Why the SA payroll play may work … and why it may not

4 minute read

It’s unlikely the revenue office read every contract closely before deeming them liable. But whether that matters is up in the air.

Earlier this week, practices across South Australia received a letter inviting them to join in a mass rejection of state revenue office assessments of payroll tax eligibility.

The letter, which came from the Australian General Practice Network (formerly the Australian Divisions of General Practice), also pledged support for a class action lawsuit against the SA government.

Its move was spurred by the fact that seemingly every single one of the 283 practices that applied for payroll tax amnesty in the state was informed that it would be required to pay tax on contractor GPs going forward.

AGPN’s first step will be a legal letter to the SA treasurer outlining concerns that the SRO failed to properly review individual contracts submitted by practices applying for payroll tax amnesty.

To fund the creation of the letter to the treasurer, along with template letters for practices to reject SRO findings of payroll tax eligibility, AGPN requested a small fee.

Practices were given a deadline of 30 April to decide whether they wanted to contribute $110 to AGPN and be added as a co-signatory to the treasurer letter.

Behind the scenes, there has been heated debate over whether this approach has any merit.

AGPN CEO Dr Susan Pearce – an engineer by training who has run GP practices in the past – said the group’s main goal was to get the government’s attention.

“We actually do believe that GPs aren’t employees for payroll tax purposes,” she told The Medical Republic.

Her central contention is that the SRO has not given due consideration to each and every GP contract.

“GPs run their own practices and clinics provide them services so that they can focus on looking after their patients,” she said.

“We think the contracts reflect that and want the government take another look at them and just analyse it from a legal perspective, because it’s not a payroll-taxable arrangement in our opinion and the opinion of the legal team we’re working with.”

If the government would only take another look, the argument goes, it would find evidence contrary to the SRO determination of an employer-employee relationship.

Alongside the AMA and RACGP, the AGPN is also pushing for a year-long extension to the payroll tax amnesty period.

“It is two and a half months until the first of July, so … patients will start to get notifications [that the cost of their appointment is increasing],” Dr Pearce said.

Pursuing a class action, she said, was a last resort.

Given that the individual GP contracts vary according to practices, it’s unclear whether a band of clinics could even successfully set up a class action between them.

South Australian solicitor Lukasz Wyszynski, who has been working on several matters related to medical clinics and payroll tax, says AGPN’s approach is unlikely to succeed.

Both Dr Pearce and Mr Wyszynski do agree on one fundamental point: it is unlikely that the SRO read each individual practice’s contracts extremely closely.

“If I’m an SRO officer and I want to get out of the office before 5pm on a Friday, all I would do is go to the [contract] index or just press Ctrl+F and look for certain clauses and words,” he told TMR.

“Let’s say I look for the word ‘restrictive’ and that word pops in a clause saying [a GP] is not allowed to work at another clinic within 10km of a particular location … that would suggest that it’s an employer-employee relationship.”

But where Dr Pearce believes a second reading would lead to a different outcome, Mr Wyszynski does not.

“It’s not a numbers game,” he said.

“If, out of 100 pages, any one page is bad, that one bad page is enough to … prove that it is an employer-employee relationship.”

Mr Wyszynski added that he hoped to be proven incorrect.

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