The State Revenue Authorities across Australia have released a ruling in August 2023 on how state-based payroll tax applies to medical centres (and other allied health centres).
The ruling explains the application of Payroll Tax (via the contractor provisions) on an entity operating a medical centre business that contracts with medical and health practitioners (or the entities of such practitioners) to provide services to patients.
The recent Payroll Tax activity focused on Medical Practices and their engagement of Practitioners is resulting in one of the greatest disruptions of the general practice sector in history.
Impact?
These changes represent a significant shift in the financial landscape for medical centres and could affect their ability to operate effectively. It is crucial for Medical Centres to stay informed and to manage this new risk to avoid unexpected and substantial future payroll tax liabilities.
The practices that are affected by these payroll tax changes will be increasing the cost to see a GP by at least $12.
Others are looking at reviewing and restructuring their service agreements to ensure they better define the relationships between the centre, doctors and patients.
Victorian Government Announcement
The Victorian Government announced that all Victorian Medical Centres/General Practitioners will receive an exemption from any outstanding or future assessment issued for payroll tax on payments to contractor GPs for the period up to 30 June 2024.
It also announced that a further 12-month exemption from payroll tax for payments to contractor GPs, through to 30 June 2025, will be available for any general practice business that has not already received advice and begun paying payroll tax on payments to their contractor GPs on this basis.
Its also been announced that the Victorian Government will provide an exemption from payroll tax for payments to contractor GPs and to employee GPs for providing bulk-billed consultations from 1 July 2025. These changes will support GPs and the important work they do looking after Victorians, however it is important that Medical Centres and GP’s are aware of these upcoming developments to ensure they receive the exemption.
Other states are following with similar measures.
If your Medical Practice is not across the temporary payroll tax exemption available for Contractor GP’s we encourage you to contact us so that we can determine how they impact your practice
Next steps
This issue is complex and requires careful thought to make sure that the intent and structure of your arrangements with tenant GP’s is correct and does not result in a payroll tax liability. Practice owners and tenant doctors need to review their arrangements.
- Review your current service agreements
- Seek professional advice from an Advisor that specialises in Payroll Tax
- Plan for potential liabilities and budget for them in your overall costs
- If you have received communication from the State Revenue Authorities do not ignore it
If your Medical Practice is not across these developments we encourage you to contact us so that we can determine how they impact your practice and what can be done to alleviate any potential consequences.
