Protecting Your Income: Why Doctors Need More Than Just a Good Salary

Many doctors reach their late thirties or early forties earning well into six figures, with good savings, a growing super balance, and a vague plan to "sort it out later." The problem is that a high income alone does not automatically translate into financial resilience. The tax system, super rules, and property regulations each have specific mechanics that reward planning and penalise inaction.

This post walks through the main structural considerations relevant to medical professionals thinking about investment property, super, or both.

How the Tax System Treats High Earners in Super

Most people know that concessional (before-tax) super contributions are taxed at 15% inside the fund. What catches many doctors off guard is Division 293.

Per the ATO (ato.gov.au), Division 293 tax applies when your combined income and super contributions exceed the threshold of $250,000. The tax is 15% of the excess over the threshold, or the taxable super contributions, whichever is less.

In practice, combined with the 15% contributions tax already inside super, the effective rate on concessional contributions becomes 30% for affected earners, still 17 percentage points cheaper than the 47% top marginal rate.

The $250,000 threshold catches more doctors than most people expect. The ATO counts taxable income including salary, practice income, and locum fees. For a GP principal or a consultant picking up extra shifts alongside specialist income, Division 293 is almost a certainty by mid-career.

The $250,000 threshold is not indexed, meaning bracket creep gradually draws more doctors into Division 293 each year without any change in policy.

For FY 2025-26, the concessional contributions cap is $30,000, unchanged from 2024-25. The non-concessional (after-tax) cap is $120,000 per year, and if you are under 75 and your total super balance is below $2,000,000, you may be able to bring forward up to three years of contributions, totalling $360,000. These caps change each financial year, so always check the ATO's current rates page before acting.

One option worth knowing about is that non-concessional contributions are not subject to Division 293. If you have already hit the concessional cap and want to put more into super, non-concessional contributions work differently, the contribution comes from post-tax income, but growth inside the fund is still taxed at concessional rates.

All of this is general information. The right mix of contribution types depends on individual income, existing super balance, and cash flow, things to work through with a licensed financial adviser or SMSF specialist accountant.

Investment Property Inside and Outside Super: What Changed in August 2026

For years, a common strategy among higher-income earners was to hold an investment property inside an SMSF using a Limited Recourse Borrowing Arrangement (LRBA). The structure worked as follows: an LRBA allows an SMSF to borrow money to acquire a single asset, most commonly residential or commercial property. The structure involves a separate holding trust (a bare trust) that holds legal title to the property while the SMSF holds the beneficial interest. Lenders have recourse only to the acquired property rather than other SMSF assets.

However, the rules as they currently stand have changed significantly. The changes to the LRBA laws were scheduled to come into effect 45 days after receiving Royal Assent. Royal Assent was granted on 26 June 2026, meaning the changes became law from 10 August 2026.

From 10 August 2026, only property that meets the definition of business real property under the SIS Act is able to be financed through an LRBA. Residential property can still be purchased using cash reserves of the SMSF only, so for SMSFs with sufficient funds to buy without borrowings, the change has no real effect.

A few important points on what the change does and does not cover:

• If your SMSF already has an LRBA in place, nothing is expected to change. Existing borrowing arrangements are expected to be fully grandfathered under the new rules.
• Because the new restrictions apply solely to residential property, commercial real estate LRBAs remain fully operational. This is significant for small business owners, allowing their SMSF to purchase commercial business premises via an LRBA and lease it back to their operating entity at market rates.
• The change only targets borrowing. An unleveraged acquisition of residential property is still permissible if it fits the fund's investment strategy and diversification requirements.

The other core rules on residential SMSF property have not changed. The sole purpose test under superannuation law strictly prohibits you, your family, or any related party from living in or renting a residential property owned by your SMSF. Doing so is a major compliance breach with severe ATO penalties.

The Trade-offs: When Super Property Works and When It Doesn't

Holding property inside super has genuine tax advantages. In accumulation phase, rental income is taxed at 15%. In pension phase, earnings up to the Transfer Balance Cap are taxed at 0%. The general Transfer Balance Cap is $2 million from 1 July 2025.

But those advantages come with real constraints worth weighing:

1. Liquidity. An SMSF holding a property outright needs enough cash left to meet ongoing expenses, insurance premiums, and any pension payments. A fund that is heavily weighted to a single illiquid asset can face compliance pressure quickly.
2. Cost and complexity. Running an SMSF carries annual accounting, audit, and compliance costs regardless of fund performance. These costs are generally fixed, which makes them proportionally higher for smaller funds.
3. Sole purpose test. The fund must exist to provide retirement benefits. Every investment decision needs to be made in that context, not for the personal benefit of members or their relatives.
4. Rental income, not guaranteed income. Realistic rental yields vary by location and property type, and vacancy periods happen. Any property purchase should be supported by an independent rental appraisal, not an optimistic figure from a developer's information pack.

For doctors who own their own practice premises, commercial real estate LRBAs remain fully operational and can be a powerful mechanism, allowing their SMSF to purchase commercial business premises via an LRBA and lease it back to their operating company at market rates. This is worth discussing with an SMSF specialist accountant, as the business real property rules under the SIS Act have specific requirements.

A Worked Example: Illustrative Only

Consider a specialist physician in accumulation phase, aged 44, earning $380,000. Her income combined with her SG contributions already exceeds the $250,000 Division 293 threshold, so her concessional contributions are effectively taxed at 30% inside super rather than 15%.

She has a total super balance of $600,000 and has not always contributed at the cap during her training years. If her total superannuation balance is less than $500,000 on 30 June of the previous financial year, she may be entitled to carry forward unused concessional cap amounts from prior years. At $600,000 she is above that threshold, so carry-forward is not available to her, but this illustrates why checking balance levels matters before planning contribution strategies.

She is also considering purchasing a commercial property for her practice through her SMSF. Because it qualifies as business real property, an LRBA remains available under the current rules. The fund would need a sufficient liquidity buffer after the deposit, and her SMSF's investment strategy would need to explicitly accommodate property held through an LRBA, things an SMSF specialist accountant and a broker experienced in SMSF lending would need to assess together.

This example is illustrative. It does not reflect any specific person's situation, and the numbers are not projections of any outcome.

What to Think About Next

If you are a medical professional looking at investment property or SMSF structuring, here are three concrete starting points:

1. Get your super picture clear. Check your current balance, contribution history, and whether you are being caught by Division 293 each year. Your MyGov account through the ATO shows your super balance, contribution history, and any unused carry-forward amounts. This gives you the factual foundation for any conversation with an adviser.
2. Talk to the right professionals before assuming any structure. SMSF property involves at minimum an SMSF specialist accountant (to structure the fund and ensure compliance with the SIS Act), a licensed financial adviser (for investment strategy), and a broker experienced in SMSF or investment lending. For commercial property, add a solicitor familiar with bare trust deeds and stamp duty rules in your state.
3. Match the structure to what you actually own and earn. A residential investment property held in your personal name works differently from one held in a trust or inside super. The right structure depends on income, existing super balance, borrowing capacity, and long-term plans, not a template that worked for someone else.

If you want to understand what property and finance options are relevant to your situation, you can speak with the EWC team or explore our services for more detail on how we coordinate property sourcing and finance referrals for investors and SMSF holders alike.

General information only, not personal financial advice. Speak with a licensed adviser before acting.