The recent Payroll Tax Amnesty announcement is significant news for medical practices in Queensland regarding their decision to register or not with the Queensland Revenue Office (QRO).
The Queensland Medical Association (AMA Queensland) originally raised concerns that opting for the amnesty might imply an admission of liability. You may be aware that QRO recently released a fact sheet following AMA Queensland’s concerns that confirms registering for the amnesty does NOT automatically make you liable for payroll tax. The professional bodies are urging all QLD medical practices to seek professional advice on whether to register for the amnesty in time to meet the EOI deadline on 29 September 2023.
All QLD medical practices should strongly consider the benefits of the amnesty however you need to be ready!
At Prosperity, we offer a payroll tax audit risk review for medical practice operators. This review helps practices determine whether they need to complete an EOI form and assists with preparing the necessary documentation for potential QRO document request and review.
Prosperity continues to advocate for a payroll tax exemption across all states and we support the industry bodies position on this. Medical practices have conducted their business for many years utilising an independent GP service model to run their business, this additional tax will be a significant burden on medical practices already facing challenges ranging from recruiting doctors, insufficient funding, freezing of bulk billing, and many are currently operating on very tight margins.
How can medical practice owners protect themselves?
There are several factors medical practices should consider when assessing their liability for payroll tax. These factors include the nature of room and facility usage, control over practitioners, patient attribution, and fee collection procedures. Ask yourself the following:
Does your medical practice provide use of rooms and facilities as a service or a lease?
- Does your medical practice exercise control over how and when the practitioner operates?
- Are the GPs required to use your medical practice facilities to see and treat their patients, or do they have discretion on how they conduct their own business?
- Are the patients attributed to the independent GP/other practitioner or to your medical practice?
- Are the patient fees collected and paid directly to the GP, or are they collected by your medical practice and then remitted to the GP?
Two potential options for medical centre operators based on recent developments are to either:
- Reduce payroll risk by clearly specifying arrangements as room rental and facilitation services without control over patients and practitioners. Ensure patients are patients of the independent doctor, and services agreements, record keeping, reporting and flow of funds are in line with the specified arrangements; or
- Retain control over the centre’s patients, practitioners, and payments, accepting payroll tax as a business cost and possibly passing it on to patients or doctors.
It is important that impacted medical practices comply with the legislation and state rulings to avoid penalties. Take advantage of the support available and ensure you are fully compliant with your payroll tax obligations. This will help to avoid any potential penalties or prosecution and ensure you are well positioned to continue providing high-quality healthcare services to your patients.
As part of the audit risk review service, we can help you to ensure your billing procedures, record keeping, and internal and external controls are in line with the service agreement. We can also support independent GP practitioners with the collection and reconciliation of their patient income by outsourcing the use of a billing collection service.
Other related news
Payroll tax rulings have now been affirmed for all three eastern states – QLD, NSW and VIC. All medical practices must pay particular attention and take immediate action!
Both NSW and VIC revenue offices have now published their own public rulings which affirms the same view as QLD. In contrast, there is no amnesty program made available by NSW and VIC, only a 12-month pause on any audit activities, leaving still great level of uncertainty for Medical Practices.
South Australia also provides a payroll tax amnesty on payments made to contracted general practitioners until 30 June 2024. Medical practices that successfully apply for the amnesty will not be required to pay payroll tax on payments made to contracted general practitioners between 1 July 2018 and 30 June 2024
To recap – please read Prosperity’s previous article for further details.
If you have any questions regarding the above, contact Director of Business Services and Taxation Ashley Quinton at aquinton@prosperity.com.au or Brendan Campbell at bcampbell@prosperity.com.au. Alternatively, we have Specialist Health Sector Advisers in each of our offices. If you would like to speak to one in your location, call 1300 795 515.
