Payroll tax: Qld to rule direct GP payments exempt

4 minute read

The sunshine state will be the first jurisdiction to define what isn’t a relevant contract in payroll tax.

Queensland GPs will have more to boast about than the weather, as the state moves to put an end to uncertainty on payroll tax.

The state’s revenue office will release a new payroll tax ruling some time next week.

While the exact details are not known, it’s expected to outline an example scenario where payroll tax wouldn’t apply in a medical centre setting.

The college’s Queensland chair Dr Bruce Willett told The Medical Republic that he was reasonably certain the new ruling would clarify that when patient fees are paid directly into the account of a doctor – as opposed to the practice – it does not count as “wages” and is therefore not subject to payroll tax.

The best-case scenario is that the ruling will clarify that proper payment flows on their own are enough to exempt a practice from paying payroll tax on contractor GPs.

In any event, it will mark the first time that any jurisdiction has officially clarified what doesn’t count as a relevant contract in relation to payroll tax in the medical centre context.

“As far as it goes, this seems like a major breakthrough,” Dr Willett said.

“We do need to wait and see the details of the ruling next week, so I’m just holding back a little bit of celebration.

“I have the champagne on ice, but I haven’t popped the cork.”

The next step, he said, was working through the details with the Queensland Revenue Office and treasurer.

Queensland’s new ruling won’t be the end of the matter entirely – Victoria has so far refused to make any form of concession for practices, Tasmania and the Northern Territory have stayed mum and the ACT’s amnesty requirements are virtually unattainable.

“I’d put the call out to GPs in Victoria, the ACT and New South Wales to consider now moving to Queensland,” Dr Willett said.  

“Not only do we have good weather, but now we also have the payroll tax certainty that is not available in the other states.

“But I’m being cheeky.”

The AMA also welcomed the announcement, with Queensland president Dr Maria Boulton calling it a “sensible decision”.

“This new public ruling, combined with the amnesty until June 2025, will give practices the time to ensure they comply with the new interpretation of the payroll tax law,” she said.

“We saw practices suddenly being hit with backdated payroll bills ranging from tens of thousands to millions of dollars.”

The AMA Queensland confirmed with TMR that it knew of three separate practice owners who had been hit with seven-figure tax bills.

One owner of a small chain of practices in regional Queensland was purportedly looking at closing all clinics as a result.

It will be up to individual states and territories as to whether they commit to following the same ruling; it is perhaps telling, though, that each state and territory has adopted Queensland’s original public ruling on payroll tax in medical centres almost verbatim.

Rulings are not legally binding, nor are they case law.

A public ruling is simply the view of the state tax commissioner on a particular topic, one which they generally do not depart from.

4PM UPDATE: Paul Copeland, head of health services at accountancy and advisory firm William Buck, said the ruling would “provide much-needed clarity to an issue that has caused significant stress to the health industry”.

Under the “flow of funds solution”, he said, “patients pay practitioners directly for their services and then the practitioner pays a service fee back to the practice.

“This announcement confirms that this process falls outside the ambit of the payroll tax legislation, which is a welcome relief for GPs and practice owners who work tirelessly to care for patients. It also alleviates the need for any allowance for payroll tax to be passed on to patients.”

He said switching to this model would involve changes to practitioners’ nominated bank accounts and to the point-of-sale terminals so that patients’ Medicare rebates could go directly to practitioners, instead of to the practice’s nominated bank account.

The move apparently does not negate Queensland’s payroll tax amnesty, for which the deadline for expressions of interest has been extended from 19 September to 10 November.

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