Payroll tax updates for medical practices
Revenue authorities in Queensland, South Australia, Victoria, and New South Wales have recently issued coordinated rulings indicating that many medical practices might now face payroll tax obligations on payments to medical practitioners. This development pertains to both new and existing contracts.
These rulings clarify that payroll tax could apply to payments made under contracts where medical practitioners provide services, expanding the scope beyond traditional employee-employer relationships to include contractors such as doctors.
Understanding the Expanded Definition of 'Relevant Contracts'
The authorities have broadened the definition of a "relevant contract" to encompass any agreement involving work performance. Previously, the focus was primarily on payments directly linked to services rendered. If a medical centre engages a practitioner to operate from its facilities or facilitates patient access to a practitioner's services, it likely constitutes a relevant contract.
Exclusions to Consider
However, certain exclusions remain, which could exempt some arrangements from payroll tax:
Services offered by the practitioner to the general public, for instance, if they serve multiple medical practices.
Practitioners working at a practice for no more than 90 days within a fiscal year.
Situations where services are performed by the practitioner along with one or more other persons, like a nurse or an assistant.
State-Specific Concessions and Amnesties
Different regions have introduced specific concessions:
Australian Capital Territory (ACT): Payroll tax for GP payments is waived until 30 June 2023, with an extended compliance deadline up to 2025. Practices that bulk bill at least 65% of their patients and are registered with MyMedicare may seek exemptions until 30 June 2025, with applications due by 29 February 2024.
South Australia (SA) and Queensland (QLD): Both offer an amnesty on GP payments until 30 June 2024 and 30 June 2025, respectively, provided medical practices make a voluntary disclosure and register for payroll tax as required. Please note that the amnesties in QLD and SA are contingent upon successful prior expressions of interest and are not automatically granted.
New South Wales (NSW): The auditing of medical centres will pause for 12 months until 4 September 2024, during which time any accrued interest and penalties will also be suspended.
Other Regional Considerations
The Northern Territory and Tasmania have not issued similar rulings, and their positions regarding amnesties remain undefined. Western Australia's payroll tax legislation lacks provisions for relevant contracts, potentially sparing such arrangements from similar payroll tax obligations.
Next Steps for Medical Practices
Recent legislative developments underscore the importance of considering whether contracts with contracted doctors could incur payroll tax liabilities.
We recommend consulting with our team to review your practice's arrangements, evaluate potential liabilities, and discuss necessary adjustments to comply with current tax laws.