleague who waited.

Do not buy an investment property in your first year on autopilot. Negative gearing changed. From the 2027 to 2028 income year, net rental losses on established residential dwellings are quarantined: they can only be deducted against income from residential dwellings, not against your salary. Dwellings you last acquired before 7.30pm Australian Capital Territory legal time on 12 May 2026 are grandfathered, and new dwellings are treated differently. If you arrived after that date, the old model of a negatively geared established unit reducing a specialist’s tax bill no longer works the way the person recommending it thinks it does.

Start the super clock properly. Superannuation guarantee is 12 per cent for 2026 to 2027. On a specialist salary it will usually fill your concessional cap on its own, which changes what you can do with salary sacrifice. That is covered below.

I am an employed specialist thinking about private practice. What actually changes?

Six things change at once, and only two of them are about income.

Your super stops being automatic. As an employee, superannuation guarantee arrives whether you think about it or not. In private practice, nobody makes the contribution unless you do.

Your insurance stops being subsidised. Group cover through a hospital or an employer default fund usually ends when the employment does. Group definitions are also weaker than the retail definitions a proceduralist needs, which is the point of the income protection section below.

Your income becomes irregular. Billings move with leave, with theatre lists, with referral patterns and with your own health. A specialist earning $500,000 across a year does not earn $41,667 every month, and cash flow planning built on an annual number will fail in the months it matters.

You take on pay as you go instalments. The first full year in private practice frequently produces a tax bill and an instalment obligation in the same quarter. Doctors who have only ever been salaried are routinely caught by this.

Your structure becomes a real decision. Company, trust, service entity or sole trader is your accountant’s call, and it should be. What we care about is what the chosen structure does to your wealth position: whether the entity can make deductible superannuation contributions for you, whether income can legitimately be shared with a spouse, whether the practice can ever be sold as a business rather than as your personal reputation, and whether your insurance is owned in the right place to be deductible and to pay the right person.

Your exposure to state payroll tax on practitioner arrangements becomes live. Service agreements between a medical practice and the practitioners working in it have been the subject of significant state revenue activity. This is a matter for the practice’s own tax and legal advisers, and the position varies by state. It belongs on your risk register from day one, not after an assessment arrives.

I own a GP practice. What is different about my financial position?

The practice is usually the largest asset you own and the least liquid, and its value is usually tied to the thing that is also your income.

Three specific issues recur.

Goodwill that cannot be sold. If patients follow you rather than the practice, there is no transferable goodwill. The practice is worth its equipment, its lease and its systems. Owners who assume the practice funds the retirement are frequently working from a valuation that does not survive their departure.

Key person concentration. In a two or three doctor practice, the absence of one principal for six months can remove a disproportionate share of billings while the rent, the staff wages and the software licences continue. This is the same problem we work through on our business protection and succession page, and the answer is the same: a funded agreement, not an intention.

Premises. Owning the building you practise from is often the best decision a practice owner makes, and where it is held changes the outcome by a large margin. That is the practice premises section below.

How much income protection does a doctor on $300,000, $500,000 or $800,000 actually need?

Most doctors are told they have “70 per cent cover” and stop thinking about it. Seventy per cent of gross income is not 70 per cent of your position, because the benefit is assessable income and because your superannuation stops.

Income protection benefit payments are assessable income and must be declared. Premiums on a policy protecting your income are deductible; premiums for life, trauma and critical care cover are not. That asymmetry is what makes the arithmetic below work the way it does.

The figures use the 2026 to 2027 resident rates plus the 2 per cent Medicare levy. They assume no Medicare levy surcharge, because private hospital cover is assumed, and no study loan.

Doctor A, income $300,000.

A benefit of 70 per cent of income is $210,000 a year, or $17,500 a month before tax. After tax that is $145,430 a year, or $12,119 a month.
Before the claim, $300,000 produces $193,130 after tax, or $16,094 a month.
Monthly shortfall: $3,975. Annual shortfall: $47,700.
Superannuation guarantee also stops. On this income that is roughly $32,500 a year of contributions not being made.

