Does your professional association represent you? What do you personally risk losing?

It is so important professional membership associations and not for profits to walk the talk when it comes to representing their members as well as the community’s best interest. This is about being open, transparent and accountable.

By taking this for granted, this will risk any statutory privilege provided by the Government that their members currently enjoy such as capped liability, government funding or less red tape. This will come out of your own hip pocket with higher membership fees, premiums or reduced support services. 

For too long we have taken for granted this is what our hard-working professional bodies and not for profits do for us.  However, the most important function in acting in the public’s best interest of the public is a fatal mistake.

Lessons from the Royal Commission into the Banking and Financial Planning Sector

The Royal Commission into the Banking Industry is forcing the Government’s hand to investigate high profiled professional associations such as the Financial Planning Association (FPA) Board.

I note the recent article in the Medical Republic about the Federal Australian Medical Association called How low can the AMA go

There are many others I could name, other than to say the problem is a lot greater than we all think.

The bottom line it is important to hold your membership bodies into account.

CPAA Member Openness, Transparency and Accountability Resolution


In our last news alert, I had explained why I and my fellow peers had taken action against the high profiled CPA Australia.

It is for this reason I wanted to serve a warning to the broader community that professional associations and high not for profits.  They must serve the public’s interest and not just its members if they wish to enjoy the kudos the Government provides them.

It is a warning to the accounting profession and the broader community at large you risk getting revoked your statutory privileges and professional reputations sullied if we did not hold our elected Board members accountable.

It is for this reason I had recently raised an openness, transparency, and accountability CPAA motion. This very easy to comply with a resolution to hold a webinar on member resolutions has been incredibly unanimously rejected together with 10 other member resolutions.

This provides a poor optic. There is a real risk we will lose special tax agent protections and capped liability due to the lack of consultations.

This resolution made international headlines as this is a simple public interest issue.


CPA members push for removal of president

If you are CPA member entitled to vote I am happy to hold your proxy for the benefit of the profession and the community. Click here . 

For more information about my resolution see this short members Fireside Chat video about my resolution.  

The Royal Commission: cannot legislate good behaviour, so how do you protect yourself?

Five key tips towards finding a trusted ethical financial adviser

Warren Buffett1

In this article we cover the following key tips:

  1. Being financially self-aware and literate is the best protection you can give yourself
  1. Do not be fooled by glossy brochures and flashy offices, qualifications  or professional associations or organisations
  1. Do not be rushed into to doing anything, and get it in writing
  1. Do not put all your advisers in one basket
  1. Pay for your own advice – nothing important in life is for free or cheap

The spate of current financial scandals involving greedy bankers and financial planners exposed by the  Royal Commission is making us all uneasy about who can you trust with your money.

High profiled politicians have even argued do our regulators need regulating!

The second most valuable thing (after your loved ones) is your financial security. Being financially self- aware and literate is the best protection you can give yourself.

The ever-trusting and time-poor medical practitioner is a key target for greedy financial planners offering one-stop accounting and financial services. Now is the time to stop and look beyond the glossy brochures and seemingly inspiring and enticing seminars to see why your ‘busyness’ is putting your entire financial security at risk!

Be warned.. even high profiled and educated people have been burned. The Royal Commission into the banking sector reveals how increasingly difficult it is to protect your nest egg. We explain why this is, and what to do about it.. and it does not involve keeping your money under the pillow.

It’s clear that the top end of town have been enjoying a gravy train of money for some time, leaving ordinary people hungry.

Even high-profiled and educated people are not immune


When people like the national Fair Work Commissioner  Donna McKenna was nearly duped of up to $500,000 by her celebrity financial adviser, it demonstrated that no-one was immune to this misleading and deceptive behaviour.

The Royal Commission has criticised even our corporate regulator  ASIC for being a toothless watch dog in not acting on serious complaints. It may seem that not even your own bank is a safe place to invest. The pillow under your bed may seem to you a safer option.

Now more than ever, the Royal Commission into the banking industry shows it is important to ask the right kind of questions of your financial advisor(s) …then get the right answers.

But we can learn from other people’s mistakes.

Professional bodies are not a guarantee of protection

Do not push the button

In 2012 the Accounting and Professional Ethical Standards Board (APESB) ruled that taking commissions based on the amount of money a client has invested compromises “integrity, objectivity, competence and due care”.

The APESB said, “no safeguards could reduce this threat to an acceptable level,” lumping other forms of payment such as those from third parties, as well as soft dollar benefits, in the same boat.

(Source: Royal commission shows us why financial planning, in its current form, isn’t worth the risk)

Many accounting firms have not heeded this warning. We see many offer commission based lending, financial planning and wealth advisory services. The APEB says this in itself creates a conflict of interest.

It has emerged from the Royal Commission that many people do not realise their fees are being significantly subsidised by commissions and were unaware the advice they were receiving was not always in their best interest.

And it appears that Certified Practising Accountants Australia (CPAA known as CPAs), as well as CANNZ Chartered Accountants Australia and New Zealand (known as Chartered Accountants) and the IPA (Institute of Public Accountants) have ignored this recommendation by the APESB.   

What about the FPA? Well, according to the Royal Commission’s findings so far, the Financial Planning Association (FPA) are worse at regulating their members.

So, unfortunately, the problem is probably a lot bigger than you think. This is why we, as a professional Medical and Health Accounting and Practice Advisory Firm, do not engage in this practice, contrary to our own professional bodies’ position and our own bottom line. We agree with the APESB. We do not believe this is ethical.  

How do you find a great adviser?

Family Consulatation

Finding a decent financial planner can be hard.

As the Royal Commission shows, being penny-wise and pound-foolish, or being taken in by someone’s fame or credentials, can easily leave you vulnerable, without being aware of it, no matter how informed or educated you think you are. Ego and ignorance is your greatest enemy.

