Much has been written about the New South Wales Civil and Administrative Tribunal (NCAT) payroll tax case of Thomas and Naaz Pty Limited v Chief Commissioner of State Revenue which was released on 3 September 2021. It has been over 10 months since the case was released and Medical Professionals remain in limbo and without a resolution.
Many have sought financial, tax and legal advice in relation to their current structure and most Doctors have done what they can to set a course to safe harbour. However Doctors are uncertain about what is ahead for them and their practises. In fact there are many unknowns about how payroll tax will be applied to Medical Professionals including:
- Will there be a Payroll Tax Exemption for Medical Professionals?
- Will a Service Trust Structure as used by the majority of Doctors be exempted from Payroll Tax?
- Will the Payroll Tax rules be applied retrospectively?
- Should Doctors be paid their service fee distribution amount into their own dedicated bank account to avoid Payroll Tax?
- Should a Service Agreement be renewed and updated to ensure Payroll Tax will not be applicable?
At this point in time we do not know what the Payroll Tax Rules to be applied to Medical Professionals will look like and what they will entail.
Until we see a Practise Note or receive guidance from Revenue NSW in relation to their approach toward Medical Professionals and Payroll Tax it is anyone’s guess what might occur in the next few months. What is certain is the impact of the Covid-19 Pandemic on GP Practices and the community has certainly slowed the administration process within Revenue NSW and they are in no rush to release the guidance the Doctors and Advisers so badly need.
Medical professionals are unable to plan for the future without this guidance and, as they face increased cost pressures, the level of uncertainly and stress for Medical Practise owners is growing by the day.
The AMA (NSW) have recently held an online webinar on payroll tax with the Commissioner of State Revenue, Cullen Smythe, and the national AMA president Dr Omar Khorshid. This webinar however failed to provide any positive information related to the timing of the much-anticipated Practise Note or information from Revenue NSW in relation to the rules and how they will be implemented. In fact, the sentiment from the webinar was overwhelmingly negative and gloom with more fear and clarity created from the webinar.
The AMA (NSW) have of course been continuing to recommend Medical Professionals seek legal and accounting advice from people who have an understanding of payroll tax as it related to medical practices. But the concern here is without the guidance required from Revenue NSW what is the point as the advisers are not sure how effective this advice will be.
The AMA (NSW) have a workplace relations team who are trying to guide Doctors in the right direction and support practices to make the right choices. However this is too little too late as the AMA should have engaged with Revenue NSW a lot sooner and lobbied the political parties to alert them of the political time bomb this area may prove to be for the state government.
Rest assured this matter will come to a head and we will find out soon enough just how the payroll tax rules will work for Medical Professionals in NSW and most likely for the worst. But until then there is no further information or clarity available.
Be sure to read our previous payroll tax article Medical Professionals & Payroll Tax – Where to from here? for our suggestions on the steps you should consider taking now.