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young dentists


!"#$#%"$&'!&())'!(*'' ''''+,-'.(/#0'1-#+")+ Newly qualified dentists can quickly find themselves in financial trouble – despite earning high levels of income. Many are unaware of their tax responsibilities, and merrily spend up all they earn. When the time comes to prepare year-end accounts and file tax returns, they can be surprised at the extent of their tax liabilities.

How can this happen to a well educated, intelligent person? Perhaps there is a case for financial management to be part of the dentistry qualification path. Certainly, in the first year of work, it will pay to form a partnership with an accountant. Three simple steps can help to protect the newly qualified dentist from financial strife. — The first is to put aside funds to meet tax liabilities. It is essential that the amount and timing of tax liabilities are clearly understood. A qualified accountant will be able to provided detail, calculations and advice to ensure that commitments are met. — The next step is to set up accounting software that can help keep track of money flows in and out. Xero is a good option for young dentists. This Cloud-based software is easy to use and facilitates information sharing with your accountant, enabling him/her to be proactive about any issues. It has the added advantage that software updates are automated, rather than manual. — Finally, you must set yourself up under the right structure and pay yourself a market salary. Where once the use of trusts was common, the Penny & Hooper precedent has changed the approach. The case found

For the first two-three years, this is a ‘keep it simple’ money management approach that will ensure you stay on top of your commitments and be well positioned to capitalise on your earning potential. Within three years, you may have gained experience in a variety of practices and established enough of a financial base to set up in business for yourself. Buying an existing practice is less difficult than starting from scratch, because systems and a market have been established. Understanding the differences between a profitable practice and one that does not perform will also be useful knowledge. Forming a relationship early on with an accountant helps you to keep it simple in the early years, and prepare you for the complexity that comes with increased earning capacity.

Scott Jackson is an accountant with William Buck Christmas Gouwland Limited, Chartered Accountants and Advisors, and has worked with a number of recent dentistry graduates to help them establish business structures and financial-management systems.


For some, a consolidation loan may be necessary in order to keep Inland Revenue at bay and manage the debt load.

against two orthopaedic surgeons (Penny & Hooper) who had paid themselves below-market salaries through trusts in order to reduce their tax obligations. However using the right structure is still crucial and a qualified accountant can provide expert advice in this regard.


THE TRADITIONAL PATH for a new dentist is to work as a contractor, taking responsibility for their own GST and PAYE. Significant earnings in the first year are not uncommon; unfortunately it is also not uncommon for a young dentist to spend it all, and not allow for the tax liabilities ahead. Life can then become quite a struggle, meeting student loan repayments, car or mortgage commitments, as well as provisional and company tax liabilities.

For more information please contact Scott Jackson Ph: 09 366 5068 E:, or Clyde Young – Ph: 09 366 5050 E:


William Buck for NZ Dental Association News - Financial floss for the young dentist