Doctor B, income $500,000.

Seventy per cent is $350,000 a year, or $29,167 a month before tax. After tax that is $219,630, or $18,303 a month.
Before the claim, $500,000 produces $299,130 after tax, or $24,928 a month.
Monthly shortfall: $6,625. Annual shortfall: $79,500.

Doctor C, income $800,000.

Seventy per cent is $560,000 a year, or $46,667 a month before tax. After tax that is $330,930, or $27,578 a month.
Before the claim, $800,000 produces $458,130 after tax, or $38,178 a month.
Monthly shortfall: $10,600. Annual shortfall: $127,200.

Two things make the real gap larger than these figures.

Most contracts do not pay a flat 70 per cent all the way up. Above a threshold the replacement ratio typically steps down, and every contract carries an overall maximum monthly benefit. Doctor C is unlikely to be able to buy $46,667 a month from a single insurer at all. The number on your policy schedule is the number that matters, not the percentage in the brochure.

And the shortfall is not the only cost. Add the superannuation that stops, the practice overheads that do not, and the fact that a long claim usually arrives at the point in a career when the mortgage is largest and the children are most expensive.

What we look at is therefore not the percentage. It is the benefit period, the waiting period, the definition of disability, the offset clauses, and whether the contract is agreed value or indemnity and what evidence it will demand at claim time. That work is set out on our risk insurance strategy page.

My medical indemnity cover is expensive. Does it replace personal insurance?

No. They answer different questions, and confusing them is common.

Medical indemnity cover responds to claims made against you arising from your professional practice. It protects your patients and your capital from the consequences of a claim. It does not pay you an income if you become unable to work, it does not pay a lump sum on death or permanent disability, and it does not fund your family.

Personal cover answers the other question: what happens to your household and your practice if you cannot work, or if you die. That is income protection, life cover, total and permanent disability cover and trauma cover.

The definition that matters most to a proceduralist is own occupation. A surgeon who loses fine motor function may be entirely capable of working in medical administration. Under an any occupation definition, that surgeon may not be totally and permanently disabled. Under an own occupation definition assessed against their actual specialty, they may be. The premium difference is real, and so is the outcome difference.

Where cover is held changes the tax treatment. Premiums for total and permanent disability cover inside superannuation are deductible to the fund at 100 per cent for an any occupation definition, 67 per cent for own occupation, and 80 per cent where own occupation is bundled with death cover. Holding own occupation cover inside super therefore carries a cost that is easy to miss and easy to model.

My accountant has set up a company and a trust. Do the personal services income rules affect me?

Possibly, and this is your accountant’s determination to make. What we do is work out what the answer means for your wealth position.

The personal services income rules apply where income is mainly a reward for an individual’s personal efforts or skills. Where they apply, the income is attributed back to the individual regardless of the entity that received it, and the deductions available are restricted. A practice can fall outside the rules by satisfying the results test, or by satisfying the unrelated clients, employment or business premises tests, and the ATO’s guidance sets out how each is assessed.

Three consequences follow, and they are the reason this belongs in a financial plan rather than only in a tax return.

If income is attributed to you personally, it cannot be shared with a lower earning spouse, and any plan built on splitting practice income falls away.

If the entity is genuinely carrying on a business, it may be able to make deductible superannuation contributions on your behalf, and it may be able to own insurance in a place that changes both the deductibility and the destination of the proceeds.

And the structure determines what you can eventually sell. A practice that satisfies the small business tests can access the small business capital gains tax concessions on sale, including a contribution to superannuation under the lifetime capital gains tax cap, which is $1,935,000 for 2026 to 2027. A practice whose income is attributed personally usually cannot.

Accounting and tax agent services are provided separately by Accounting Cloud Pty Ltd and are not part of the financial advice engagement. We read the structure your accountant has built and make sure the wealth plan matches it.