1. The best form of protection is to be financially self-aware and literate

Do you have all of your personal information

Being financially self-aware and literate is the best protection you can give yourself. A great adviser can simply explain back your arrangements. If they cannot keep looking until you can find one that can. The house rule is if you do not understand it do not do it. Proving this to yourself means keeping a written key record of all your financial affairs, including:

  1. Your legal and tax structure – a diagram explaining how and why it works;
  2. Financial statements – they should show how much you earn annually, and what you own and control, based on your legal and tax structure. It is cost effective to get this information daily;
  3. Legal and personal documents – these provide written proof of just what you legally own and control. They include business and personal agreements e.g. succession planning agreements, a Power of Attorney, healthcare directives and wills. They could also include other information such as computer access, passwords to your email and on-line accounts, and the keys or codes to your bank safe. (Also included are clear final instructions to your loved ones in the event of your untimely death).
  4. List of trusted advisers – this is critical in the event of a catastrophe, such as an overseas airplane accident. It is important your loved ones know who to call and where to find things in the event of an emergency.

Contact us for our free Personal Portfolio example checklist.

2.Do not be fooled by glossy brochures and flashy offices, qualifications or memberships of professional associations or organisations


These are unsettling times. We have had to question the integrity of our leading (and once highly reputable) institutions. Shareholders of companies and members of professional bodies are facing a clear lack of ethics or even adherence to law and order.

Having a ‘Gun Shy’ regulator in ASIC erodes our confidence in the entire financial system.

While becoming an accountant takes years of undergraduate and post-graduate studies and while accountants must strive to meet the requirements of the requisite professional memberships, historically it is not hard to become a financial planner.

Yet, the response by the Financial Planning Association to the Royal Commission thus far provides little consumer comfort or protection.

We would expect the professional bodies to respond to the evidence revealed at the Royal Commission. But we can’t take their response for granted. In any case, changes will take time.

3.Do not be rushed into to doing anything, and get it in writing

bTime-poor professionals are a key target. So make time and take your time. Do not be star-struck with celebrity advisors. Be wary of pressure sales.

Do not agree to anything over a bottle of wine or over dinner. Be wary of overt hospitality like free tickets to a grand final football game. Keep your relationship professional. Don’t feel under obligation to respond.

Demand openness and transparency. Ask; how independent are the recommendations?

Ask for estimated costs and risks as well as projected returns. Go over the fine print and make sure all key advice you receive is in writing.

The ‘house rule’ is; if you do not understand it, do not invest in it or do it – it’s that simple. Always insist (politely) you would like to think about it and even get a second opinion.

4.Do not put all your advisers in one basket

drConsider whether is it time to separate your advisors and have a separate accountant, lawyer, and financial planner.

Remember the saying; if you are a jack-of-all trades, then you a master of none, and a conflicted one to boot.  

One-stop shops can be convenient and useful. However, they could be doing you more harm than good. You may not be getting the best advice in the area you need, or the advisor may be conflicted.

To avoid future disputes, an ethical adviser will automatically declare when they have a conflict-of-interest, for example, when they are doing the personal financial planning work for one owner and are also at the same time acting on a profit-sharing arrangement for the group medical practice. Or when they are advising you to borrow more money so they can enjoy a 25-year commission trailer on a loan you may not have really needed.

Separating advisors is a small price to pay for the inconvenience of having more than one advisor. On the plus side, it places you in a less awkward or intimidating situation if you are not happy to with their advice or direction.

Accountants are your first point of call like your GP!

aFor example, we are experienced specialists in setting up and running successful healthcare practices. This represents a doctors or healthcare owners primary economic engine. Without it, a successful and sustainable practice cannot exist. It is premature to take on lawyers or a financial planner unless you think you have money to pay and invest money with them. It is all in the timing.

Your accountant should be your first port of call. Your accountant is like your financial GP who coordinates and refers to lawyers, like a GP may refer a patient to a surgeon.

Your accountant may refer you to lawyers, who are employed at the time of setting up a practice, or for any personal or business agreements and for dealing with disputes. And/or they may refer you to financial planners who can be thought of as allied health practitioners who look after your financial wellbeing. It is impossible for any one firm to do everything well, all the time.

To get the best results look for accountants who sub-specialise in your area of need or industry

business con

For over 25 years we have specialised nationally in the setup and running of medical and healthcare practices. We are not experts in financial planning, nor do we want to be. Financial planners do this.

However, this does not mean we simply do your tax returns. Many accounting firms do doctors tax returns, but this does not mean the same thing as setting up and advising on how to run a sustainable practice. We are specialists, experienced in setting up and running successful healthcare practices. Without this advice, a practice cannot be successful and sustainable. We can advise you on SIP’s, Pip’s and government grants, pathology rentals, practice benchmarking and successful succession planning.

Few accounting and financial planning firms do this type of work and even fewer can boast the skills and expertise in this area that we do. Firms who carry a financial planning licence usually have financial planning, this is their core business it is called a Australian financial services (AFS) licence. We do not have one as, our core practice is accountancy and health practice management advice.  

This is an excellent article called Royal flush: 15 questions to ask a financial adviser now to find out if you have the right adviser.

For more information, the ASIC checklists below will help you find the right team of advisers.

  1. Choosing your accountant
  2. Choosing your financial planner.

5.Pay for your own advice – nothing important in life is for free or cheap

cIf you wish to reduce conflicted or biased advice, pay a fair fee for the advice you receive. Do not let others pay for your advice. A low fee is not a guarantee that it is better or fairer. In fact, the cheaper a service, the less value you tend to place on it.

Cheap advice from around the BBQ may burn you in the long run.

We call this all care but no responsibility advice when things go wrong. Look out for yourself, nobody else can.

We are often offered advice from well-intended friends, colleagues and, these days, email chatroom groups such as Facebook and LinkedIn. But remember, this is piecemeal advice and it lacks the breadth and depth and the context of the advice you get from your trusted adviser. Friends may mean well, but unlike your professional adviser, they won’t take responsibility for the consequences of that advice if it is poor – after all, they are (probably) not experts. By all means, listen but discuss their advice with your real adviser before acting on any information.



