Are payroll tax amnesty programs a trap?

5 minute read

States aren’t falling over themselves to disclose their full terms, nor to advise practices how to avoid liability.

As various states and territories announce versions of a payroll tax amnesty program that are conditional on practices registering with a revenue office, GPs are jostling for a good look at these gift horses’ teeth.

So far, the full details of the amnesty programs have not been released, Avant Law senior associate Ben Ryan told an Australian GP Alliance-run webinar on Tuesday.

It’s a particular worry, he said, given that deadlines for practices to express interest in amnesty are beginning to draw nearer: Queensland and South Australian clinics have until the end of September, while Canberra practices have until February 2024.

Earlier this month, the Queensland Treasurer revealed that just 93 out of the state’s 1400 practices had enrolled.

Prominent Melbourne practice owner Dr Mukesh Haikerwal expressed his apprehension plainly, asking if amnesty schemes were “a noose to put your neck into”.

“It’d be nice if you could take [these schemes] at face value and say, ‘well, they’ve said that this is going to give us the time,’” Mr Ryan said.

“But my main problem with the amnesty is that they haven’t actually released the full details of what the amnesty will look like, they’ve just been saying, ‘oh, it’s coming soon, it’s coming soon’.”

The biggest potential advantage of opting in, he said, was peace of mind in knowing that there won’t be a “knock at the door” from the tax office until the end of the period and that, whatever happens, the clinic won’t owe back tax.

“The disadvantages or the risks are that you can opt into that amnesty, but how do you know that the revenue office [will help you] – they say that they’ll work with you to try and make sure that [you’re compliant] and if you do have relevant contracts, they’ll let you know,” he said.

“I don’t know if that’s necessarily going to happen.”

Mr Ryan also told the webinar audiences that a clearer way forward may be asking for clarification on what is not a relevant contract, rather than more state concessions.

“Everyone’s asking for exemptions and blanket exemptions for GPs,” Mr Ryan said.

“I don’t know if you’re necessarily going to get that.

“It might be a better endeavour, rather than asking for an exemption, to just say to the revenue offices ‘hey, you’re very free and willing to give public rulings on what is a relevant contract, but won’t you … please give us a public ruling on what would be the instance if a practice was engaged by the doctors to provide services to them?’”

The Medical Republic has asked that exact question of each of the states and territories, bar WA, over the last week.

NSW and the Northern Territory did not reply before deadline, but the advice from the remaining five was mostly unenlightening.

A spokesman for Queensland said the state revenue office “is considering ongoing developments in caselaw and will provide further advice to stakeholders in due course”, but that taking part in the amnesty process did not automatically make a business liable for payroll tax.

Victoria’s revenue office simply stated that “payroll tax is assessed in the same way across industries and professions – there has been no change to the law or the application of the tax in relation to GPs or medical centres”.

The ACT government advised that “whether payroll tax is payable will depend on the application of the Payroll Tax Act 2011 to the particular facts and circumstances of each business”.

How patient fees are shared and how Medicare benefits are assigned, a spokesman for South Australia said, are just two factors of a contract between a medical centre and a practitioner that would be looked at to form a picture of payroll tax liability.

“The entire contract arrangement needs to be reviewed and all factors considered in determining whether the arrangement is subject to payroll tax either as an employer/employee arrangement or a relevant contract arrangement,” SA’s spokesman said.

Tasmania was perhaps the most helpful, writing back that, while the state revenue office does not provide legal advice on specific taxpayer circumstances, it could give general advice about the application of contractor provisions in the payroll tax law where an “agency service model” is in use or being considered by medical practices.

A spokesman for Tasmania’s Treasury office said contractor provisions were less likely to apply when medical practitioners can choose their own hours and days of work, choose their location of work, are not subject to restraint of trade clauses, only receive administrative services from the medical centre and receive remuneration by reference to patients seen after management fees are deducted.

Particular cash flows, the spokesman said, are not necessarily determinative of whether an arrangement incurs a payroll tax liability and concerned practices should seek independent advice.

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