As a practice grows, dental practice accounting has to handle financial decisions that a general small business rarely faces. Chairs, imaging equipment and fit-outs come as large, occasional capital outlays. Several dentists may work under different arrangements, and ownership often changes as associates buy in or partners join. Each of these changes the practice’s tax position, cash flow and compliance obligations at the same time, and each is easier to plan than to unwind.
Understand where the income comes from
Practice income arrives through several channels, including health fund claims, Child Dental Benefits Schedule claims and direct patient billing. Each has its own processing rules and timing. Tracking them separately in the accounts shows the practice’s real cash position, not just its profit on paper.
GST needs the same attention. Most dental services are GST-free, but treatments provided mainly to improve a patient’s appearance, such as teeth whitening, generally are not. A practice offering cosmetic work needs its pricing, coding and activity statements to reflect the difference.
Financing equipment and fit-outs
A new chair, scanner or full fit-out is a major commitment. The finance structure chosen for it, whether a chattel mortgage, lease or hire purchase, determines what the practice can deduct and when. Under a chattel mortgage or hire purchase, the practice generally claims interest and depreciation. Under a lease, it claims the lease payments and the financier claims the depreciation. The structure also affects when GST credits can be claimed and whether a balloon or residual payment falls due at the end of the term.
We work through the tax and cash flow effect of each option before the practice commits, and prepare the financial information a broker or lender needs to assess the application. The practice then deals directly with its chosen broker or lender.
Depreciation is based on an asset’s effective life for tax purposes, either the ATO’s published figure or a supportable self-assessment. The length of the finance term does not come into it. Small business depreciation rules, including the instant asset write-off, can change the answer again, so the treatment is worth deciding deliberately when the asset is bought.
Contracted dentists and payroll tax
Many practices engage dentists as contractors rather than employees. In Queensland, this can create payroll tax obligations even where the dentist invoices the practice as an independent business.
The Queensland Revenue Office’s amnesty for contracted dentists ended on 30 June 2025. Since 1 July 2025, dental clinics are expected to pay payroll tax on payments to contracted dentists unless an exemption applies. The exemption available to some general practices does not extend to dental clinics. Whether an exemption applies depends on how each arrangement actually works, so contracts and payment flows are worth reviewing before a new dentist starts, not after an audit letter arrives.
Moving from associate to practice owner
Buying into a practice, or buying one outright, changes more than your title. You move from earning fees for your own clinical work to owning a business that earns income through the whole practice, its staff and its equipment.
Many owners operate through a company or trust. A structure does not change the character of the fees you personally generate, however, and the personal services income rules and the ATO’s current compliance approach still apply to that income. The structure should be set up with advice before settlement, when the options are widest.
The purchase price usually includes goodwill as well as equipment and fit-out, and how the price is split between them matters. It affects the buyer’s future deductions, the seller’s capital gains position and what a lender is prepared to fund. A business valuation puts a supportable figure on goodwill before it is negotiated.
Bringing in a partner
Adding a second owner raises the same questions in reverse. Buy-in price, profit share and how a future exit will be valued all need to be settled up front. A structure that suited one owner may not suit two, and it is far easier to review before the new partner starts than after a disagreement forces the issue.
Your lawyer should prepare a partnership or shareholder agreement covering profit share, exit valuation and early departure. We work alongside them so the agreement and the accounting structure match.
Keeping your dental practice accounts ready for the next decision
Finance applications, ownership changes and partner buy-ins are all assessed against the practice’s actual financial position. Books that are only brought up to date at tax time slow each of them down.
Cloud accounting in Xero, with transactions coded and reconciled monthly, keeps the numbers current. A practice that reviews its position each month can see a cash flow gap coming before an equipment repayment or a partner distribution makes it urgent.
How Wiseman Accountants can help
Wiseman Accountants has worked with established, family-owned businesses across South East Queensland since 2015. As an accountant for dentists, we handle business structuring, business valuations, SMSF administration and bookkeeping in-house, so the same team stays across the numbers as the practice changes.
If your practice is facing an equipment purchase, a new dentist, an ownership change or a partner buy-in, talk to us before the details are locked in.
Is cosmetic dental treatment GST-free?
Most dental services are GST-free, but treatments provided mainly to improve a patient’s appearance, such as teeth whitening, generally are not. A practice offering cosmetic work needs its pricing, coding and activity statements to reflect the difference.
Do Queensland dental clinics pay payroll tax on contracted dentists?
They can, once the practice’s total taxable wages, including payments to contracted dentists, exceed the payroll tax threshold. The Queensland Revenue Office’s amnesty for contracted dentists ended on 30 June 2025. Since 1 July 2025, dental clinics are expected to pay payroll tax on payments to contracted dentists unless an exemption applies. The exemption for general practitioners does not extend to dental clinics, so each arrangement is worth reviewing.
How is goodwill treated when buying a dental practice?
The purchase price usually includes goodwill as well as equipment and fit-out, and how it is split matters. The split affects the buyer’s future deductions, the seller’s capital gains position and what a lender will fund. A business valuation before negotiation gives you a supportable figure.
Does running my practice through a company or trust avoid the personal services income rules?
Not on its own. A structure does not change the character of the fees you personally generate, and the personal services income rules still need to be considered for that income. The structure is still worth setting up with advice before settlement, when the options are widest.
Is a chattel mortgage or a lease better for dental equipment?
It depends on the practice. Under a chattel mortgage or hire purchase, the practice generally claims interest and depreciation. Under a lease, it claims the lease payments and the financier claims the depreciation. GST timing and any balloon payment also differ, so each option is worth working through before you commit.