Rather than accept lower annual accounting or professional fees, which may have been subsidised by a percentage of asset fees, loan value or income arrangements, be prepared to pay on a ‘fee-for service’ basis.

This may be an itemised hourly rate or a fixed fee. Be clear about who is the paying client. It should only be you!  When somebody else pays your fees, lines can get blurred. Your advisor cannot have two clients.

Do not be afraid to get a second opinion


Financial incentives can drive adviser behaviour that may not be in your best interests. The simplest way to ensure a financial adviser’s advice is not biased is to ask for a second opinion and compare. Remember, it’s not about the price of advice, it’s about the value offered i.e. whether timely communications and quality market-tested advice is being provided.

Where to from here?

In the current investment climate, many people are turning to investing in their own businesses, or in do-it-yourself investments such commercial and residential real estate, or simply keeping cash ‘under their pillow’ or in a simple fixed term investment.  

Despite the inconvenience, direct control of your own investments and financial security can give comfort and certainty.

Contact David Dahm at for further information.


Please note we are not lawyers, we are accountants and practice advisers. Please seek specific legal advice in relation to your own circumstances. We cannot be held responsible for any errors or omissions in this article. This is for discussion purposes only.

We have updated our Privacy Policy

At Health and Life, it’s our mission to improve the lives of people, here in Australia and globally. Health and Life hosts this The Business of Healthcare blog and the Health and Life website.

To help us achieve this mission, and in preparation for the new EU data protection laws, we’ve updated our Privacy Policy, Disclaimer & Terms of Engagement and internal processes.

These updates ensure we are compliant with the Australian Privacy Act 1988 and the new EU privacy laws (known as the General Data Protection Regulations, or GDPR), and the updates will give more transparency and control over how we deal with your personal information.

To keep you informed, we’ve addressed a few common questions about the GDPR below:

What is the GDPR?

The GDPR is a comprehensive data protection law that replaces existing European privacy laws and strengthens the protection of personal data in an increasingly data driven world. The GDPR is enforceable in each EU member state and gives individuals greater control over their personal data.

Why does it matter now?

The GDPR comes into effect on 25 May 2018. We’re updating our processes, systems and policies now to make sure we’re fully prepared.

What is personal data?

Any information related to a natural person (individual) that can be used to directly or indirectly identify the person is personal data. It can be anything from a name, a photo, an email address, bank details, posts on social networking websites, medical information, or a computer IP address.

Who does it affect?

The GDPR applies to any organisation that processes personal data of EU individuals, regardless of whether the organisation has a physical presence in the EU. For Health and Life clients, that’s any organisation with one or more employees in the EU.

What do I need to do?

Our new Privacy Policy, Disclaimer & Terms of Engagement will go into effect from today. Please read the updated Privacy Policy, Disclaimer & Terms of Engagement and make sure you familiarise yourself with their contents. 


The Health and Life team.

For questions please reach out to us using the contact information provided in the privacy policy email

New Data Privacy Laws breached every two days!

Australians’ sensitive health information, including data on women who have had abortions, is not being properly protected, a News Corp investigation has found.

Under a new mandatory notification scheme, businesses must now report a data breach to the Office of the Australian Information Commissioner. 

The first 37 days of the new mandatory notification scheme has revealed that a breach occurred in the health sector every two days, yet no financial penalties are being applied; instead the government agencies are merely giving undertakings to do better.


Yes, there is a provision for the OAIC to order compensation payments to victims which have occurred in at least one case, and there is also a civil penalty of $420,000 for a serious or repeated interference with privacy for individuals, and $2.1 million penalty for body corporates. However so far it has not been used.

Following the Facebook privacy saga, a plethora of local and international privacy laws, with big fines to protect users, either have come into effect or will do so, affecting your patients and staff.

Furthermore, if you have patients from the European Union for example who are traveling and visit your clinic, then new rules will apply from the 25th May 2018. Substantial fines apply to you for any breaches, which may amount to as much as 2% of your turnover! See the Minter Ellison article.

You may not be aware that in February 2018, a new Privacy Law legal requirement that affects every single medical and healthcare business came into force. For practices with a turnover of over $3m the conditions are particularly onerous. If you fail to act you could potentially end up losing your practice.


This is thee‘Notifiable Data Breach Scheme’. The bottom line is within 30 days you may be required to notify your patients and the Privacy Commissioner of any breaches. Depending on the seriousness of the breach you may need to publish details on your website! For more information see Notifiable breaches scheme.

If the breach causes serious harm to others, you may be liable. Serious harm could include (but is not limited to) identity theft, financial loss, the threat to physical or emotional well being, and harm to reputation and humiliation.

If you fail to notify, the fines can be as high as $2.1m. So it cannot be ignored.

For those who employ contractor medical personnel (e.g. GPs) it gets worse. If your contractor does something which should be notified and they don’t, your business is jointly responsible, even if you argue you did not know of the incident.

Any of the following will constitute a breach:

– Sharing staff passwords e.g. of former staff

– Lost phones with data on it (including apps)

– Hacking of any kind

– Breaches involving emails

– Loss of USB flash drives/ laptop or mobile devices

– A third party (e.g. a data analytics software company) receives information about your patient


The latest craze is patient data mining. Patient information is the new data oil for well intended tech companies around the world. There are a plethora of third party (data analytical) companies showing you how to bill patients using their software programs. Many data mine, track and SMS your individual patients for care plans or specific types of high dollar value and or clinically necessary visits.

To upload this information, the treating practitioner must receive informed consent (preferably in writing) from their patient. If not, no third party software company must receive their non-de-identified personal health information. If so, this is a serious and reportable breach. Read carefully the software vendors terms and conditions. They make it the practices or doctors/providers ultimate responsibility. What seems like a great idea can become a nightmare. This can be confusing. The government are paying grants to practices for patient healthcare information. This does not automatically protect the provider and the practice from a privacy breach.

