1) The document provides tips for veterinarians on tax planning strategies they can implement before the end of the financial year. 2) It recommends maximizing superannuation contributions, prepaying expenses, reviewing debts and assets, and succession planning. 3) Several experts advise starting tax planning early in the year and maintaining regular contact with an accountant to ensure the best outcomes.

1. YOUR BUSINESS
26
It’s not something you normally highlight
on your calendar.Unlike birthdays,the
end of the tax year doesn’t involve
the exchanging of gifts,but financial
experts argue that getting your fiscal
affairs in order can be worthy of
celebration.Tracey Porter reports
The
numbers
game

2. 27
FOR NEARLY 30 YEARS, GRAHAM
Middleton has rifled through mountains
of paper receipts and unformulated
Excel spreadsheets to help leading
veterinary practices stay on side with
the tax man.
But Middleton, the founding partner of
Victorian accountancy firm Synstrat and
author of several tomes including 50 Rules
for Financial Success as a Veterinary
Surgeon, says the problem with end
of financial year (EOFY) advice from a
veterinarian’s perspective is that it usually
arrives too late to be of any use.
“If [vets] haven’t structured their
businesses to share income with spouses
when purchasing or starting a practice,
it is too late to contemplate it prior to
a 30 June year-end, particularly as
restructuring often triggers capital gains
tax considerations.
“If they haven’t structured their
practices to enable retention of some
earnings in order that personal taxable
income can be smoothed over several
years, it’s not going to be practical to
achieve several years later at short notice.”
However, he says, there are still plenty
of things veterinarians can do to get their
finances up to speed ahead of the 2014-
15 EOFY—not least of which involves
planning for the days ahead.
SUPERANNUATION
Experts agree that raising superannuation
contributions up to the permitted
tax-deductible limit is a great way
to save costs.
RSM Bird Cameron director Pat
Flanagan, whose area of specialty
includes succession planning for
veterinary practices, says currently
the minimum superannuation
business owners must pay is 9.5 per
cent of an employee’s ordinary time
earnings. However, business owners
can generally claim a tax deduction
for superannuation contributions that
are paid on time.
Recently, the contribution limits for
superannuation were raised up to $30,000
and $35,000 for those aged under 50 and
over 50 respectively.
Flanagan says vets should always
consider contributing the maximum
levels of both concessional and non-
concessional superannuation “as
superannuation is, generally speaking,
the most tax-efficient vehicle available”.
TRUSTS
John Rowe, the owner of Sydney
brokerage firm Vet Finance, says tax
concessions vary depending on whether
the entity is set up as a sole trader,
partnership, company or trust. While
there may be some common benefits
in tax planning, he says it’s important to
remember some entities may also have
limitations on what they can claim or
carry forward depending on turn over.
However, Flanagan says that savings
can also be made by vets who operate
their business via a trust, providing
trustees decide how the profit will be
distributed prior to 30 June.
He says it’s important this decision
is recorded and signed off before
the end of the financial year as vet
practice owners can find any profit
is taxed at the top marginal rate of 47
per cent if appropriate steps are not
taken prior to the EOFY.
“By being proactive, you can ensure that
you know of the obstacles that lay on the
road ahead and you can even take steps to
ensure these obstacles are less significant
and easier to navigate past.”
HEALTH COVER
Most small- to medium-sized enterprise
(SME) owners know that if they have
a taxable income of $90,000 (single) or
$180,000 (joint) and are without health
insurance, they will be required to pay
the Medicare levy surcharge. However,
Middleton notes, it is a little-known fact that
an individual is not required to have extras
cover as basic hospital cover will suffice.
He says those in the vet sector should
be aware that whereas hospital cover pays
out 96 per cent of private hospital costs on
average, this falls to 52 per cent of costs
rebated against extras expenditure such
as dental, optical or physiotherapy.
Middleton suggests vets consider
reviewing their health insurance regularly
and if it includes extras cover then consider
the actual claims made over its duration.
“The fact is that on average, funds skim
off 22 per cent of the fees paid for ancillary
cover. If paying a fund 22 cents in the
“Superannuation is,
generally speaking,
the most tax-efficient
vehicle available.”
Pat Flanagan,RSM Bird Cameron
Tax time tips in brief
1. Keep in regular contact with your
accountant who will review and be
across your financial situation.
2. Pre-pay interest on investment
properties or lease agreements
on equipment and cars. Pre-pay
expenses where possible.
3. Maximise superannuation
contributions for yourself before 30
June and pay staff entitlements.
Contributions must be receipted
by your super fund, not just paid;
otherwise the tax deductibility of
the contribution may be disallowed
for that year and fall into the next
financial year.
4. Review your bad debts before
30 June and write off any you
are unlikely to recover.
5. Watch stock levels—obsolete/out-
of-date stock may be able to be
written off.

3. dollar to recycle 78 cents of benefit to you
sounds like a pretty poor deal for most,
then it’s true. Most poker machines have
a higher payout percentage.”
SUCCESSION PLANNING
Rowe, who has been in the financial
services industry since 1981, says many
vets are working to get out of their business
but struggle to find a way to plan for it.
He says a good succession plan creates
a smooth transition from the old owner
to the new with minimal disruption to the
business and clients. It is generally better
to sell one’s practice to an internal vet as
opposed to bringing in a new purchaser,
Rowe says.
“A run-down practice will not realise
one’s full capital gains [but] working hard
for the last five years of your working life,
expanding and developing your business
is more likely to maximise your return.”
AREAS TO AVOID
Never buy an investment asset such
as a rental unit just because an agent
or a property spruiker talked up the tax
benefit, says Middleton.
There are always better
financial options available
to vets than buying
investment units or
houses. He says that
the same is true of
hobby farms.
“You may like to watch
the cattle or sheep
grazing in the meadows,
or enjoy the smell of
freshly baled hay but, financially speaking,
hobby farms are black holes into which
health professionals pour their profits.”
Flanagan says that where tax
optimisation is the goal, it’s best to invest in
the areas of the business that will provide
prompt tax deductions. Therefore the
areas of spending to avoid would be capital
expenditure or pre-payments where the
deduction will be delayed to later years.
“Capital expenditure such as asset
purchases or renovations will be treated as
assets of the business and a deduction will
only be claimed as the asset depreciates
in value. Where pre-paid expenses
extend beyond the next year, or for larger
purchases, part or all of the tax deduction
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will be deferred,” he says.
Rowe says many business owners tend
to panic towards the EOFY and commonly
look for as many tax deductions as
possible. But this does not always work
in the vet’s best interests, he says.
The buying/financing of cars and
equipment in June is not necessarily
going to obtain those tax deductions
one is looking for given there is little,
if any, interest or depreciation. The
real benefit is therefore obtained in the
following tax year. The best advice for
tax planning is to start early and be in
regular contact with your accountant
and finance broker. “Proper planning
will provide better results.”
Avoid making
‘panic purchases’.