My super balance is heading past $3 million. How does Division 296 change what I do?

Less than most people assume, and in a direction that surprises them.

Division 296 tax began on 1 July 2026. It applies an additional 15 per cent to the proportion of your taxable superannuation earnings attributable to the balance above $3 million, and a further 10 per cent on top of that for the proportion above $10 million. Both thresholds are indexed, in $150,000 steps for the $3 million threshold and $500,000 steps for the $10 million threshold. The tax is assessed to you personally, not to the fund, and can generally be paid from your superannuation. First assessments are expected in the second half of the 2027 to 2028 income year.

The version that became law taxes fund earnings using existing tax concepts, described by the ATO for self managed funds as an adjusted amount of fund taxable income. It is not a tax on paper movements in asset values in the way the original proposal was.

Here is the arithmetic that actually decides the question.

Take a specialist with a total superannuation balance of $4 million and total superannuation earnings of $280,000 for the year. Taxable superannuation earnings for Division 296 are $280,000 multiplied by ($4,000,000 minus $3,000,000) divided by $4,000,000, which is $70,000. Division 296 tax at 15 per cent on $70,000 is $10,500. Expressed against the whole year’s earnings, that is an extra 3.75 per cent. Added to the 15 per cent already paid inside the fund, the year’s earnings carry roughly 18.75 per cent.

The alternative, for a specialist on the top marginal rate, is 47 per cent.

So the answer for most high balance doctors is not to leave superannuation. It is to stop treating it as the only destination, to be deliberate about which spouse the next dollar goes to, and to make sure the fund holds enough liquidity to meet a Division 296 assessment and any pension obligations without a forced sale. The concessional contributions cap is $32,500 for 2026 to 2027, and Division 293 applies an extra 15 per cent to concessional contributions for anyone with income over $250,000, so a specialist is contributing at 30 per cent rather than 15 per cent before the Division 296 layer is even reached. It is still 30 per cent against 47 per cent. Our Division 296 tax strategy page works through the full decision.

Should my SMSF own my practice premises?

For a practice owner with a stable location, it is one of the strongest structures available, and it is one of the few places where superannuation law is genuinely generous.

Business real property is an exception to the rule that stops a fund acquiring assets from a related party, and it is also excluded from the in-house asset rules that would otherwise limit a fund leasing property to a member’s business. That combination means a fund can buy the premises from you or from a third party, lease them to your practice at market rent, and hold them without the usual related party restrictions.

What that produces: the rent leaves the practice as a deductible expense and arrives in a fund taxed at 15 per cent, or at nil on the pension phase proportion. Capital growth accrues inside superannuation rather than at your marginal rate. And the premises are separated from the trading entity, which matters if the practice ever faces a claim.

Four cautions.

Concentration. A fund holding a single commercial property and little else has no diversification and no liquidity.

Liquidity. Division 296 assessments and minimum pension payments have to be paid from somewhere, and a building does not pay them.

Market rent. The lease must be on arm’s length terms and documented. This is a live audit area.

Borrowing. The rules changed this year. Under the capital gains tax and housing package enacted in June 2026, real property acquired by a superannuation fund under a limited recourse borrowing arrangement must be business real property, effective from 10 August 2026, with arrangements entered into before that date preserved. Commercial practice premises remain fundable through a limited recourse borrowing arrangement. Residential property no longer is. Confirm the current drafting and the grandfathering position with your SMSF adviser before you commit to a purchase.

More on how we approach this on our SMSF strategy page.

My spouse earns much less than I do. What should we be doing with that?

Three things, and one of them changed this year.

Balance the superannuation, deliberately. The transfer balance cap is $2.1 million for 2026 to 2027 and it is per person, not per couple. The Division 296 thresholds are per person too. Two balances of $2.5 million each sit outside Division 296 entirely; one balance of $5 million does not. The tools are concessional contribution splitting to the lower balance spouse, spouse contributions, and simply directing the next non-concessional contribution to the smaller account. The non-concessional cap is $130,000 for 2026 to 2027, with a bring forward of up to $390,000 depending on total superannuation balance at the previous 30 June.

