Recent changes to Payroll Tax in Queensland
08 February 2023
Practices including GP, physiotherapy, and dental throughout Queensland are set to face a significant increase in payroll tax after the Commissioner of State Revenue confirmed contracted medical practitioners will now fall under ‘relevant contracts’, according to the Public Ruling PTAQ000.6.1.
Although this will materially impact practices, for practices who have previously been unaware of these changes, there is some hope.
Since confirming the ruling in December 2022, Premier Annastacia Palaszczuk announced that the state is in fact committed to giving certain medical practices a reprieve until mid-2025. This allows practices who were not previously aware of these tax changes to have the liability waived. But those that have already been paying the tax will have to continue doing so. More information will be released in due course as to how to apply the amnesty when available.
Why this impacts medical centres
It’s common for medical practices to engage practitioners as independent contractors, instead of employees of the practice. The medical practice takes the full patient fee and rebate, and after subtracting their service fee, pays out the remaining to the health practitioner as a contractor. This has not previously been considered as paying employee wages.
With the new ruling, these contracted medical practitioners will fall under the ‘relevant contract’ definition (PTAQ000.6.1 section 11). When patient fees are collected and paid to the practitioner it will be included in the practice's payroll records and contributes to whether the tax threshold has been exceeded.
Payroll tax in Queensland is levied at 4.75% for Taxable wages, including superannuation, above $1.3m, and with medical practices with multiple practitioners, nurses, and administration staff, the increase in tax payments will be significant.
Are all medical practices liable for the added payroll tax?
There are three listed exemptions to this ruling.
1. A medical practitioner is only providing a service to the patient and is in no way providing service or value to the medical practice.
This may be generally unrealistic due to the nature of most medical practices. For example, if a GP is unable to see a patient, then the next available GP can pick up the appointment – which would be considered a service for the practice.
2. A medical practitioner who works for 90-days or less for the practice.
This can happen for practitioners who move around, and cover leave for other practitioners, e.g. locums.
3. The service is provided by two or more persons.
For example, a dentist employs a specialist nurse to assist with dental procedures.
The exemptions may be challenging to meet, and some require a determination to be applied for.
Will this impact specialist medical practices?
Not so much, as medical specialists tend to work for themselves, with minimal staff they don’t often exceed the $1.3m threshold. However, it’s important that if you own any sort of medical practice that you are completely aware of your situation and under what circumstances it might change.
How are these changes going to impact people in the community moving forward?
This depends on how the medical practice is able to cover this added cost in payroll, but more than likely this cost will be passed on to the patient and increase medical fees. The concern is that this will impact patients who rely on bulk billing to see a doctor.
This increase in payroll tax is potentially another added expense that the public will have to cover in the face of inflation and interest rates.
Is each state effected by this new payroll tax legislation?
Payroll tax is state based, so this ruling only impacts medical practices within Queensland. However, NSW and Victoria have individually ruled that medical practitioners fall under ‘relevant contracts’, and other states are expected to follow suit. So, if you’re medical practice is outside of Queensland, it would be a good idea to talk to one of our specialists to review your business, and understand the potential implications for you.
What can you do now?
It is highly recommended that you get a full review of the financial position of your medical practice, examine your past and current contracts with practitioners, and consider how you can plan for these tax increases in the future.
If you fall within the amnesty group that will be given a two-year reprieve, now is the best time to assess your position and plan, so that when the time comes, your practice is fully aware of and capable of handling the changes. We also believe that you may be required to register for the amnesty but the details have not yet been finalised.
If you’re unsure of whether you are eligible for the amnesty, our team can help work through it with you to ensure your practice is tax compliant.
Our team of tax specialists have extensive medical practice experience and can work with you to find the right solution and plan for your practice. Whether you’re looking for answers, guidance, or full confidence in your position now and moving forward, get in touch with our team and we can help.
The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the thought or position of Findex (Aust) Pty Ltd 84 006 466 351.
This document contains general information and is not intended to constitute legal or taxation advice. If you need legal or taxation advice, we recommend you speak to a qualified adviser.