will be looking at them to see whether

payroll tax is due on any payments to their

medical professionals .

What must practice owners consider ? The

two main issues are how the clinic and the

medical professionals have structured their

legal arrangements ; and what happens with

the clinic ’ s cash flow between patients , the

clinic and the medical professionals .

The detail

The State Revenue Office ( SRO ) has medical

and healthcare providers in the spotlight

regarding their payroll tax obligations . The

focus is on how clinics structure arrangements

with medical professionals at that clinic . In

many cases , doctors are engaged as contractors

to work in these clinics . SROs have sought

to apply payroll tax to payments made by the

centre or clinic to doctors .

Practice matters

Clinics found to have breached payroll tax

obligations could incur costs and penalties . If

the SRO believes payments constitute taxable

wages , it will likely impose payroll tax ( now

4.65 % in Victoria once the payroll tax threshold

is exceeded ). Given a typical practice comprises

five GPs , this impost could be significant .

Anthony Bradica is a partner at Hall & Wilcox , Melbourne , Vic .

A recent tax case has important ramifications for small to large practices . Here ’ s what you should know to make sure you ’ re not caught out .

may be up to 90 % of the additional tax , but the

SRO generally reduces penalties to 20 % when

the clinic owners are co-operative .

Recent case opens the door

A recent Victorian Civil and Administrative

Tribunal decision involving Optical Superstore

sets the scene . The features of the arrangements

in this case will be familiar , in that Optical

Superstore :

• owned and managed an optical store

• collected income from optical sales and eye

tests

• paid a portion of income from its customers to

the optometrists .

The SRO contended payments to Optical

Superstore ’ s optometrists constituted payment

for work performed under the contractor

provisions of the payroll tax law , because the

arrangements involved ‘ relevant contracts ’

relating to work performed by the optometrists

for the clinic . This mean payments were

wages and subject to payroll tax .

The tribunal found agreements between

the optometrists and Optical Superstore were

“ relevant contracts ” for payroll tax purposes ,

meaning payments under these agreements

could attract payroll tax .

However , the payments made by Optical

Superstore to the optometrists were not wages

because the store was simply returning the

entitled to that income under the arrangement

between the store and the optometrists .

The SRO has appealed this decision and it

will be heard this month .

What might it mean for you ?

The SRO has become emboldened by the

Optical Superstore case and is reviewing

arrangements involving medical and healthcare

providers . Revenue offices in NSW and

Queensland are following suit . Unfortunately ,

there is no safe harbour , but there are possible

exemptions that could apply . Independent

legal advice to confirm your payroll tax obligations

may identify any relevant exemptions .

A possible exemption is where a practitioner

can demonstrate that they provide the

same kind of services to the public in another

clinic or hospital . The challenge is finding the

evidence to prove it . This will mean clinics

must ask their practitioners about which services

they provide to other clinics or hospitals .

Key risks

The wording of any service agreement

between the medical centre / clinic and the

medical professional is important . For example

, is the arrangement a trust arrangement

under which the owner of the clinic is merely

collecting income on behalf of the medical

professional ? Or is the practitioner actually

working for the clinic ?

Where the clinic is entitled to a service fee

of , say , 35 % for operating and managing the

practice , the SRO may take issue with a medical

centre recognising 100 % of the consultation

fees as its own income in financial records

( even if the amounts returnable to the medical

professional are expensed ), notwithstanding

a service agreement that makes it clear

the fees are to be held in trust for the medical

professional .

Ultimately , the strength of any case will

depend on the written agreements in place

and how the practice is managed on a day-today

basis .

Read the full Optical Superstore case here :

Authorities are casting a close eye over payroll tax obligations in the healthcare industry .

FIVE years ago the world ’ s first in-human trial of implanted seizure prediction devices was deemed a success .

Using implanted electrodes , the devices measured brain activity to calculate seizure risk in real time and warned patients via an external light that shone blue ( low risk ), white ( medium risk ) or red ( high risk ).

It was revolutionary for some patients , predicting seizures with 100 % sensitivity , according to results in Lancet Neurology in 2013 . But for others the sensitivity was just 17 %.

Thus began the search for better algorithms .

As part of this , Melbourne University co-organised a competition offering more than $ 25,000 to whoever came up with the most accurate seizure algorithms for three patients with particularly poor results in the 2013 trial .

Entrants received 7000 clips of brain activity from the patients , some from the lead-in to a seizure and some controls .

Some were labelled to say whether they were from seizures or control periods , but others were unlabelled .

Using the data , entrants tried to build algorithms that could accurately tell if the unlabelled data indicated a coming seizure or not . From more than 10,000 algorithms developed by 478 entrants , the winning entry recorded almost 60 % sensitivity at 75 % specificity .

The moral of this story , as described in the journal Brain last month , is not that crowdsourcing will turn up the next big seizure prediction algorithm , to be widely used .

It ’ s that crowdsourcing could turn up thousands of algorithms that have been specifically tailored for individual patients .

As the researchers wrote : “ The outcomes suggest a clinical solution where an army of algorithms is trained for each patient and the best algorithm is chosen for prospective , realtime seizure prediction .” Brain 2018 ; online . Lancet Neurology 2013 ; online .

How penalties will be applied is uncertain , and

fees to the optometrists , who were rightfully

bit . ly / 2PGOXLc