Medical Professional Payroll Tax – Paused for NSW

Medical Professional Payroll Tax – Paused for NSW

After initially advising there would be no type of tax amnesty in relation to the implementation of Revenue Ruling PTA-041 (Ruling), as they did in Queensland, by the NSW and Victorian Governments when the Ruling was released on 11 August 2023, but then on 24 August 2023, after lobbying from the Royal Australian College of General Practitioners (RACGP) and the Australian Medical Association (AMA), there was turnaround by the New South Wales Government with the Minister for Finance, Courtney Houssos, announcing there would be a 12-month “pause” of payroll tax audits targeting general practitioners and their practices.

Revenue NSW have continued with their stance that the Rulings is merely providing confirmation of the currently payroll tax law and that the outcome from the recent cases is based on the Payroll Tax laws as they have always been interpreted.

The pause will provide for additional time for consultation with the professional bodies and will be enacted though an amendment to the Revenue, Fines and Other Legislation Amendment Bill. However, it is not certain if the pause only relates to General Practitioners of to all medical and health care professionals.

Revenue Office of Victoria have made no announcement of a pause in relation to the their Revenue Ruling – PTA-041 but the RACGP and AMA of Victoria are continuing to lobby the government.

The NSW Government in their announcement also have committed to establish an Inquiry into healthcare funding and the inquiry will also be tasked with identifying opportunities to deliver higher quality, timelier, and more accessible patient-centred care.

Payroll Tax Concern Remains – This is not a time to celebrate and instead practices should carefully consider their position in relation to their payroll tax exposure and the current entity structure to assess whether there are Payroll Tax obligations, immediately. Where there is a Payroll Tax concern then restructuring of the practices entities is one consideration.

Some other considerations include workers compensation and superannuation obligations for those sole trader doctors under a service agreement which is considered a relevant contact. Where a contractor is deemed to be an employee under the payroll tax rules as outlined in Revenue Ruling PTA-041 then it will be likely both Workers Compensation and Superannuation Guarantee may also be applicable where the contract is a Sole Trader Individual. It is therefore also important for Medical Practice to review the Entity Structure of the Medical Professionals under a Service Agreement and confirmed whether there is also an obligation to pay Workers Compensation and Superannuation Guarantee Contributions for the Medical Professional.

Where to now?

There is no time to waste, and you have less than 12 to review your position in relation to Payroll Tax, Workers Compensation and Superannuation Guarantee which are also a concern now. The sooner you contact your adviser then the sooner you can start to get proactive with your future arrangements.