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Payroll amnesty – the good , the bad and ugly
It is worth noting that the Queensland Commissioner of State Revenue in pursuing payroll tax from practices relied upon the outcome of the Thomas and Naaz case . The Thomas and Naaz case remains important .
As reported widely in the medical media , the NSW Court of Appeal dismissed an appeal by the owners of a GP practice group in the case .
That means contracting GPs will continue to be treated as employees for payroll tax .
So it is important that all medical practice operators review their current arrangements to understand their exposure to payroll tax , particularly in NSW and Victoria , which have not announced any payroll tax amnesty programs .
Interestingly , we found that , in assessing the payroll tax liability of the medical centres in the original court case , the NSW Chief Commissioner did not assess the amounts paid directly to three medical practitioners , who administered their own claims and did not participate in the administrative arrangement that other contracting practitioners were subject to .
It raises the question of whether such arrangements are accepted as not subject to payroll tax .
THE Queensland Government recently announced a new payroll tax amnesty program aimed at payments made to contracted GPs in the state .
This is a welcome relief to concerns raised by the healthcare sector .
Changes that came into effect in December 2022 meant that medical centres with contracting GPs and other health practitioners were subject to payroll tax on payments they made to those contractors .
But the amnesty now in place will run to 30 June 2025 , in order to support existing Queensland practices not currently complying with the payroll tax requirements .
It also means those who benefit from the amnesty will not be liable for payroll tax for the previous five
General practice
Brendan Campbell Director of business services and taxation at Prosperity in Brisbane , Queensland .
It is an opportunity for impacted GP practices to manage their affairs in preparation for the tax .
years — that is , 2018 to 2023 . The hope , at this stage , is that other states will follow suit .
But we need to stress this is a temporary relief . The idea for the Queensland Government is to give these practices additional time to implement necessary changes and either meet compliance requirements or change their existing contracting arrangements .
Who is eligible for the amnesty ?
It is also important to be clear that not all practices are going to benefit .
You have to apply for the concessions , and you have to be approved .
The program is open to Queensland medical practices that have not previously registered for payroll tax or paying payroll tax on their payments to contracting GPs .
The amnesty is not available for medical practices that are already complying with their payroll tax obligations . It also does not extend to any other non-GP practitioners or to any new medical practices .
It is important to discuss with your adviser to confirm if your current arrangements are not considered to be relevant contracts for payroll tax purposes .
To be eligible , medical practices must register their expression of interest in the program via the Queensland Revenue Office website by 30 June 2023 .
The revenue office will provide further information once the program is open ; however , applicants will likely be required to disclose details of any payments made to contractors and ensure they are registered for payroll tax if they have not already done so .
Considerations for payroll tax
When considering whether your
Eli Wallach in The Good , the Bad and the Ugly .
medical practice may be subject to payroll tax , there are many factors to consider , including the following :
• Does your medical practice provide the use of rooms and facilities as a service or a lease ?
• Does your medical practice exercise control over the practitioner ?
• Are the GPs required to use your medical practice facilities to see and treat their patients , or do they have discretion on how they conduct their own business ?
It is not available for medical practices that are already complying with their payroll tax obligations .
• Are the patients attributed to the independent GP / other practitioner or to your medical practice ?
• Are the patient fees collected and paid directly to the GP , or are they collected by your medical centre and then remitted to the GP ?
The impact of the Thomas and Naaz case
Given that the amnesty only runs until 2025 , unless there are more fundamental shifts , payroll tax is going to be something that practices need to deal with .
In conclusion
Following the outcome of the court case , it looks like there may be two options for medical centre operators from here on :
• Specify contract arrangements are for room rental and facilitation services ; that there is no control of patients , working hours or restraints over doctors ; and that the flow of money is from the doctors to the practice ( ie , the practice does not collect the patient fee for the doctor ); more likely not subject to payroll tax ; or
• Retain control over patients of the practice , restraints , and doctors ’ sessions and payments but accept the additional payroll tax as a cost of business and choose to pass this cost on to the patients and / or doctors . The Queensland payroll tax amnesty program is an opportunity for impacted medical practices to manage their business affairs in preparation for the payroll tax — either by accepting the payroll tax cost as part of the business or restructuring their business model to exclude contracting GPs .
Although limited to GPs for now , the program remains a positive step towards supporting the healthcare industry in Queensland , as well as something that will hopefully encourage other states and territories to follow suit .
Queensland Revenue Office : Payroll tax amnesty for contracted GPs ; 11 Apr 2023 : bit . ly / 3I5VpZ4