Payroll tax - latest rulings, amnesties & audit activity
Effective 20 September 2023, a summary of recent payroll tax developments impacting medical and health practices in Australia.
Tuesday, 19 September 2023
Payroll tax public rulings
In December 2022, the Queensland Revenue Office released a public ruling addressing payroll tax for health practices. The South Australia, Victoria and New South Wales revenue offices have since released rulings that are substantively the same as the initial Queensland ruling. Compared to recent decisions of courts and tribunals, these public rulings take a broader view on when a relevant contract will exist. The rulings are not law, but they reflect the revenue offices’ interpretations of the law and their approach to audit activity.
The public rulings provide that a 'relevant contract' will generally exist where:
- a practitioner carries on a business or practice of providing medical-related services to patients;
- in the course of conducting its business, the practice provides medical-related services and engages a practitioner to supply these services to the health practice by serving patients on its behalf; and
- a payroll tax exemption does not apply
In September 2023, Queensland released an amended version of its initial public ruling which provides that the current view of the Queensland Revenue Office is that where Medicare benefits and out-of-pocket fees are assigned and paid directly to a practitioner who is a sole trader, these payments will not be deemed wages for payroll tax purposes. To date, no other state or territory has amended their ruling in line with Queensland.
Amnesties & audit activity
Queensland and South Australia announced payroll tax amnesties that only apply to contractor payments made to general practitioners and not to other medial or health professionals. The deadline for these amnesties is 30 September 2023 for South Australia and 10 November for Queensland.
Victoria and New South Wales had no payroll tax amnesty.
In New South Wales, amendments have been made to the Taxation Administration Act 1996 (NSW), preventing Revenue NSW from conducting payroll tax audits for GPs for a period of 12 months. There will also be a 12-month pause on tax penalties and interest accrued on outstanding payroll tax debts incurred before and at the commencement of the 12-month period.
The ACT has proposed, but not yet legislated, that it will take the following steps:
- waive some historic payroll tax liabilities for medical practices that have not previously paid payroll tax on GP payments, provided these practices register with the ACT Revenue Office by 29 February 2024;
- allow general practices that support the community with reasonable levels of bulk billing until 30 June 2025 to review their taxation arrangements, seek advice, and implement changes to ensure future compliance with their payroll tax obligations; and
- offer a payroll tax exemption on GP payments until 30 June 2025 for healthcare businesses making payments to GPs that are bulk billing 65% of all patients, are registered for MyMedicare and register with the ACT Revenue Office by 29 February 2024.
The Northern Territory and Tasmania revenue offices have not, to date, issued public rulings or amnesties regarding payroll tax for health practices, but their payroll tax legislation is harmonised with the other eastern states and territories.
In Western Australia the payroll tax legislation is different, and payroll tax is generally only payable on wages paid to health practitioners where they are engaged as employees at common law.
To ensure they are complying with these changes, practices should seek legal, tax and accounting advice about their operating model and agreements with health practitioners.
We have prepared a payroll tax risk indicator checklist for you to use in determining your potential exposure for payroll tax. Download here.
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About the author
Stephen Schoninger is a Partner and Head of the Employment & Workplace law practice at Avant Law, based in Sydney. Stephen has over 20 years’ experience practising exclusively in employment, industrial relations and discrimination laws. Stephen is called on for his ability to plainly advise on and pragmatically apply legal principles to manage and resolve complex issues arising in the workplace. Stephen advises employers and employees in the private and public sectors on all areas of workplace law and is an experienced litigator of work-related claims. Stephen also conducts workplace investigations and delivers workplace compliance training. He regularly presents seminars on topical employment and workplace law issues.
Disclaimers
The information in this article does not constitute legal advice or other professional advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of this content. The information in this article is current to
20 September 2023. Liability limited by a scheme approved under Professional Standards Legislation. Legal practitioners employed by Avant Law Pty Limited are members of the scheme. © Avant Mutual Group Limited 2023