Anti-money laundering rules are the wrong question. Here’s a deeper one worth asking.
Every week, a practitioner somewhere in Australia walks into their accountant’s office with the same quiet, slightly embarrassed question: am I being paid correctly?
They are not accusing anyone. They simply cannot tell. The Medicare statements look right. The Tyro receipts look right. The bank statements look right.
But put them side by side, and the numbers do not quite line up, and nobody at the practice can explain why.
That question, ‘am I being paid correctly?’, is becoming the most important one in healthcare practice management, and it is about to become a regulatory question as well as a personal one.
Holly Payne’s article in The Medical Republic on 5 May asked whether the new federal anti-money laundering and counter-terrorism financing rules starting 1 July 2026 would catch general practice.
The article closed on a reassuring note: “phew, so I’m probably out of the woods?”.
I want to suggest, respectfully, that the wrong question was being asked. The right question is not whether the new rules apply, but something deeper that practitioners are already asking themselves: across all the rules that touch the way patient money is banked, where do I actually stand, and is anyone willing to sign something that says so?
That is a question with at least four well-established regulatory regimes in its answer, and an emerging fifth, and it starts with the practitioner’s bank account, not the regulator’s.
A quick word about advisers, before the technical bit
None of what follows is a criticism of advisers. The integrated multi-regime question is genuinely outside the scope of a typical compliance engagement, and many advisers may simply not have been asked to look at it.
We tend to be asked specific questions, and we answer the specific question in front of us. Cost, time, and scope all push in that direction.
Assumption management, where everyone gently assumes someone else has looked at the bigger picture, is common, and rarely visible until something goes wrong.
It is also worth saying, plainly, that these laws do not carve out healthcare. They do not carve out any industry that believes itself to be honest.
They are like the tax rules: they apply to everyone, no matter how honest you think you are.
As Lukasz Wyszynski of Hamilton Bailey Lawyers put it to me, these laws were once about tracking down drug dealers, but today they are increasingly about collecting taxes from people who do not correctly report their income.
The regulator is not asking whether your intentions are good. The regulator is asking whether your structure, banking, and reconciliations can prove what you say they prove.
If that sounds tough, here is the more uncomfortable point. We have been here before, recently, and most of the industry walked straight into it.
The pattern we have seen before
Five years ago, the medical and health media suggested to general practices that early payroll tax rulings probably did not apply to them.
The arrangements would likely be fine. The regulator was looking elsewhere.
Practices took comfort, did not change anything, and a meaningful number are now sitting on retrospective payroll tax assessments running into the millions.
For some, Thomas and Naaz [2023] settled the law on a payment flow the bulk of the industry still operates today. In truth, the case did not decide that question.
The court’s comments on the payment flow were incidental observations made in passing while resolving a more complex set of issues, and they have been treated by the wider profession as far more conclusive than the judgment itself supports.
Many felt that conclusion was reached somewhat prematurely; it takes more than banking flows to remain compliant once you read all the rulings and laws that holistically affect your practice and your practitioners.
The commentary then sounded a lot like the commentary now: “on balance, probably not.”
The lesson of the payroll tax episode was not that anyone’s analysis was wrong on its own terms. It was that the analysis was narrow. Each rule was looked at on its own. Nobody was asked the integrated question: what does this banking arrangement mean across all the rules that touch it?
Which brings us back to the question every practitioner is starting to ask, and most practices struggle to answer.
The question every practitioner should be asking
The single most common complaint I receive from practices and practice managers is: “I cannot easily reconcile, quickly, all patient money received to a practitioner’s bank statements.”
That is a big red flag, not only under the new anti-money laundering rules, but for the more fundamental question of whether the practice is correctly billing, collecting, and accounting for patient and practitioner fees in the first place.
If the practice cannot reconcile every income stream to my bank account on demand, how do I know I am? How does the practice know? How does the regulator know?
Very few practices we encounter can prove they can do this end-to-end without difficulty.
It is not because anyone is doing the wrong thing on purpose. It is because doing it properly is genuinely a complex exercise.
It requires the right business model, the right legal structure, the right service agreements, the right accounting and administrative workflows, and the right legal arrangements, all working together. Most practices have one or two of these in place. Few have all five.
The practices that can reconcile cleanly tend to share certain structural features, and those features are worth understanding before the new rules commence.
If your practice manager cannot quickly reconcile patient receipts to each practitioner’s bank account on demand, every regime discussed below is harder to defend, not just anti-money laundering. And the reason most practices cannot reconcile cleanly is hiding in plain sight.
The non-PRODA income most practices forget
A great deal of practitioner income does not flow through PRODA. The streams that most often fall outside automated Medicare reconciliation include:
- Telehealth fees charged direct to the patient or via third-party telehealth platforms
- Department of Veterans’ Affairs (DVA) payments, which sit on a separate stream from Medicare
- Tyro and HICAPS terminal receipts, including private health rebates settled at the counter
- Patient gap payments taken at the front desk, by EFTPOS, or via online payment links
- Workers’ compensation, third-party insurer, and motor accident commission payments
- After-hours, cosmetic, and procedural fees billed privately
- Cash receipts, where these still occur
Each of these is a real income stream. Each one needs to land back in the right practitioner’s bank account, and each one needs to reconcile to the practice management system without manual intervention.
