In this PodMD episode, Lending Consultant Eyal Judah, from DPM Financial Services, will be discussing funding your tax obligations, and more.
- Transcript
Please note this is a machine generated transcription and may contain some errors.
*As always, all in this PodMD podcast is intended for health professionals and the comments are of a general nature. Information given is not intended as specific medical advice pertaining to any given patient. If you have a clinical issue with one of your patients please seek appropriate advice from a colleague with expertise in the area.
The financial journey of a doctor is unique and complex. DPM Financial Services is a specialist medical financial advice firm that aims to educate doctors of Australia to make the right financial decisions and achieve their financial goals. DPM Financial Services is all about getting you the right advice that suits your personal and professional needs and making sure you have confidence in your financial future.
Today I would like to welcome to the PodMD studio, Eyal Judah from DPM. Eyal is one of DPM’s lending consultants with many years of expertise in providing financial services to doctors in Australia.
We do hope you enjoy this podcast, but please remember that the information discussed here is of a general nature and is not intended to serve as advice. The views and opinions expressed in this podcast are those of DPM, not PodMD. DPM Financial Services recommends you obtain advice concerning specific matters before making a decision.
Eyal, thanks for talking with us on PodMD today.
Eyal: Thank you.
Question 1
Eyal, another financial year has gone by and many doctors have large tax bills, particularly when their income trajectory is up. This can be in the form of GST, pay as you go and superannuation obligations.Eyal: Yes, that’s correct and forward planning your cash flow for your tax obligations is crucial, particularly as the ATO is now owed over 50 billion in tax debt. We’ve had some breathing room during the pandemic, but ensuring tax payers pay their tax and their super obligations is a key focus now for the ATO. So, clients are at risk of either having failed to lodge overdue tax returns as well as having to pay interest and penalties for any overdue tax payment obligations. If you have an overdue debt and don’t respond to the ATO’s request to pay, they may send you a pre referral warning letter. And if you don’t respond to the letter or engage with the ATO to pay your debt, the ATO will refer you to an external debt collection agency. So what you don’t want is the ATO reporting your tax debt to a credit reporting Bureau, because this might affect your credit rating if you are reported, and it could impact your ability to access credit from lenders or other businesses.
Question 2
So what options do medical professionals have to consider when it comes to their tax obligations?Eyal: So most tax consultants would advise clients that they will need to communicate with the ATO before the due date so the ATO can listen to the client situation and help them get back on track. Usually this can normally translate to having an ATO payment plan, which is an arrangement with the tax office to pay off your tax setting instalments over time, but often there’ll be added interest and penalties. The problem is that many instances ATO payment plans usually don’t exceed a couple of months. The average is about 11 months and each’s charges can be as high as 11% per annum. So one of the reasons medical professionals seek a loan to pay out their tax set is at the ATO business payment plans are often too demanding on the business cash flow because not over a long enough time period. And this is where DPM finance can help by facilitating your loan to provide you with the funds needed to pay your ATO debts in line with what your business cash flow can handle. Tailored tax solution, loan solution offers fast access to funds and can give you some flexibility around repayment options.
Question 3
When you save fast access to funds, how long can clients expect the application process to take before they can access funding?Eyal: So we have leaders that are committed to helping medical professionals with tailored solutions that your traditional leaders can’t offer. We find that young doctors may struggle to get financed from traditional banks until they are well established. And whereas older doctors are often time poor to go through lengthy application and just want an efficient service with minimal paperwork. So DPM finance have lenders that can approve and fund an unsecured loan to cover tax bills within 48 hours. This can be in the form of a line of credit so that the facility can remain there after it has been paid down should the clients have any future funding needs, they will only pay interest on what they utilise out of that facility. Most importantly, we look at setting up the loan facility and term to match the cash flow needs of the client, which can be more beneficial than a restrictive ATO payment plan. We encourage our clients to get ahead of their ATO obligations by forward planning their upcoming tax payments and then give DPM a call to seek assistance if funding is required.
Question 4
Why would doctors consider obtaining a loan for their tax obligations as opposed to engaging in a payment plan with the ATO?Eyal: So potentially funding your tax obligations, the rate can be on par with what the ATO interest charges are or sometimes lower, but primarily the biggest benefit would be structuring the repayment to suit your cash flow, so it’s not as restrictive within an ATO payment plan and where this is crucial is actually if you are going to seek any funding throughout you having this liability or loan in place, having a short term ATO payment plan will have a higher payment commitment. Which banks will consider as a liability, it has to be disclosed at time of any application, if you were to, let’s say, buy a home or apply for an investment. So having an external loan setup over a longer term essentially reduces your monthly obligations and thereby improves your borrowing capacity.
Concluding Question
What is the key takeaway from this podcast?Eyal: The key message for clients is to forward plan their tax obligations and get in touch with their DPM financial advisor, if required to set up any payment arrangements with the ATO or externally through a lender.
