Accounting for Medical Practices in Melbourne

Why do medical practices need specialist accounting?

Medical practices operate under a unique combination of regulatory, billing, and structural requirements. Medicare and private health fund billing creates a revenue reconciliation challenge that doesn't exist in other industries. Practice structures — whether sole practitioner, partnership, trust, or company — each carry different tax implications that directly affect how much of your billings you keep.

The wrong structure can cost a Melbourne GP or specialist tens of thousands of dollars per year in unnecessary tax. Associate arrangements, service entity models, and the interaction between personal services income (PSI) rules and practice revenue all require careful planning that most general accountants aren't equipped to provide.

How does Centric support Melbourne medical practices?

We start with your practice structure. For new practices, we design the entity setup to optimise tax outcomes while maintaining compliance with PSI rules and medical board requirements. For established practices, we review existing structures and identify opportunities — often finding significant tax savings that have been left on the table.

On the operational side, we reconcile Medicare bulk billing and private billing against bank deposits, manage payroll for reception and nursing staff, handle superannuation obligations, and prepare BAS with correct GST treatment for medical services (which are largely GST-free but not entirely — pathology, cosmetic procedures, and some allied health services attract GST).

What are the common accounting mistakes in medical practices?

The most expensive mistake is operating under the wrong structure. A sole practitioner GP earning $400,000 in billings pays significantly more tax than the same income flowing through a properly structured service trust arrangement. But PSI rules mean this structure must be set up correctly — the ATO actively scrutinises medical practice arrangements.

The second most common issue is poor associate agreement accounting. When multiple practitioners work under one practice, the split between practice income and associate fees must be clearly documented and consistently applied. We see practices where informal arrangements create both tax risks and partnership disputes.

What about equipment and fit-out depreciation?

Medical equipment represents a significant capital investment. Dental chairs, imaging equipment, surgical instruments, and practice fit-outs all have specific depreciation schedules under ATO rules. The instant asset write-off thresholds change regularly, and the interaction between equipment financing and depreciation claims requires careful timing. We ensure every eligible deduction is claimed in the optimal year.