NSW Payroll tax update
We have engaged a payroll tax consultant to communicate with NSW Revenue to assess their current position regarding the “Optical Super Store Case”.
We have been advised all State based revenue offices continue to view the Optical Super Store Case decision as a precedent for applying the “relevant contract” provision and assess the net payment of fees to doctors attending a medical centre as “assessable wages for payroll tax purposes” for the medical centre.
We have lodged various cash flow management scenarios to NSW Revenue for their interpretation. One example being:
The medical centre collects the patient fees for the attending doctor
The medical centre transfers 100% of the patient fees to the doctor’s bank account
The doctor pays the required facility fee to the medical centre bank account.
NSW Revenue advised this banking system between the medical centre and the attending doctor is not precluded from the “relevant contract” provision.
NSW Revenue have advised to avoid the assessment of payroll tax on the net payment of the fees from a medical centre to a doctor, the following should occur:
The attending doctors bank their own patient fees in their own bank account, not into the bank account of the medical centre
The only deposit in the medical centre bank account should be the payment of the required facility fee for using the medical clinic services
A written service agreement which clearly defines the services provided by the medical centre and the separation of the doctors medical practice and the medical centre administration services
When referring to attending doctors on the medical centre website, there is no interpretation they could be employees of the medical centre
It is preferable the doctors are not equity holders of the medical centre
To reduce the risk of NSW Revenue applying payroll tax on the payment to the attending doctors, the medical centre should not be involved in the banking of the patient fees.
Various professional medical, accounting and legal associations are monitoring this payroll tax issue.
If you are concerned about the application of payroll tax to your medical clinic on the payments to your attending doctors, please contact your consultant.