During recent years medical centres and practitioners have been a focus area following topical cases in New South Wales and Victoria. As a result, a newly introduced ruling was published by the Queensland Revenue Office (QRO). The newly published payroll tax ruling PTAQ000.6.1 sets out how Queensland Commissioner of State Revenue will apply the payroll tax contractor provisions to agreements between medical centres and medical practitioners, including doctors, dental, physiotherapy, radiology, and similar healthcare providers.
Now to better understand what this means for someone conducting business in a medical centre, you first need to know about Payroll Tax in Australia. As stated by Payroll Tax Australia “Payroll tax is levied on wages paid or payable by an employer to its employees when the total taxable wages of an employer (or group of employers) exceeds a threshold amount. Payroll tax is self-assessed and lodged by the employer.” Payroll tax rates and thresholds will vary between states and territories. For information of this visit www.payrolltax.gov.au
The new ruling which was introduced in December of 2022 has raised several concerns for those who conduct business in a medical centre. Medical centres in Queensland are likely going to face significant challenges in relation to payroll tax. The payroll tax is likely to be payable on payments from a medical centre to contracting practitioners. Medical centres have been notified to take prompt actions to review current arrangements and conduct necessary changes in an attempt to limit their payroll tax exposure.
The medical focused ruling talks about relevant contract provisions in relation to medical centres and medical practitioners. If there is a deemed payroll tax liability, the QRO needs to deem there to be a relevant contract. The relevant contract needs to be between the medical centre and the medical practitioner. There are three areas the must be tested:
- Is the practitioner in the business of providing medical related services to patients.
- In the course of the medical centre running its business that it provides members of the public access to medical related services
- That the centre engages its medical practitioners, the individual doctors, to supply those services to the patients on behalf of the medical centre.
The Queensland Revenue Office has advised they will pay attention to current contracts that are already in place and take a substance over form approach. Although many are not convinced and have flagged major concerns for nationwide implications the ruling will have on medical centres.
If you are a medical practitioner and have concerns over your current contractor arrangements and what impact the change to payroll tax assessments may have on your practice, please reach out for assistance.