NSW Revenue Office Payroll Tax Development

The State Revenue Offices around Australia currently have medical and healthcare providers in the spotlight. The recent activity has demonstrated they are looking to expand the application of payroll tax in the Medical and Dental practice professions.

Recent cases include Commissioner of State Revenue v. Optical Super Store Pty Ltd [2019] VSCA197 and Homefront Nursing Pty Ltd v. Chief Commissioner of State Revenue [2019] NSWCATAD145.

The revenue authorities are currently focusing on medical and dental clinics and the manner in which the clinics have structured their arrangements with the attending doctors and dentists at the clinics. In many cases, doctors and dentists are engaged by a service entity. The service entity provides administrative services, including the billing and receipt of payments. At the end of a specified period the fees collected on behalf of the medical and dental professionals are returned less an agreed service fee.

State Revenue Offices are conducting audit activity and investigations reviewing these arrangements to see if the “relevant contract” provisions apply to the payments made to the practitioner. Payments can potentially be classed as wages, notwithstanding the parties are not employer and employee at common law.

This means these types of structures could be reviewed in the future and we may need to assess the potential risk.

We recommend an analysis of your practice structure and documents. Particularly the service fee agreements in light of these recent developments. Ultimately, the strength of the case will depend on the written agreements in place and how the practice is managed on a day-to-day basis.

Please contact your adviser to discuss your particular circumstances.