New QLD Payroll Tax Ruling Released for Medical Practice

Following on-going review and commentary since 2021 regarding the liability of medical practices to pay Payroll Tax in New South Wales, the Queensland Revenue Office (QRO) has now released a new Public Ruling determining interpretation for QLD clinics.

Announced prior to the Christmas break on 22nd December 2022, the Ruling (PTAQ000.61) reaffirms a similar position taken by Revenue NSW (via Thomas & Naaz Pty Ltd v Chief Commission of State Revenue) highlighting that General Practitioners are likely to be considered contractors under relevant contract provisions and the payments to them will therefore by subject to Payroll Tax.

The Ruling is effective from 22 December 2022 but is said to confirm their interpretation of the law following the 2021 NSW tribunal case. This being the case, there are indications that the QRO will limit their audit activity to the 2021/2022 year onwards.

Important Ruling Points

The Ruling targets medical and allied health practitioners providing services onsite at medical centres, including dental clinics, physiotherapy practices, radiology centres, and similar providers.

It provides greater clarification of their interpretation of the relevant contractor provisions and advises a relevant contract between a medical centre and a practitioner exists if all the following apply:

• the practitioner carries on a business or practice of providing medical-related services to patients;
• in the course of conducting its business, the medical centre:-
  • provides members of the public with access to medical-related services; and
  • engages a practitioner to supply services to the medical centre by serving patients on its behalf; and
• an exemption does not apply.

The Ruling also provides a number of useful examples of where a relevant contract will and will not exist.

Exemption Eligibility to the Ruling - What is Available?

The Ruling identifies three likely exemptions from the relevant contract provisions between a medical centre and a practitioner, which are:

• the practitioner provides services to the public generally - with the practitioner providing services of a similar kind to other medical centres and hospitals. However, prior to claiming this exemption, the medical centre is required to apply to the Commissioner for a determination; or
• the practitioner performs work for any one medical practice for no more than 90 days in the Financial Year; or
• services are performed by two or more persons - with the second or subsequent person(s) being a specialist healthcare provider.

Immediate Action Items Required by Medical Practices

There has been indication from RACGP and AMA that the QRO will limit audits on medical centres to the 2021/22 financial year and future years. In light of this, we recommend you:

1. Review current arrangements with health practitioners, including arrangements from 1 July 2021;
2. Determine whether any of the exemptions may apply and ensure evidence/documentation is kept;
3. Consider whether a voluntarily disclosure may be relevant for the 2021/2022 financial year and ensure relevant contracts are included in the current 2023 payroll tax returns.

We are also of the understanding that RACGP and AMA are meeting with QRO further to try to negotiate a more reasonable approach to this issue.

For More Information

As additional information is released, we'll continue to keep you updated on the changes and what this means for your practice for the purposes of payroll tax.

In the meantime, should you require an assessment of your practice structure and whether your Services Agreements will be subject to "relevant contract" determination, please contact us on (07) 3002 2699 | info@agredshaw.com.au.