NSW Payroll Tax Amendments: End of Exemption and Commencement of Bulk-Billing Rebate

Background and complimentary assessment

As we have previously reported, the NSW Government’s exemption on payroll tax liability for medical practices will end effective from today, meaning that all medical practices who engage medical practitioners under a relevant contract may be liable for payroll tax in relation to those arrangements going forward unless they qualify for a relevant exemption (please see our previous articles on this topic in the right-side panel for further information). Please also reach out if you would like a complimentary assessment as to whether your agreements may be a relevant contract for the purposes of payroll tax.

As part of the amendments made to the Payroll Tax Act 2007 (NSW), the NSW Government also introduced a payroll tax rebate (Rebate) for medical centres who engage general practitioners under a relevant contract and who meet certain bulk-billing thresholds. The NSW Revenue Office also released additional guidance in relation to the application of the Rebate for medical centres on 23 August 2024. We have provided a brief summary of the Rebate and the NSW Revenue Office’s guidance below.

The Rebate

A practice eligible for the Rebate will receive a refund of all payroll tax paid or payable on wages paid to general practitioners engaged through a relevant contract from 4 September 2024 for the remainder of the financial year. To be eligible, a practice based in metropolitan Sydney must bulk bill at least 80% of general practitioner services; where the practice is based outside of metropolitan Sydney, this threshold is reduced to 70% of general practitioner services provided through the practice. The calculation of this proportion is based on the total number of services provided by general practitioners registered under the Health Practitioner Regulation National Law (i.e. it is calculated from the number of item number attendances and not the total revenue generated from those services) and only arises from arrangements which have been bulk billed (i.e. no other arrangements are included in the calculation of the relevant threshold, even if those arrangements may mean that there is no out of pocket cost or gap fee payable by the patient).

Services provided by any trainee general practitioners (such as registrars) or other general practitioners who are not registered under the Health Practitioner Regulation National Law are not included in determining whether a practice may meet the relevant threshold for the Rebate (and any wages paid to those practitioners are not eligible for the rebate).

Where a general practitioner provides services at multiple locations, the bulk-billing percentage of each site is individually assessed by reference to the total number of services provided from each site. Where the relevant threshold is met at some sites but not others, the applicable Rebate will be pro-rated in line with the proportion of general practitioner services provided by the practitioner at the locations that met the minimum threshold.

In order to receive the rebate, practices must disclose to the Revenue Office that it has relevant contracts and must pay payroll tax in relation to the wages paid under those relevant contracts. Practices will then be entitled to the rebate, which will be payable by the Revenue Office either as a refund, or as an offset against other payroll tax liabilities which the practice may have accrued. Accordingly, practices are advised to ensure that they have kept clear and accurate records of the following:

• The number of general practitioner services which have been bulk-billed and the number of general practitioner services that have not been bulk-billed;
• The locations where general practitioner services are provided (if the practice operates more than one medical centre) and the relevant portion of bulk-billed attendances at each site;
• The pro-rated calculations of the practice where a general practitioner works at more than one medical centre location;
• The wages of each relevant general practitioner for the financial year;
• The payroll tax payable for the financial year when the relevant general practitioner wages are included; and
• The payroll tax that would be payable for the financial year if the relevant general practitioner wages are not included.

Other than set out above, there are no further exemptions or rebates applicable to practices who have relevant contracts, and payroll tax liability will accrue in relation to those arrangements on and from 4 September 2024.

Next steps

For further information on the application of the Rebate, or if you would like to speak to someone about whether your arrangements with practitioners may be liable for payroll tax, please call Avant Law on 1800 867 113, or to organise a confidential discussion at a time that suits you, please click here