Priority Focus Areas for the Healthcare profession in 2023

For my Insights advisory article dedicated to the Healthcare sector, I wanted to speak specifically to the challenges many medical and allied health practices currently face.

The last six-months has seen an increased concentration on the healthcare sector from government bodies and other associations, with one of the key challenges surrounding staff shortages in both metropolitan and regional areas well-documented.

The sector is currently under the ‘microscope’ in this area, but also those associated with telehealth services, and payroll tax - all of which are impacting practitioners and clinics in one way or another.

Telehealth – Technology & the building of the ‘smarter’ practice

One of the biggest developments facing medical and allied health practitioners centres on the evolution of telehealth services, with more practices engaging in digital consultations following the pandemic.

Since March 2020, over 100 million telehealth consultations (across general practice, specialist services and allied health) have been delivered to Australians. For practitioners, telehealth services provided avenues to deliver health consultations via phone or video conference, with clinicians providing diagnosis, treatment and preventative health services without the need for in-person consultation.

As a continuing development within the Healthcare sector and with Medicare opening greater eligibility for access, practice leaders need to give serious consideration to how telehealth digital infrastructure may create further growth opportunities. Especially true, when looking at the future of the practice.

Whilst it is up to the individual practice to assess, from a practice management perspective, the benefits of telehealth can offer greater service delivery growth, improve clinical workflows and practice efficiencies, and potentially reduce patient “no-show” appointments.

However, in building a ‘smarter’ clinic set-up and offering greater scope of telehealth services, practitioners will need to be mindful of increasing cyber security considerations. The need for cyber security awareness has seen a dramatic rise in the last 12 months, meaning practice leadership must ensure they have the appropriate processes and systems to secure confidential patient information and encourage all staff to remain vigilant in data protection.

It is also important to engage with your practice management and patient management system providers to understand their data-security measures, whilst ensuring your systems infrastructure offers best-practice protections.

For general tips surrounding how to protect yourself and your practice against cyber threats, please refer to our previous Insight article – blog.agredshaw.com.au.

Payroll Tax for Medical Practices - Any Further Update?

In speaking to the pain points of many medical and allied health practices at present, it is difficult not to mention the current payroll tax argument that is circulating.

Since our January update, nothing further has been announced at either Federal or State Government level on finding a solution of exempting medical practitioners from the definition of contractor payments for payroll tax purposes.

As a brief recap, the basis of the issue falls where payments made by GP clinics to consulting contractors may be taxable, and where the arrangement is considered a “relevant contract” for payroll tax purposes. The criteria to define these arrangements between a medical centre and a practitioner highlights:

• 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,
  • engages a practitioner to supply services to the medical centre by serving patients on its behalf
• where an exemption does not apply

This also extends to those operators within the Allied Health sector, and other such healthcare service providers – including dental clinics, physiotherapy practice, radiology centres and similar.

Every State has its own payroll tax legislation and tax rate benchmarks, therefore the above will affect practices across Australia differently – with no universal solution currently being discussed. In Queensland, the current threshold for payroll tax sits at $1.3 million in annual Australian taxable wages. The tax rate benchmarks sit at:

• 4.75% for employers or groups of employers who pay $6.5 million or less in Australian taxable wages;
• 4.95% for employers or groups of employers who pay more than $6.5 million in Australian taxable wages

Over the last week however there has been a formal update regarding the proposed payroll tax amnesty offered to medical practices from the Queensland Government. Clarification has now been given, advising that medical/allied health practices which successfully apply for the amnesty will not be required to pay payroll tax on payments made to contracted GPs up to 30 June 2025 and for the previous five-year period (i.e. 2018 – 2025).

The amnesty is limited to contractor payments made to GPs, with eligible practitioners needing to be registered with the Medical Board of Australia. It important to highlight that the amnesty is not available to:

• Other medical doctors or allied health professionals
• Medical practices that are already complying with payroll tax obligations
• New medical practices
• Non-medical businesses that are currently paying payroll tax on contract payments

It is important for your medical practice to individually assess whether the payroll tax amnesty is appropriate, as details regarding what will happen post-June 2025 are yet to be determined.  

In the meantime, as we highlighted in our January article, practices should:

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 voluntary disclosure may be relevant for the 2021/22 financial year and ensure relevant contracts are included in the current 2023 payroll tax returns.

Our team are more than happy to assist in reviewing your structure set-up and assess your payroll tax scenario, therefore please don’t hesitate to reach out.

Temporary Full Expensing - Can You utilise this before End of Financial Year?

Originally announced in the 2020 Federal Budget and extended until 30 June 2023, eligible businesses have the ability to claim an immediate tax deduction for purchases of business assets first used or installed ready to use before the end of this Financial Year.

The measure provides an avenue for your practice to improve cashflow, as well as the opportunity to invest in new equipment and materials for the clinic. It is important to assess how this may be able to support your clinic ahead of End of Financial Year.

Updating old equipment or medical devices could help in the overall development and operating efficiencies of the clinic, with replacements eligible for the tax deduction.

Please remember, to be eligible for the incentive, the practice/business must have an aggregated turnover of less than $5 billion and the depreciating asset must be: new or second-hand, and first-used or installed ready for use by the business by 30 June 2023.

As we move towards the End of Financial Year period, should you consider any new equipment investments for the clinic, please consult with your business adviser on whether the temporary full expensing measures may be applicable to the purchase.

For More Information

As there is likely to be more updates to come from Government surrounding tax implications for the healthcare sector, we will continue to keep you abreast of all on-going developments.

For practitioners, a priority focus will be on payroll tax, therefore should you have any questions on how to structure arrangements, please feel to contact the Archer Gowland Redshaw office on (07) 3002 2699 | info@agredshaw.com.au.