Specialists in private practice have been issued fresh warnings to get their tax affairs in order amid an escalation in the payroll tax crackdown around the country.
It comes after the Queensland Revenue Office issued a ‘public ruling’ on the levy two months ago (link here) stressing it would begin applying payroll tax on all payments from medical centres to doctors, including those under so-called service or facilities agreements.
The ruling sparked an immediate backlash from GPs, who have historically been exempt from payroll tax under contractual arrangements which said they were not technically working for their practice.
Instead, they and specialists with similar arrangements paid a service fee based on a percentage of their billings in exchange for access to facilities and admin support.
But in a high-profile case two years ago, a chain of primary care medical practices was ordered to pay almost $800,000 in backdated tax after losing a legal battle against Revenue NSW.
The “onus of proof” was determined by the NSW Civil and Administrative Tribunal to rest on the practice, even if their contracts specified otherwise, to demonstrate that they were not employing the doctors.
Last month, the Royal Australian College of General Practitioners launched a public campaign on the issue, taking out a full page advertisement in the Daily Telegraph and urging its 30,000 members to write to their MPs demanding medical practices be exempt.
It cited a member survey which found nearly one in five practices would have to shut their doors if forced to absorb the additional tax burden, while 78% would have to raise fees.
Elena Bytch, the principal of medical accounting firm Prism Accounting, said specialist practices could also find themselves in the crosshairs of state revenue offices, although the impact was likely to be less significant than in general practice.
“It’s not the time for practice owners to be complacent,” she told the limbic.