Another example, if you tell a nurse to provide an opioid to someone in the waiting room and another patient hears it, then strictly speaking the practice has to report it to the Privacy Commissioner. (In practice, serious cases are more likely to be an issue, such as where demonstrable harm is caused and the person is identifiable).

Now is the time to update your policies, procedures and train all your staff. Computer passwords and agreements may need to be changed. You will also need to get expert advice on your IT systems. Update your data privacy policy details on your website, in your waiting room and on your ‘hold’ messages and refer people to your website for further information. Remember, ignorance of the law is no excuse.

Contact your professional indemnity insurer and/or local healthcare professional body for more information. Be careful not to provide them with any patient information they should not be receiving. If unsure, consult an experienced legal adviser. Ensure you have the correct documentation and processes  in place. Be wary of the vexatious staff member or patient, which is often where these problems originate.

Contact us for further information.

Please note we are not lawyers, we are accountants and practice advisers. Please seek specific legal advice in relation to your own circumstances. We cannot be held responsible for any errors or omissions in this article. This article is for discussion purposes only.

New Excessive Pathology Rent Red Book Alert!

We have been receiving reports from some practices that GP’s in private medical practices have been targeted by a recent mass Pathology Rent Red Book mail out from the Department of Health. The Department is informing referring GPs of the current prohibited kickback rules e.g. excessive rents being offered to practices and to be wary of such arrangements. Specifically, if you own a practice or use a practice manager that has a pathology collection centre or other diagnostic services, make sure you can answer any questions accurately and truthfully in order to avoid unnecessary suspicion and unwanted inquiries.

(Indeed, this may have been the intended effect of the mass mail out. We are not sure why landlords were not contacted as well.)

The mail out clearly is implying there should be a concern regarding some practices but this should not be a concern for those who complying to the letter, which most practices are. You may need to reassess your situation however.

It is commendable that the Federal Government is attempting to provide some clarity on this issue, which was so heavily politicised in the last election. We are familiar with this issue, having been involved with an amendment to the 2009 law that continues to remain upheld – see article Pathology Deal May Backfire.  The bottom line is the Government cannot price-fix pathology rents. Practices must ensure they use the ‘market value’ approach to ensure their position is legally sound.

International Def of MArket

For those practice owners who have leases; if you offer exclusive dealing arrangements referred to in the Red Book, which historically most pathology laboratories have requested, then this may reduce the rental value of your lease if this clause is removed. This needs to be budgeted for and/or seek appropriate advice on how to address this issue. This may be a key issue in your rental negotiations.

Note that you are not required to seek a formal valuation; however you must ensure ‘market value’ is paid. Market value means an open market with a willing buyer and seller involved in the transaction.

One difficulty is that your local valuer may be unaware of what a multibillion dollar national pathology lab will pay for your consulting room. The valuer should also include signage rights, car parks and common areas like the waiting room which are often overlooked.

The ideal situation is an open tender based on the same set of terms and conditions. In our experience, this will get the right outcomes for all parties. However, the correct documentation and processes must be in place. Contact David Dahm at for further information.


Please note we are not lawyers, we are accountants and practice advisers. Please seek specific legal advice in relation to your own circumstances. We cannot be held responsible for any errors or omissions in this article. This article is for discussion purposes only.

Medicare Audit Anxiety is it fake or real what does the High Court think?

Medicare Audit Anxiety is it fake or real? We have asked this question in our last news alert article Do you find trouble in interpreting the MBS item numbers?. We need your feedback.

Please complete and share this important five-minute survey . We collect this de-identified data for the High Court of Australia.

Prior to the survey for decades many practices have told us it does affect the access and type of care that practitioners provide to patients.

It started for us when a female client in the 1990’s had set up private billing Women’s Clinic for pap smears. This is what female patients had demanded at the time in a patient survey the clinic had conducted. From Canberra, Medicare statistically audited her for doing ‘too many’ Pap smears compared the average GP. Many at the time were male GP’s. She was asked to pay it back or else face a full investigating.

This video shows that practice managers at a national practice manager conference last year, have (nearly unanimously) indicated there is an ongoing and serious problem see  Practice Managers expressing MBS item number concern video

This is a health issue and it is not just a money issue. We have raised this matter with the Government via the Australian Medical Association last year and have not received a response to date.

Practices have reported the audits, in the absence of relevant clinical guidelines, did influence how many pap smears or care plans they completed in a day regardless of clinical need. It influenced whether off labeling in the practice occurs or not and opioid prescribing behaviour.

Our question has always been what are the commonly agreed peer-reviewed guidelines you use in order to practice patient safe medicine. Are they easily accessible and reliable?


Recently the Courts have used peer-reviewed guidelines as the overarching basis for any complicated negligence claims made against practitioners.

‘Since about 2002, judges have had the benefit of some legislative guidance, phrased along the lines of “a professional does not incur a liability in negligence arising from the provision of a professional service if it is established that the professional acted in a manner that [at the time the service was provided] was widely accepted in Australia by peer professional opinion as competent professional practice”.

Source: A lawyer breaks down the negligence case that has alarmed doctors, Australian Doctor 24th April 2018

Guidelines are becoming a practitioner’s best friend. More publishing by the relevant Colleges is required to protect patients and providers as contextually clear, up to date and consistent deadlines are hard to find are not always at your fingertips when you are working in a busy practice.

high court

As an update to our national survey, we sent late last year to our readers, we have received many excellent interim results. We have more than exceeded the statutory minimum Medicare requires to deem a doctor or provider is engaging in ‘inappropriate practice’. So it may be argued our results are ‘statutorily’ from the Health Insurance Act are valid.

We raised this issue in 2011. Government representatives from the Professional Services Review did argue in the absence of anecdotal evidence it was left to speculation as to whether audit anxiety exists or not and whether it was harming patient care.  

This unique and independent study seeks to debunk the myth once and for all and we need your help. Please share this survey with your doctors, dentist, allied health and practice staff. Now is the time to send a real message to the highest order on the land.

