Payroll tax: Qld practices could owe $71k per year

4 minute read

Despite talk of an ‘existential threat’ to general practice, just 7% of Queensland practices have signed up for amnesty.

Queensland Treasurer Cameron Dick expects to collect about $100 million in payroll tax from the state’s 1400 general practices each year, or an average of around $71,000 per year per practice. 

Only 93 of the state’s 1400 practices put up their hands for the payroll tax amnesty, under which they would not face an audit until 2025-26.  

Following a 2022 ruling in NSW that clarified the meaning of a relevant contract as applied to medical centres, various doctor groups have lobbied for payroll tax concessions for primary care. 

For years, many practices have operated under the assumption that tenant doctors are contractors, rather than employees, and thus do not incur payroll tax.  

The ruling in the Thomas and Naaz case flipped this assumption on its head. 

Because of Australia’s harmonised contractor provisions, it automatically applied in all states except WA.  

So far, Queensland and South Australia have announced temporary amnesty programs for GP practices that voluntarily come forward with concerns about their own payroll tax compliance.  

WA told The Medical Republic back in March that it had no plans to pursue the issue.  

Across most states, the rate of payroll tax is about 5% of a business’s turnover.  

Speaking at Queensland’s budget estimates hearing on Tuesday, acting Under Treasurer Maryanne Kelly revealed that only 93 practices had registered for the amnesty, announced in early February, by the deadline at the end of June. 

This represents just 6.6% of a total 1400 practices in Queensland, according to the state branch of the AMA.  

Practices still have until the end of September to lodge an expression of interest with the Queensland Revenue Office. 

Both Ms Kelly and Mr Dick pegged the expected revenue from GP payroll tax at $100 million per annum.  

Ms Kelly told the estimates committee that the figure was based on modelling that included the number of assumed contractor GPs, their average taxable wages and the proportion of contracted GPs’ taxable wages on which employers have been paying payroll tax.  

She also confirmed that no modelling had been done to ascertain tax’s potential effect on the bulk-billing rate or on the potential for more ambulance call-outs.  

Mr Dick, meanwhile, hit back at criticisms from the opposition and characterised payroll tax as largely affecting corporate GP practice chains. 

“It is okay [for the LNP] to sit here and ask questions and complain … but the truth of the matter is if you do not like something, do something about it,” he said.  

“Don’t be weak … if you believe in giving those large corporate medical practices a permanent tax break, say it.  

“But then you have to follow through … with how you are going to fund $100 million in cuts.” 

The AMA Queensland said Mr Dick’s words showed a “misunderstanding” of how payroll tax will affect small business. 

“The vast majority of practices targeted for auditing under the new interpretation of payroll tax law are not large corporates – they are small suburban and regional clinics, owned by mums and dads,” AMAQ president Dr Maria Boulton said. 

Dr Boulton said practices were closing “almost every week” in Queensland and called on the Treasurer to follow in WA’s footsteps and opt out of applying payroll tax to contractor GPs completely. 

As mentioned above, Queensland has harmonised contractor provisions which are shared across all states and territories bar WA. 

Any developments in case law that happen in other states automatically become status quo in Queensland too. 

WA is in a unique position where it would likely have to try its own version of Thomas and Naaz in order to clarify its position on relevant contracts. 

“WA does not have the harmonised contractor provisions of the other states, so the NSW tribunal decision that contractor GPs are in fact medical practice employees for payroll tax purposes does not flow on to GPs operating as contractors in WA,” the state’s revenue office told TMR earlier this year.  

“As such, this is not an issue in WA that requires action.” 

Despite the RACGP and AMA presenting WA’s position as a win, the state is actually just keeping its status quo. 

Because of these differences, it appears unlikely that Queensland – even if it were willing to do so – would be as readily able to scrap payroll tax for contractor GPs as WA was.  

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