There is no single right structure for a dental practice, but most established practices run through a company, often with a discretionary trust in the ownership chain and a separate entity holding equipment or premises. What decides it is the scale of the practice, whether you own the building, how you engage associates and hygienists, and what you eventually intend to do with the business. Personal services income rules and the capital gains tax treatment on a future sale are usually the two factors that settle it.
The Four Factors That Usually Decide a Dental Structure
Scale comes first, because of the personal services income rules. A single dentist with no staff, no rooms of their own and one main source of income is likely to have that income attributed back to them personally, which removes most of the tax benefit of a company or a trust. A practice with employed staff, its own premises and multiple chairs generally operates as a personal services business, and the structure starts doing real work.
Asset protection is second. Separating the trading entity from the equipment, the premises and the goodwill limits what is exposed if something goes wrong on the commercial side of the practice. It does not touch clinical risk. AHPRA registration is personal to each practitioner, and professional indemnity insurance, not a company, is what responds to a clinical claim.
How you engage other practitioners is third, and it has become the most consequential of the four. Whether associates are employees or engaged under service agreements affects superannuation, workers compensation and payroll tax, and the payroll tax treatment of practitioner service arrangements has been an active area of review in NSW. That decision usually determines which entity contracts with whom, so it belongs inside the structure conversation rather than after it.
Exit is fourth, and it is the one owners underweight. The small business capital gains tax concessions and the general discount apply differently to companies, trusts and individuals, and the structure you set at the start determines what is available when you sell ten or fifteen years later. Restructuring later is possible and rollover relief exists, but it is conditional and it costs more than getting it right the first time.
Whether a service trust belongs in the mix is a separate question again, and it turns on whether the arrangement is genuinely commercial and the fees charged are defensible. It is worth looking at once the practice is large enough to justify it, and not before.
Reviewing Your Practice Structure?
If you are setting up, buying in, or working with a structure that no longer fits the practice you have, our accounting for dental practices page sets out how we work with practice owners. You can read more about the firm at MYC Partners Accountants, or get in touch to talk it through with Kylie before anything is locked in.