This information will be used in an anticipated High Court ruling we have been approached to give evidence at.

What is the role of the Government and professional associations and their membership engagement will be a critical feature of this application?

surveyThis survey seeks to address this issue and why your feedback is critical to improving a patient’s timely access to affordable healthcare.

Please complete and share this important five-minute survey . We collect this de-identified data for the Federal Health Minister and High Court of Australia.

New Tax warnings for doctors – Health care home tax ruling and excessive income splitting and service entities

There are two areas of concern:

  1. Homecare tax ruling
  1. Excessive income splitting and service entities
  1. Homecare tax ruling

Practices have been given up to 18 months to get compliant or lose out on the Practice Incentive Payments (even though trials are taking place). It is not certain whether the program will actually ever be implemented, given that many practices have expressed concerns about the program.


For those GP practices considering the Healthcare Home program or those in the trials, the ATO has released the taxation treatment of HealthCareHome payments.

In our view, the ruling is at best vague in the situation where there are GP contractors or doctors who are paying a service fee as a percentage of their turnover.

These direct payments to the practice and not the doctor may deem an employer/employee relationship, especially if significant payments are made to the doctors from the patient.

This has significant payroll tax, superannuation guarantee, Fair Work Act and income tax implications that may be difficult to undo.

We have undertaken considerable business and tax compliance modelling of practices who use service entity structures, and continue to believe that the model is viable and will not irreversibly taint your existing arrangements (as detailed below in Excessive income splitting and service entities.)  

Unfortunately the ruling gives no extra clarity or protection from current taxation and employment laws.

To entertain these arrangements you must ensure you have the correct documentation and processes in place. Contact David Dahm at for further information.

  1. Excessive income splitting and service entities

There have been a number of recent tax warnings in relation to income splitting. Over the years we have continually warned readers about these arrangements; now it appears the Tax Office has caught up with the issue. Therefore, practices should urgently review their arrangements.

50 cents

Income splitting remains a legitimate way to minimise tax, as long as commercial arm’s length arrangements are in place. This includes using appropriate structures for purposes such as asset protection and succession planning that ensure the dominant reason is not to evade income tax.

The following arrangements are tax office targets.

  1. Practices that are partly or wholly owned by a related self-managed super fund;
  2. Sole trader (GP Contractor) practitioners who operate out of a practice trust or company to lower their tax;
  3. Excessive medical practice income splitting to spouses in family trust and practice company structures; and
  4. Everett assignments of partnership income to a spouse.

Service Trust and Family Trusts are still legitimate commercial and tax planning vehicles

Doctors or their practice managers get into trouble when they say (over the phone to the tax office) “my accountant told me to setup family trust to avoid tax’ or even “I do not know… ask my accountant”. This opens you up to a major audit as you cannot simply retract what you have already said over the phone.


Service trusts and family trusts are still legitimate succession planning and asset protection vehicles, if set up and operated correctly. It is important you understand this as well as your adviser does.

Step one is ask you advisor to explain it to you. If they cannot, find an advisor who can (we can assist here). If the arrangement does not make sense beyond paying less tax, you may have a problem.

Service trusts owned by a family trust remain a useful and legitimate structure for succession planning and asset protection purposes. A service trust is where the intellectual property, premises, plant and equipment, staff and systems are employed and bundled into a service fee (e.g. 40 to 60% plus GST) and charged as a GP’s receipts – so long as it is commercial. The profit made in the service trust is used to sell to a potential owner.  It cannot be sold if it cannot make a legitimate profit, any more than you can sell shares in a company that consistently makes no profit.

A higher service fee percentage can be justified

We have successfully argued for a higher service fee percentage. Let me explain how.

The 2006 Service Entity guidelines have not been revised to take into account the impact of inflation. The current ATO ruling continues to determine an appropriate rate of 40% to 45% of a doctor’s gross fees unless a higher rate can be established due to higher practice costs.

However, there is an arguable position (one that is often overlooked by advisers as they do not specialise in this area or keep a 27-year national medical practice benchmark series as we have). The details are somewhat complex, but bear with me.

A common mistake advisers make in relation to setting service fees …


Clearly, a higher rate based on an arms-length arrangement would incidentally and legitimately provide more income to split income to lower-paying taxpayers, such as a corporate beneficiary, spouse or a child attending university, via a family trust. This is done to stay solvent and not primarily to receive a greater tax break. It is so that you can sell your practice, if you are forced to, do so, for a fair market value. However, proof of this must be provided, which some advisers have trouble providing (it’s “all too hard”) so instead they default to the ATO ruling which is quicker but not always in the best interest of the trust, Experienced advisers can demonstrate what you do need to know and do, so as to get it right for a lifetime.

Some advisers do miss this point or the practice fails to ask the right questions. Sometimes there is a failure to ensure the correct documentation, for example service agreements that are PIP friendly, with correct procedures and an audit trail in place.

There is a legal duty-of- care to make a profit, or else you could not borrow money to expand your services. At worst you would be trading while insolvent, which of course is not permissible. Getting a call from a liquidator would be worse than one from the Tax Office, and blaming it on the ATO’s low service fee percentage rates may not be seen as a defendable excuse.

Profit warning…

For many years now, bulk billing general practice clinics have faced a multitude of Medicare freezes. These freezes have seen owners needing to subsidise practice costs, if they wish to avoid running at a serious loss, especially if pathology rents fall or are removed from the general practice bottom line. See Pathology Rent Red Book Alert!

However, a radiology practice could easily justify a higher percentage due to the high cost of MRI capital equipment being used to operate their practice. Not to so may run the risk of going insolvent based on the current ATO guidelines of 40% to 45% gross fee. Remember the guidelines are just that, and not law.

We at Health & Life have in the past been quite public in the national media on this issue. In 2007, when the issue was first raised for public comment, one of our key arguments was for the ATO to use percentages of gross fees, which was agreed to by  the ATO in its final 2006 Ruling.


