The Queensland Government has sought to clarify its position in relation to payroll tax liability in respect of payments to contracted GPs in medical clinics in an updated ruling made 19 September 2023.
Simultaneously, the deadline for registering for the payroll tax amnesty was extended until 10 November 2023.
Revised deadline for amnesty registration
The Queensland Government has implemented an amnesty for payroll tax for certain contracted GPs through until 30 June 2025 citing ‘a potential lack of awareness of the payroll tax treatment of contractors among GPs’.
In order to be eligible for the amnesty the medical clinic must submit an expression of interest (EOI) form by 10 November 2023 (extended from the original deadline of 29 September 2023). 1
Further, the amnesty only relates to payments to certain contracted GPs. It does not apply to GPs who are common law employees.
Registering will require that the clinic make voluntary disclosure to the Commissioner of State Revenue (Qld) and cooperate with the government.
Failure to register before 10 November 2023 will mean penalties and interest in addition to any unpaid tax – if the clinic is liable.
Key clarifications in the updated ruling
The original version of the ruling addressed misconceptions in the medical industry about liability to account for Payroll Tax on payments made to contracted GPs, including in respect of:
· GPs operating as independent contractors for the clinic;
· GPs operating in the clinic under a facilities or services arrangement, in which the clinic charges the GP for administration, marketing and/or accounting support (‘facilities arrangement’).
The broad implication of the original ruling was that these arrangements were ‘relevant contracts’ and payroll tax liability arises under those arrangements.
The updated ruling provides several clarifications about the Queensland Government’s position2. Relevantly, the updated ruling clarifies that payroll tax is unlikely to apply to payments from patients and medicare directly to the GP, in contrast to the situation where the
clinic receives payments on behalf of GPs, and distributes the funds to the GPs at the end of an accounting period.
In our experience, there is variability in the manner in which different clinics operate, and therefore legal advice should be sought by medical clinics that are or may be affected.
Allied Health and other businesses
The lion’s share of the media attention in relation to the recent rulings has been focused on medical centers and clinics. Crucially, the rulings (both original and updated) do not distinguish between medical centers and other businesses operating under similar arrangements. In fact, the ruling expressly applies to:
‘an entity that conducts a medical centre business (referred to as a ‘medical centre’), including dental clinics, physiotherapy practices, radiology centres and similar healthcare providers who engage medical, dental and other health practitioners or their entities (‘practitioners’) to provide patients with access to the services of practitioners’.
Despite this, the amnesty only applies to certain payments made to contracted GPs. This means there is presently no payroll tax amnesty for allied health and other businesses operating under a similar model. Businesses that are not eligible for the amnesty, but that operate under a similar model, should seek urgent legal advice if there is any doubt about whether payroll tax is being correctly managed.
NB Commercial Law has significant experience advising clients on these issues and similar arrangements, if you are unsure whether your business is affected contact our office for an obligation free consultation.
Daniel Dash and Zahra Rashedi are part of the commercial law team at NB Lawyers – lawyers for employers working with individuals and business owners on a range of matters including business sales, property disputes, estate disputes, shareholder agreements, intellectual property, litigation and taxation matters.