Value the earning capacity, not just the income. A spouse who steps back from paid work during the training and early consultant years is making a much larger contribution than the foregone salary suggests. On our standard teaching figure, $200,000 a year over a 30 year career is $6 million of lifetime earnings. A five year interruption is not a five year problem.

Reconsider whose name the investments sit in. This is the change. Holding growth assets in the lower earning spouse’s name has been a standard play for decades, because the 50 per cent capital gains tax discount plus a low marginal rate produced a very low effective rate on sale. From 1 July 2027 that discount is replaced for individuals and trusts by cost base indexation, and a minimum 30 per cent rate applies to capital gains made by Australian resident individuals, including gains attributed from trusts. A spouse on a 30 per cent marginal rate who would once have paid an effective 15 per cent on a large gain now pays at least 30 per cent. Gains that accrued before 1 July 2027 are handled separately and keep their existing discount treatment. If your plan assumes the old arithmetic, it needs to be re-run.

What estate structures do medical families actually need?

Start with the number nobody quotes.

Superannuation left to an adult child is left to a non-tax-dependant. The taxable component, taxed element, is taxed at 17 per cent including the Medicare levy when paid to an individual, and the untaxed element at 32 per cent. A specialist with $3 million of taxable component in superannuation is leaving a tax liability of around $510,000 attached to it. That is not an argument for withdrawing everything. It is an argument for knowing the number, and for looking at whether re-contribution over time, a different beneficiary, or a different withdrawal order changes it.

Beyond that, three structures do most of the work for medical families.

A binding death benefit nomination, valid and current, so the superannuation goes where you intend rather than where a trustee decides.

A testamentary trust in the will, particularly where there are minor children, because income distributed to a minor from a testamentary trust is taxed at ordinary adult rates rather than penalty rates, and because it holds the inheritance away from a future relationship breakdown.

And asset separation appropriate to a person carrying professional claims exposure for their whole career, decided with your lawyer and coordinated with the rest of the plan rather than bolted on.

One item to watch. The capital gains tax package that begins on 1 July 2027 deems assets to be sold and reacquired at market value just before that date, with the resulting gain deferred until an actual sale. The interaction between those deferred gains and the concessions that apply to assets passing from a deceased estate has been left to a later tranche of legislation and is not settled. Estate plans for families holding long held assets should be reviewed once that tranche is enacted. Our estate planning strategy page covers how we coordinate this with your lawyer.

What does working with Build MyWealth look like for a doctor?

We start with the position rather than the product: what you earn, what would happen to it if you could not work, where it is accumulating, what your structure permits, and who receives it. Then we work in the order that changes the outcome most, which for most doctors is insurance first, structure second, contributions third and estate last.

We are based at Level 1, 55 Collins Street, Melbourne, and we advise clients across Australia. If you would like to work through your own position, request a consultation or call 03 7034 4888.

Sources

1. Australian Taxation Office, Income protection insurance, on deductibility of premiums, and Income protection insurance payments, on assessability of benefits.
2. Australian Taxation Office, Division 296 tax on large super balances and About Division 296 tax for SMSFs.
3. Australian Taxation Office, Working out if the PSI rules apply.
4. Australian Taxation Office, What are the SMSF investment restrictions, and SMSFR 2009/1 on the meaning of business real property.
5. Treasury Laws Amendment (Tax Reform No. 1) Act 2026, No. 49 of 2026, royal assent 26 June 2026, on the replacement of the capital gains tax discount with cost base indexation, the minimum 30 per cent rate on capital gains, negative gearing quarantining, and limited recourse borrowing arrangements.
6. Australian Taxation Office, Key superannuation rates and thresholds and Tax rates for Australian residents, for the 2026 to 2027 caps and rates used in the worked examples.