The Australian Financial Review  May 2007

How do we know all this stuff?

The bottom line is, you must run a solvent business and not make excessive profits from contrived arrangements. They require sound commercial reasons to enter into them.

PriceIn a 1973 national referendum, people voted that the Government could not price fix goods and services. This includes service fees and pathology rents. This is why the Service Trust Ruling is not a law but a guideline.

Unlike many advisers, we are on the record on this issue (see BRW in 2007) We have argued to the ATO that a higher service fee is legitimately justified, and within the rules if it is a commercial arrangement. However, it is important to always check that your advisers have interpreted the law correctly (the fine print is important in understanding how the laws actually work).

Even if you are within the guidelines, you still need to ensure correct documentation and processes to substantiate any arrangement.

Service burden

Sadly, some advisers still do not fully understand the fundamental principles and opportunities of using trust structures correctly, to the frustration of their clients, and at their ultimate cost.

Contact David Dahm at for more information if you would like us to confidentially review your arrangements at no cost or obligation.

Please note we are not lawyers, we are accountants and practice advisers. Please seek specific legal advice in relation to your own circumstances. We cannot be held responsible for any errors or omissions in this article. This is for discussion purposes only.

Readers question – Why start succession planning when you start up your practice?

HandWe have just received an important question from a reader, regarding succession planning.

Practice manager ‘Ali’ asked; when do you start to think about succession planning… in particular about issues such as timelines, how long it takes on average to sell a practice, and whether staff are retained versus replaced? 

When should you start planning? 

The answer is simple – from the time you first start up your practice. From the outset, you should have an end point in mind. You won’t live forever, nor will you want to own the practice indefinitely. Having a succession plan in place will greatly benefit recruitment and staff retention. More importantly, if you are suddenly struck down with poor health, it can become a financial life-saver to have somebody to be ready to take over. 

How long does the process take?

The process of transferring the practice may take up to 2 to 5 years, depending on how well the succession planning process has been implemented. You must; 

  • plan for a carefully thought out process and an orderly transition (so you avoid doing it in a sudden panic);
  • identify and prepare a capable successor;
  • build, protect and transfer your net worth.

Identify your successors 


What if you decide to retain ownership or transfer the business rather than sell outright –  who should run the practice after you are gone? It may be;

  • family member(s),
  • partners and/or shareholders,
  • professional managers or key employees or staff,
  • external investors or practitioners,
  • some combination of the above. 

Usually a successor is chosen according to two criteria; who you want the practice to go to, and who you believe is best qualified to run it after you leave or sell down. Often, these two are not one and the same person. In fact, identifying a suitable successor can prove to be the most difficult step in the entire process.


In my experience, the three common succession planning mistakes in order of importance, are;  

  • failure to plan,
  • choosing a weak successor,
  • having a succession plan in place but then failing to implement it successfully.

Having no succession plan at all means you will find it harder to recruit, retain and groom the next like- minded owner.

clear vision

To find a suitable like-minded owner, the process should start immediately. Bear in mind that it is a process and not an event. Most importantly, to sell for a fair price, the buyer’s accountant and the bank’s approval require the following:


  1. A clear and enticing vision including a succession planning strategy; for example, something like this: “We want to have five high-quality separate practice locations in five years’ time, managed by junior associates who are leveraging off our knowledge and experience.” Such a strategy can be set out simply in a concise statement, for example on a single page, using bullet points.
  2. A clear business model i.e. how profitability and sustainability will be achieved,  including the percentage of a provider’s gross fees.
  3. Clear legal and tax structures with adequate supporting practice documentation, including the service trust, service agreements, fair work-friendly employment agreements, and an owner’s agreement on management, share profits and retirement (avoiding any expensive legal disputes so that all parties remain on good terms).
  4. The annual financial statements needed to demonstrate the financial success of the practice so it can be correctly valued.

If annual financial statements are prepared correctly, buyers and sellers can easily and fairly deal with each other with minimal external legal and financial advice required. However, this is not the case when the documentation and structure is opaque.

Where there is a lack of preparation, owners are often disappointed both in the sale price and in subsequent interactions with the new owners following the sale. This is because their expectations were not appropriately set out and discussed in the first place. It’s a situation that occurs frequently, unfortunately.

Getting it wrong may have expensive consequences for both parties, consequences that are avoidable. In a sense, it is no different to planning for a marriage or a divorce.


The more opaque and unclear your arrangements are, the less the practice will sell for, since people do not know exactly what it is they are buying. No matter how great you the seller think your practice is, the prospective buyer can only ‘lowball’ the price due to the inherent uncertainty and risk involved. It can also have the effect of delaying the sale, which may prove to be a significant setback. 

Outstanding practice liabilities may also be an issue. If prior to the sale, the owner still has debts or they incur a new debt, for example a significant five-year loan, then this may inevitably lead to poor cost-cutting decisions, declining practice infrastructure, support and profitability. Any of which can significantly reduce the overall value of the practice. 

In this situation, it will be harder to recruit and retain new and quality practitioners and staff.  After all, nobody wants to buy tickets to the Titanic! The practice suffers from decision-making paralysis and sinks to the bottom. 

More is at stake than just the satisfaction of a good sale price. Proceeds from the sale of the practice may well be your last opportunity to generate the retirement savings needed to live in a comfortable retirement. As a rule of thumb, a typical person needs at least $2 to $3m, in addition to the family home, given the lower interest rates forecast for the foreseeable future. 

The message is, plan ahead.


For more information see

Succession Planning Part I – How Not to Screw it Up! (from the archives)

Succession Planning Part! II – How Not to Screw it Up! (from the archives)

Directors Pathway Program – this helps train the next person to buy your practice.

Time to start restructuring now before 30th June!

meetingIf you are trying to formulate a succession plan or are simply getting your books into order so you can draw up a succession plan or sell a practice, now is the time to restructure, i.e. before the end of the financial year, so to save as much as 40% on your bookkeeping and accounting costs.

