Financial Planning for Dermatologists in Australia

Dermatologists hold specialist registration under AHPRA (approximately $900–$1,000 per year for specialist practitioners in 2024–25). Most Australian dermatologists maintain fellowship with the Australasian College of Dermatologists (ACD), with annual membership fees typically in the range of $1,500–$3,000 depending on member category and faculty involvement. Membership with international societies (American Academy of Dermatology, European Academy of Dermatology and Venereology) carries additional fees that are also deductible if directly related to maintaining professional competency.

AHPRA registration and ACD fellowship fees are fully deductible as professional expenses in the year of payment. CPD activities required to maintain fellowship - conferences, case-based learning, peer review, and procedural skills maintenance - are also deductible.

MDO premiums for dermatologists vary significantly based on the proportion of cosmetic vs medical work and the extent of surgical procedures performed. Pure medical dermatologists (managing psoriasis, eczema, inflammatory skin disease, patch testing) typically attract premiums in the $8,000–$18,000 per year range.

Dermatologists performing skin cancer surgery (excisions, flap repairs, Mohs micrographic surgery) face higher premiums - commonly $20,000–$45,000 annually depending on procedure volume and complexity. Mohs surgeons carry particular exposure given the reconstructive component; facial Mohs surgery near critical structures (eyelid, nasal tip, lip) represents the highest risk profile.

Cosmetic dermatologists - performing injectables (anti-wrinkle injections, dermal fillers), laser treatments, and body contouring - are increasingly the subject of MDO concern as cosmetic procedure complaints have risen. Most MDOs require annual declaration of cosmetic procedure volume and type. Underreporting cosmetic volumes or failing to disclose new procedure categories can lead to policy voidance at claim - review your declaration annually and notify your MDO immediately when adding new cosmetic modalities.

Run-off cover for dermatologists should account for skin cancer surgical cases - limitation periods vary by state and patient age. Mohs surgeons performing facial reconstruction carry run-off exposure that should be factored into retirement financial planning.

Medical dermatology consultations are billed through Medicare (specialist consultation items 104, 105, 110, and related items). Skin cancer procedures have specific MBS item numbers covering the excision, histopathology submission, and repair/reconstruction. Mohs micrographic surgery has dedicated MBS items reflecting its staged nature.

Cosmetic dermatology procedures - injectables, laser treatments, chemical peels, and non-therapeutic skin treatments - are not covered by Medicare and are billed privately at the dermatologist's own fees. This cosmetic income is typically higher-margin and all-private, but it is not subject to the MBS fee structure or the Medicare compliance framework.

From a tax perspective, both Medicare-billed medical income and private cosmetic income are assessable professional income - they are both PSI if earned through a company or trust where the dermatologist's personal skills are the primary income driver. There is no preferential tax treatment for cosmetic vs medical income.

Dermatologists operating through a company or trust are subject to PSI rules. Consultation income, procedural fees, and cosmetic treatment income all derive from the dermatologist's personal professional skills - they are PSI and must be attributed to the dermatologist personally for tax purposes.

A legitimate exception arises where a dermatology practice genuinely employs other dermatologists or specialist nurses/cosmetic injectors who generate independent clinical income. If more than 50% of practice income is genuinely generated by employees rather than the principal dermatologist, a business income argument may succeed - but this requires genuine employment (PAYG withholding, superannuation guarantee, WorkCover), not contractor arrangements designed to appear like employment.

Practice facility fees - charges made by a practice company to tenanting dermatologists for use of rooms, equipment (lasers, phototherapy units, dermoscopes), nursing support, and administration - are deductible to the dermatologist and assessable to the practice entity. These fees must reflect genuine arm's-length market rates. This is not PSI diversion; it is a legitimate cost of practice.

Dermatology training runs approximately 4 years of vocational training post-internship. The total path from medical graduation to independent consultant practice is typically 10–12 years - creating a meaningful superannuation gap during training when incomes are below career potential.

Division 293 tax applies an additional 15% on concessional super contributions when income plus concessional contributions exceeds $250,000. Established dermatologists with both medical and cosmetic income streams commonly exceed this threshold. Concessional contributions remain tax-effective above the threshold if marginal rates exceed 30%.

The carry-forward concessional contribution rule allows dermatologists with total super balances under $500,000 at the prior 30 June to access up to 5 years of unused concessional cap space - enabling catch-up contributions of up to $137,500 in a single year. This is particularly useful in the first years of consultant practice when income rises sharply.

An SMSF becomes cost-competitive for most dermatologists once total super balances exceed $300,000–$400,000, typically within 5–8 years of beginning consultant practice given high and consistent income streams.

Dermatologists with significant investment in laser and phototherapy equipment may explore whether practice equipment can be held through an SMSF structure - however, the SIS Act rules on related-party leasing of personal property (as distinct from business real property) are strict. Equipment leased to a related party from an SMSF typically breaches the in-house asset rules unless a specific exemption applies. Get specific legal advice before placing practice equipment in an SMSF.

Commercial consulting rooms or a medical suite purchased through an SMSF via an LRBA and leased back to the dermatology practice at arm's-length market rent is the more common and legally cleaner SMSF strategy. The ATO safe harbour LRBA interest rate for real property in 2024–25 is 8.85% per annum.

From 1 July 2025, Division 296 applies an additional 15% on notional SMSF earnings attributable to balances above $3 million. Model projected super balances and consider supplementing super with non-super structures as the threshold approaches.

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Review these items each financial year:

• Confirm AHPRA and ACD fees are claimed as deductions in the correct year
• Update MDO annual declaration with accurate medical/cosmetic procedure mix - notify MDO when adding new cosmetic modalities
• Model run-off cover obligations - Mohs surgery facial reconstruction has extended limitation exposure
• Check MBS item selection for skin cancer procedures - excision, histopathology, and repair items must be correctly linked
• Run PSI tests on all income streams - both Medicare and cosmetic income is typically PSI through a company
• Review practice facility fee arrangements - confirm arm's-length rates and document the basis for fees charged
• Assess Division 293 liability before setting salary sacrifice levels ($250,000 income + concessional contributions threshold)
• Check carry-forward concessional contribution availability if total super balance was under $500,000 at 30 June
• Confirm SMSF LRBA interest rate against ATO safe harbour (8.85% for real property 2024–25)
• Model projected super balance against Division 296 $3M threshold - supplement with non-super structures if approaching

A medical specialist accountant familiar with dermatology's dual medical/cosmetic income structure will identify planning opportunities a generalist may overlook.