The problem is that many of these streams do not automatically integrate into the major practice management systems (Best Practice, Pracsoft, ZedMed, and others).
Reconciliation is often manual, tedious, leaves a great deal of room for error, requires an army of administration staff, and is at best partial. In many practices it relies on a single staff member who simply knows where everything goes.
The practical step every practice should take, this week, is straightforward.
Go to your practice management system vendor and ask them, in writing, to confirm that all practitioner bank-statement feeds, including telehealth, Tyro, HICAPS, DVA, and gap payments, are automatically recorded in your practice management system and reconcile cleanly to each practitioner’s bank account.
If the vendor cannot give you that confirmation in writing, you have your answer.
Why this matters more if you pay on a percentage, and a word from a former bank auditor
If you are paying practitioners on a percentage of their fees received, the picture is more concerning, not less.
Every dollar that does not make it cleanly into the practitioner’s reconciled income is a dollar that under-reports their share, under-reports the service fee owed to the practice, and creates an audit trail that cannot be defended.
This is one of the main reasons we see practice administration fraud rise during periods of cost-of-living pressure, when more patients pay with undeclared cash and more administrative staff are themselves under financial strain.
It is rarely the headline grand-theft case. It is the slow, invisible drift of receipts that never make it to the system, gap payments that are never recorded and reconciliations that quietly do not balance because nobody has the time or the tools to chase the difference.
Speaking as a former KPMG bank auditor and fraud investigator, the absence of a complete audit trail is one of the most common reasons practices find their books difficult to reconcile.
Every system has gaps. The question is whether the gaps are visible, documented, and closed, or whether they are invisible, accepted, and growing.
Under the new regulatory environment, those gaps are about to be visible whether the practice wants them to be or not.
Related
Near real-time digital data matching, mandatory reporting obligations on advisers, and integrated cross-referencing across Medicare, the Australian Taxation Office, state revenue offices, the Fair Work Ombudsman, and the Australian Transaction Reports and Analysis Centre all mean piecemeal solutions are no longer enough.
The reconciliation has to be end-to-end, automated, and provable. That is going to be forced on all of us within the next twelve months, regardless of whether we are ready.
That answer also tells you something about the regulatory exposure that follows.
One banking arrangement, multiple exposures
Here is the standard set-up still common in most multi-doctor or allied health practices.
Patient fees go into a single practice-controlled bank account, the practice deducts a service fee, and the balance is paid out to the practitioners.
Two things are worth saying plainly about that arrangement, because the article does not.
First, billing and collecting practitioner money is one of many key medico-legal and commercial features at the heart of why most service entities exist (that is, in tenant doctor arrangements).
If you call yourself a medical centre or a practice and you collect contractor doctor income, your arrangements are potentially more complicated under this new, near real-time digital data-matching regulatory environment.
The whole reason the entity is set up, in the typical structure, is to receive patient fees, hold them briefly, deduct a service fee, and disburse the balance, alongside the legal, contracting, employment, indemnity, and operational functions it also discharges.
It is not an “incidental” activity sitting alongside something else. If billing and collecting is one of the entity’s principal commercial purposes, the comfort the article offers around the “incidental” exception may not extend as far as readers think.
Second, tracking high-volume small-dollar transactions is exactly what these laws target, regardless of industry.
The Act does not draw a line between many small flows and few large ones.
The Financial Action Task Force, whose recommendations Australia’s regime implements, specifically identifies high-volume low-value flows as a money-laundering risk under its Recommendation 10.
Volume is a feature of the risk, not a defence against it.
That same banking arrangement, with all of its non-PRODA streams, determines exposure across at least four well-established regimes, plus an emerging fifth, all at once.
Payroll tax
Across Australia, several revenue offices have now issued medical-centre specific payroll tax rulings, but their positions and the available concessions differ significantly by state and territory. Victoria (Revenue Ruling PTA-041, Relevant contracts: medical centres), South Australia (Revenue Ruling PTASA003, Relevant contracts: medical centres) and Queensland (Public Ruling PTAQ000.6.5, Relevant contracts: medical centres) all confirm that, where a medical or healthcare centre enters into a “relevant contract” with doctors or allied health practitioners, the centre is treated as the employer, the practitioners are deemed employees and payments under the arrangement are deemed wages for payroll tax purposes, even if they are described as remittances of patient fees or trust monies.
New South Wales and the Australian Capital Territory have not adopted identical named rulings but, through case law such as Thomas and Naaz and medical-industry guidance, apply the same contractor-deeming concepts to common GP and health-practice structures, while Queensland and the ACT have also introduced targeted GP-only concessions that do not extend to non-GP allied health or specialist practices.
