Resident Medical Officers (RMO)

Case Study – Senior House Officer (SHO)

Kate (an SHO) had been getting a family friend to do her tax returns whilst she was studying medicine and working part-time, as her affairs where quite simple and she was not earning much. However, she was finding her finances were becoming more complex, she felt like she was not making the most of her new and increasing income, and was missing out on tax savings plus other things that some of her friends talk about. Doctors Wealth was recommended to Kate by her consultant when she mentioned she wanted to get her finances under control, and have everything in the same place to reduce time and stress.

What was Discovered?
At the initial meeting, David from Doctors Wealth discovered and discussed the following issues with Kate:
1) Kate’s cash management did not have any structure, and despite her desire to save for the deposit on a unit, all of her income was somehow ‘disappearing’. She also had a small credit card debt that she hated.
2) Kate had been getting some of the benefits, but not optimising her salary packaging, especially given she intended to take some time off from January to do extra locum work and boost her income. Her compulsory superannuation contributions were also at the wrong level, and contributed in the wrong manner.
3) Kate only had the default income protection cover through her QSuper, which was for a very low amount, and tied to her QHealth contract (which finished at the end of the year).
4) Kate’s accountant was not familiar with the specific tax planning and deductions for doctors, and she had been missing out on some tax savings.

What was Done?
Following the initial meeting, Kate engaged Doctors Wealth to assist her with getting the basics under control, and begin creating a structure to move her towards her financial goals. The following was then arranged and completed by Doctors Wealth with Kate:
1) Kate and Doctors Wealth came up with a basic and usable cash management system for Kate, which allowed her to still live comfortably, but also begin consistently repaying her debt and saving for her house deposit each fortnight. Once Kate was ready, Doctors Wealth arranged the loan approval for her, assisted in sourcing a property for Kate (which will also serve to be a great investment in future), and walked her through the home buying process.
2) Doctors Wealth liaised with Remserv and QSuper on Kate’s behalf, and arranged for her salary sacrifice to be increased and the tax savings maximised before she left QHealth. They also fixed her superannuation to get her free contributions from QHealth, plus make an extra tax saving on her contribution.
3) Doctors Wealth was able to recommend and implement income protection for Kate that was specific for doctors (e.g. comprehensively covered her for needlestick injuries), and protected her full income through to age 65. The premium was tax deductible, and was easily funded by a small part of the other savings that were created.
4) Doctors Wealth Accounting was able to find additional deductions for Kate, and discussed future tax planning options for the period she was locuming.

What was the Outcome?
Overall, Kate was able to save over $6,500 per year, as follows:

Financial Areas Addressed                                                      Benefit ($)
Tax Planning and additional deductions                                  $1,100
Salary Sacrifice and QSuper savings                                      $4,100
Superannuation extra contributions (from QHealth)                $2,190
Income Protection cover (net cost)                                          ($850)
Total Benefit                                                                           $6,540

This extra saving of $6,540 is in addition to the ongoing savings that having a structured cash flow management system provides, along with the peace of mind Kate now has knowing that she has more structured finances. Partnering with a company that is specific to doctors and can assist with all areas of her financial situation also saves her a lot of time and stress. Since becoming a client, Kate has referred two of her colleagues to Doctors Wealth.

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