For 10 immediate benefits of a restructure, see Why Restructure Your Practice Now?

The main benefit is to ‘future-proof’ your practice, so as to attract staff and patients to your practice.
Contact David Dahm for further information at

Doctors pay Calculator (‘DPC’) and service agreement a new national service just got easier and more cost effective! – NEW

Australian first for healthcare practices a new way to lower your overheads and improve profitability – NEW!

Are you being paid correctly? You cannot afford to get your key providers pay wrong.Keeping their trust is a must.

If you are paying providers a percentage of their gross fees, you will be pleased to know you no longer need to suffer from messy spreadsheets and payment errors and complaints when paying your providers. It does not matter whether they are doctors, dentists or allied health.

We are excited to announce our unique Doctors Pay Calculator software program with free service agreement templates is now available in the cloud for a fixed monthly fee.

Nobody in Australia can offer you this unique service due to our specially developed and marketed tested software and our template agreements that have been carefully developed nationally over 27 years.

For those who do not want to train staff we now also offer an outsourcing solution where we can take care of the regular documentation compliance, calculation, accounting, book keeping and reporting headache for a monthly fixed fee.This complements our latest template service agreements which are bundled in for free.

For more information see our overview and download our brochure.

Since 2001 developed and endorsed by a Chartered Accountant and registered tax agent David Dahm.

Fixed Fee Financial outsourcing of your bookkeeping and or accounting  – NEW!

If you cannot measure it you cannot manage it!

Australian first for healthcare practices a new way to lower your overheads and improve profitability.

What are the three important things people want in life?

Go big, boutique or broke by tackling two of your greatest stresses

There are three important things people want in life:

  1. That their loved ones are cared for;
  2. Financial security; and
  3. More time.

We can help significantly with the last two items. If you are a healthcare practitioner, we can help you, your loved ones and your patients.

Not knowing your financial status can be stressful and can put your patients at risk

For practice owners, it can be frustrating and expensive to determine your true financial status so you can make that next big decision to go on a holiday, hire more staff, or spend money on more advertising, or perhaps a new practice reception area, or acquire new future-proof technology.

In a highly competitive healthcare environment, where the Government is increasingly reducing funding and patients are demanding more for less, many practices are worried; are they sustainable and for how long?

The ultimate solution

We are proud to offer to medical and healthcare practice owners the first uniquely comprehensive and unprecedented best-practice performance accounting and practice advisory service delivered on your mobile phone.

With peace of mind, you can cost-effectively eliminate your most difficult monthly practice reporting, accounting, bookkeeping and practice management problems.

bvEnjoy up to a 40% reduction in practice accounting, tax, bookkeeping and administration compliance costs. Up to 100% increase in quality, reliability, and timeliness guaranteed.*  

This solution is ideal for start-up or growing practices with practice managers who are focused on front-of-house functions. Practice managers face increasing difficulty handling the full-time strategic and operational complexity of a practice, as well as those critical and increasingly complex back-of-house financial and reporting tasks.

The time to future-proof your practice is now, so you can recruit and retain the best staff, and allow them to focus on what they do best.

In recent years cloud technology has revolutionised the accounting and practice management advisory profession. It has made it easier and more cost-effective to provide high quality and timely advice to healthcare practice owners.

Most practices, if they are not agile enough and they are too big to change, will face additional costs in terms of unnecessary time, lost opportunities and unnecessary expenditure in preparing financial statements.

Reduce your stress by finding an experienced and proactive accountant and adviser


A great accountant can improve your quality of life. A recent Accountants Daily article revealed that 85 percent of SMEs say that using an accountant significantly reduced the stress associated with their small business. This equally applies to owners of health practices.

And another survey, this one from the Institute of Public Accountants, has found that more than a quarter of SMEs wouldn’t have gone into business if they realised the associated stress, and that a third of those surveyed wish they had engaged an accountant earlier.

Source: 68% of SMEs ‘significantly stressed,’ 85% rely on accountants Accountants Daily 21 NOVEMBER 2017

However, some practice owners may see their accountant’s fee as a ‘grudge purchase’ and not an investment. In some ways this is understandable, because giving advice is not necessarily a tangible purchase. The client may think “after all, my accountant only spoke to me for five minutes”. The accountant’s advice may ultimately have saved the client $100,000 but the client may only realise this afterwards.


The accountant’s bill can detract from the overall big picture of knowing how much better off the well-advised practice owner actually is.

For example, if your accountant or adviser can help you save $300,000 to $500,000 p.a before tax and after their costs, then the true opportunity cost of not engaging the right advice can be substantial.

The key is to find an accountant who understands and has a track record in your specialty. This saves you valuable time and money on expensive false starts, re-inventing the wheel and unnecessary errors.

Setting up and running a healthcare practice takes more skill and expertise than an accountant has who just prepares doctors’ tax returns or does financial planning. This is akin to getting your maintenance person to redesign your family home. It makes no sense.

You are either growing bigger, going boutique or going broke.


To increase your profitability, you need to see more patients or reduce costs or both. Before you can do this, you need to know how you are going each month. Knowing your next step is critical.

There is nothing worse than a financially-stressed doctor who in turn, unnecessarily stresses out the staff and patients. It is a breeding ground for mistakes and can result in poor quality care. Simply increasing your turnover of patients is not the only solution, nor is it a sustainable one.

The bottom line is there is no point if your patient thrives but your practice dies.

We can help you now!

Full or partial financial outsourcing the hard stuff

We predict it will be harder to get bank loans in future. The Royal Commission into the banking sector is now asking for banks to request more timely and specifically detailed financial information about you and your business before they will approve finance.

See How Westpac plans to crackdown on home buyers.

Cloud accounting appears to be the sole, and most cost-effective and efficient, way around this problem.


We can help by ensuring your financial well-being is available to you 24/7 from your mobile phone.