Western Australia, Tasmania and the Northern Territory have not yet issued medical-centre rulings in the same harmonised format, but their payroll tax legislation still contains relevant-contract and contractor deeming provisions which can capture payments from clinics to practitioners, so practices in those jurisdictions cannot assume that an absence of medical-specific rulings means an absence of risk.
All of these regimes emphasise substance over labels: if patient fees are banked into an account controlled by or associated with the practice (including clearing or “reconciliation” accounts) and then redistributed to practitioners, those flows can be treated as payments of taxable wages under the relevant-contract rules unless a specific statutory exemption applies.
In short: if it looks like a duck and sounds like a duck, the revenue offices will treat it as one.
Superannuation guarantee
Dental Corp v Moffet [2020] held that practitioners under similar arrangements can be employees for superannuation purposes.
The same banking flow that triggers payroll tax often triggers a superannuation guarantee charge as well, plus interest, administration penalties, and loss of tax deductibility.
Fair Work and sham contracting
Where the substance of the arrangement looks more like employment than independent practice, the Fair Work Ombudsman is willing to test the structure, and the penalties are personal to directors.
Anti-money laundering
From 1 July 2026, the same arrangement may be a “designated service” under the broadened Act, particularly where the practice entity acts as trustee, provides the registered office for practitioner entities, or sets up companies for them.
And direct practitioner banking does not automatically get a practice around the rules. If your service agreement permits administrative staff to do the billing, collecting, and receipting on the practitioner’s behalf, the practice is still functionally handling the money, regardless of whose name is on the bank account.
Where a practice is found to be providing a designated service, it must enrol with the Australian Transaction Reports and Analysis Centre as a reporting entity, develop and maintain an anti-money laundering and counter-terrorism financing program, conduct customer due diligence on the persons whose money it is handling, and lodge suspicious matter reports where the relevant triggers arise.
The tipping-off rules then prohibit the practice from telling those persons that a report has been made, even where they are the practitioners whose income is being received and disbursed.
None of this is theoretical from 1 July 2026 onwards: enrolment, governance, and reporting all begin from that date, regardless of whether the practice has put the systems in place.
An emerging competition law question
Where supposedly independent practitioners collectively agree on practice fees, including agreeing to bulk bill across the board, there is a live argument that the arrangement looks less independent than the structure claims.
The same fact pattern that raises a competition flag also undermines the “independent contractor” position relied on for tax purposes.
A practice can pass any one of these tests on its own and still be sitting on serious liabilities across the others.
You cannot delegate this to your accountant
Once the new rules commence, your accountant becomes a reporting entity in their own right.
If they form a reasonable suspicion about an arrangement, they may be required to report it to the regulator without first letting you know.
The protection is not delegation. It is getting your structure right and documented in advance.
This is also showing up at the front desk in real time. From 1 July 2026, the new federal Medicare law requiring patient e-signing comes into force, and early reports from clients suggest patients dislike e-signing and are using it as grounds to dispute accounts.
High bulk billing practices are most affected. More patients are paying gap fees in cash only once they understand their rights at the counter, which creates cashflow problems and front-desk friction.
Our working view: private billing and fees will rise, and bulk billing rates will fall.
What practice owners should actually do
Independent legal advice we have obtained agrees with the view set out here.
“My accountant told me” is not a defence against mandatory laws of this kind. The protection is a written undertaking from your accountant and solicitor confirming each regulatory area has been independently assessed.
Three things to do.
First, ask for a written assessment of your current banking arrangement that looks at all the exposures together, not separately. Most practices have only ever had one regime looked at in isolation, usually payroll tax.
Second, ask the adviser who signs that assessment to give you a Professional Undertaking. That puts a degree of shared responsibility on their side, not just yours.
Third, be prepared to restructure if the integrated picture suggests it.
The most defensible arrangements we see are those where the practitioner genuinely controls their own income end-to-end, and the practice charges a genuine service fee for genuine services rendered, rather than functionally handling the practitioner’s money.
That construction tends to pass every test at once. Many current arrangements do not.
A final thought
It has been suggested that most practices will probably not be caught by anti-money laundering rules on their own, and that the carve-out will see most through. The carve-out is real on paper.
The question is how many practices actually qualify on the facts, and far fewer do than the article implies.
Having advised medical and allied health practices nationally since 1992, I respectfully take the opposite view.
Practices and their advisers consistently underestimate how common these banking and practice arrangements actually are. When you look closely at how patient money is received, held, controlled and disbursed, the typical Australian medical or allied health practice sits closer to the regime, not further from it.
My working estimate, drawn from more than thirty years of looking at these structures across every state and territory, is that more than 90% of practices need to take a closer look.
What readers most need to hear is that even where the carve-out is available on the facts, being safe on anti-money laundering on its own does not necessarily make you safe overall.
The mistake of the payroll tax era was treating each ruling as a separate weather report. The better approach is to look at the climate, because the same facts can decide every regime that touches your banking.
I gratefully acknowledge Lukasz Wyszynski of Hamilton Bailey Lawyers for his assistance in the preparation of this article.
David Dahm is a chartered accountant and registered tax agent. He is the principal of Health and Life.
