No patient "Sick Tax" Fee Needed!: "Tenant Doctor" Payroll Tax Exemption
David Dahm
Experienced National Medical and Health Accountant and Practice Owner Adviser | Columnist
No patient "Sick Tax" Fee Needed!
Time to turn a problem into an opportunity
Preventable payroll and income tax non-compliance fears are harming practitioner recruitment, retention and access to patient care.
The AMA in the ACT reported this month that a general practice has been contacted by their local ACT Health Services Commissioner Commissioner after a patient had made a complaint about a practice letter supporting a GP's fight against the ACT Government's GP payroll tax. The AMA strongly advised not to use patients to lobby for a payroll tax exemption.
Patients and practitioners require certainty.?
The cost of complying
No practitioner wants to be part of a "Medical Centre" with tax-related issues. Nowadays, many practitioners are inquiring about compliance and requesting independent legal and accounting documentation as evidence.?
The Australian Tax Office also expects this,, click on here for their recent "Deemed Employee Contractor" ruling.?
No practitioner does not want the Australian Taxation Office (ATO) to cancel their Australian Business Number (ABN) and Goods and Services Tax (GST) refunds on service fees a Medical Centre has charged them.
For a Medical Centre the estimated tax liability for a non-compliance audit for payroll and income tax, spanning over 5 years, can be around $250,000 per full-time equivalent GP practitioner.
This excludes additional charges for penalties (up to double the outstanding liability), interest, accounting, and legal fees.?
To rectify any issue,?the costs for resolving the problem are less than 2% of this liability, and ongoing costs amount to less than 0.5% per year thereafter.
There is good news, it is possible to remain compliant
The QLD amended payroll tax ruling affects everyone in Australia. The Ruling places practical context to long-held prevailing High Court and Federal Court laws. As detailed below, the QLD ruling has made it much clearer that it is possible to remain compliant.
After conducting an independent legal and accounting review, there may be some necessary changes to be made. Once these changes are addressed, you can return to your normal practice operations. Everyone must be involved both the practitioners and Medical Centre ("Medical Business") and or Service Entity "Administrative business" staff.?
How does the QLD Revised? Payroll Tax Ruling affect you?
The QLD amended ruling has doubled the size of the original ruling to 29 pages. It has added 13 New explanatory pages and added 44 new multi-factorial conditions that apply. They are based on correlation and not causation of facts.
Source: Revised QLD payroll tax ruling;?Relevant contracts—medical centres Public Ruling PTAQ000.6.2?9 September 19, 2023
The Queensland payroll tax RACGP media reports Direct (Separate) Practitioner Banking payroll tax exemption media reports appear to be dangerously oversimplified.
We have dissected the latest QLD Payroll Tax Changes with some helpful self-assessment checklists and more detailed webinar examples click?HERE. ?For our FREE national webinar with The?Medical Republic click HERE.
The revised landmark QLD Payroll Tax Ruling published on 19th September 2023, may be adapted in whole or in part by your local State Revenue Office. We highly recommend that all practices and practitioners review their arrangements against this Ruling.?
Many practices are complying but find when they compare themselves to the new (44) examples/criteria they may been either poorly advised or implemented.
No matter where you practice, your arrangements should be reconfirmed against these new criteria.
After all, they are legally based on long-held legal principles decided by the High Court and Federal Courts.
Since 1978, this QLD Ruling has confirmed our current Tenant Doctor position.?
It is a landmark Ruling that is not legally binding; the Court has the final say. The Queensland Ruling amendment:
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Key Takeaways
You may need to call your “practice manager” an office manager and your “medical receptionist” a receptionist.?
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The QLD Ruling has confirmed our long-held view that the Tenant Doctor (“Administrative business”) Model may be the only SAFE WAY forward for payroll and income tax purposes.?
Employing Practitioners is a risky alternative?
There is a legitimate commercial and medico-legal reason why service entities (i.e. based on the Tenant Doctor Model based on the “Administrative Business” solution) have been widely used by practices.?
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The alternative is to employ practitioners.??
This may be a riskier model.?
The practice owner(employer) will become vicariously liable for all their mistakes, pay payroll, income tax and superannuation on their earnings and will be subject to Fair Work laws. More supervision and control is required. It will more than likely result in reduced practitioner pay or your practice will not be viable.
Just paying the payroll tax is not a simple solution. It may trigger other employment obligations.?
Be careful of a knee-jerk change; it may trigger up to 5 years of back taxes and penalties with many other regulators.?
Where to from here
1. Educate yourself first click. Click HERE for the article (allow 30 seconds to upload. It is an epic must-read)
2. Ask the right questions: Ask your accountant or adviser in writing for advice.?
3. Please consult a medical and health accountant and lawyer who has been through and successfully defended a payroll tax audit before applying for an amnesty or acting on any advice.?
????"I sought advice from a patient who was also a Supreme Court judge.
“It is everyone’s responsibility to know, or to find about, the laws
pertaining to them.”
He was unsympathetic: “
Ignorance of the law is never an excuse,” he stated
Australian Doctor, 21st July, 2022
Stay humble, curious, hungry and focused.
1. Thinking of applying for an amnesty?
If you are still not sure take the payroll and income tax test below before applying.
2. Need a confidential free Practitioner Recruitment and Retention Payroll and Income Tax checklist?
No time to read and want to quickly work out if you have a problem?
Complete a 15 minute checklist.
a. For Medical Centres/Practices/Clinics:?Employee/Contractor v Tenant Provider Self-Assessment Checklist?
b. For Individual Practitioners:?Contractor Self-Assessment Checklist
3. Free Practitioner Recruitment and Retention Payroll and Income Tax Webinar
We are honoured to be invited by The Medical Republic to present a practical Tax Ruling supported “silver bullet” solution to your payroll and income tax dilemma.?
TLDR warning
We have dissected the latest QLD Payroll Tax Changes with some helpful self-assessment checklists and more detailed webinar examples HERE.? For our FREE national webinar with The? Medical Republic click HERE.
Last Updated 7th October 2023
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