Accessing timely monthly financial information, backed up with our experience of 27 years of national healthcare specialist advice, can give you peace of mind.

You can outsource this fixed-price service to us, or we can work with your bookkeeper and offer you a backup service if and when they are not available.

Most importantly, using our Doctors Pay Calculator (uniquely developed by a Chartered Accountant and Registered Tax Agent), we can process those providers that are paid on a percentage of their receipts. And we will include our template percentage service agreements and employment contracts as well.


Five important reasons for using this new service either in full or in part:

  • Up to a 40% reduction in practice accounting, bookkeeping and administration costs. Up to 100% increase in quality and timeliness of service (guaranteed). Greater cost-effectiveness and reliability – you are not paying for bookkeeping errors or staff turnover.
  • Fixed monthly fee, so you can better budget your accounting and bookkeeping fees. No more big and lumpy bills.
  • Doctors Service Fee Pay Calculator and Provider Template Agreements. Unique in Australia, and developed by a Chartered Accountant and Registered Tax Agent, these tools simplify critical tax documentation for providers with the correct audit trail and procedures in place.
  • Access our national monthly practice benchmark so you know what you may be missing out on (e.g. the payment of practice grants). Integration of your website with Google Analytics so you can see your patient pipeline and how this may affect your bottom line, in real time.
  • 24/7 mobile access is available so you no longer have to chase advisers to find out how you are going, with profit warning alerts and reports if things need your attention.
  • High-quality phone support

Chartered Accounting Standards back-up with the assurance of 27 years of national experience in healthcare working with GPs, Specialists and Allied Health practitioners. No more conflicting advice; we dispense high quality advice on pathology and pharmacy rates and practice valuations. Monthly free chat time included.

gadgetsWhat do we offer?

Our team is experienced and we apply only best practice principles in providing comprehensive bookkeeping and compliance services – watch this video sample of what we can do for you.

Function Specific
Bookkeeping Maintain and manage general and sub-ledger accounts in accordance with relevant Accounting Standards (AASB) such that:

Balances are reconciled;

Accounts are analysed monthly;

Details and schedules can be made readily available.

Perform monthly closing procedures of all accounts for timely submission of reports.

Prepare and/or produce accurate Balance Sheets and Income Statements monthly including supplemental financial schedules.

Bank Reconciliation Records all bank movements within accounting system using the correct accounting treatment

Creation and maintenance of bank rules for increased efficiency

Prepares bank reconciliation, maintaining the system bank feed balances in accordance with true banking records

Obtain documentation for business expenses made directly by directors and employees to confirm accounting treatment is appropriate.

Accounts Payable Record all accounts payable invoices within accounting system with correct allocation and GST.

Create and maintain Supplier Rules and manage the Auto-Publish function within Receipt Bank to gain increased efficiencies

Review and make payments for the reimbursement of employees for business-related purchases

Process batch payments for business-related payables, expenses or purchases with proper approvals and supporting documents (i.e. invoices, receipts, and proof-of-purchase)

Prepare schedules and accounts-payable related reports, including email notification to management of Important/ urgent payables.

Accounts Receivable Monitor invoicing systems ensuring system integrations remain intact and appropriately record accounts receivable accounting entries in the accounting system

Prepare Accounts receivable aging schedules with status updates.

Generate AR aging reports and identify critical issues.

Provider Pays –
Service FeeCalculations for providers usingDoctors PayCalculator Software – for full audit trail and see brochure for full details.
Supply provider template, software and accurate compliance with pay preparation

▪      Prepare and/or produce accurate provider Tax Invoices, BAS and Income Tax Extract summaries

Prepare bank reconciliation, maintaining the system bank feed balances in accordance with true banking records

Obtain documentation for business expenses made directly by directors and employees to confirm accounting treatment is appropriate

Records all bank movements within accounting system using the correct accounting treatment

▪       Creation and maintenance of bank rules for increased efficiency

Prepares bank reconciliation, maintaining the system bank feed balances in accordance with true banking records

Prepare and/or produce accurate Balance Sheets and Income Statements monthly including supplemental financial schedules.

Payroll Preparation of the Payroll including electronic uploading of payment into online bank facilities.

Preparation and payment of Superannuation

Preparation of final pay computation for resigned employees

Setup of new employees in the Payroll system

Review, reconciliation and preparation of Annual Payment Summaries

Tax Compliance Preparation and lodgement of IAS

Preparation and lodgement of BAS

Preparation and lodgement of Payroll Tax

Preparation of year end requirements

Financial Statements Review and analysis of client accounts

Preparation of Financial Statements for Companies, Trusts, Partnerships and Sole Traders

Preparation of Accounting Workpapers, supporting Balance Sheet accounts, key Expense Accounts and Income Tax Calculations

Calculation of Fringe Benefits Tax and preparation of relevant accounting entries

Tax Return Preparation Preparation of Income Tax Reconciliations

Preparation of Tax Returns for Individuals, Companies, Trusts and Partnerships

Calculation of Company Franking Account balances

Activity Statements Preparation of IAS/BAS

Reconciliation of ATO liabilities including GST Payable, PAYGW Payable and Income Tax Provisions

Please note a separate once-off clean up and set up fee may be incurred depending on your requirements.

How Much?


For more information about our cost-effective, fixed-fee Chartered Accounting, tax agent registered standard, best-practice financial reporting, tax and bookkeeping (for the price of a bookkeeper) then contact us for a confidential, no-obligation chat and quote. Or, if you want to outsource any ‘bug bear’ component of your accounting or bookkeeping work such as paying providers, please also contact us. This service can be provided anywhere in Australia.

*Our guarantee applies, provided the terms and conditions are applied to. Do not hesitate to contact us for more information. Contact David Dahm for further information at


Please note we are not lawyers, we are accountants and practice advisers. Please seek specific legal advice in relation to your own circumstances. We cannot be held responsible for any errors or omissions in this article. This is for discussion purposes only. It is important to start to ask the right questions first and get it in writing.