Payroll tax - latest rulings, amnesties & audit activity

Payroll tax public rulings

In December 2022, the Queensland Revenue Office released a public ruling addressing payroll tax for health practices.

The South Australia, Victoria and New South Wales revenue offices have since released rulings that are substantively the same as the initial Queensland ruling. Compared to recent decisions of courts and tribunals, these public rulings take a broader view on when a relevant contract will exist. The rulings are not law, but they reflect the revenue offices' interpretations of the law and their approach to audit activity.

The public rulings provide that a 'relevant contract' will generally exist where:

• a practitioner carries on a business or practice of providing medical-related services to patients;
• in the course of conducting its business, the practice provides medical-related services and engages a practitioner to supply these services to the health practice by serving patients on its behalf; and
• a payroll tax exemption does not apply

In September 2023, Queensland released an amended version of its initial public ruling which provides that the current view of the Queensland Revenue Office is that where Medicare benefits and out-of-pocket fees are assigned and paid directly to a practitioner who is a sole trader, these payments will not be deemed wages for payroll tax purposes. To date, no other state or territory has amended their ruling in line with Queensland.

Amnesties & audit activity

Queensland and South Australia announced payroll tax amnesties that only apply to contractor payments made to general practitioners and not to other medial or health professionals. The deadline for these amnesties is 30 September 2023 for South Australia and 10 November for Queensland.

Victoria and New South Waleshad no payroll tax amnesty.

In New South Wales, amendments have been made to the Taxation Administration Act 1996 (NSW), preventing Revenue NSW from conducting payroll tax audits for GPs for a period of 12 months. There will also be a 12-month pause on tax penalties and interest accrued on outstanding payroll tax debts incurred before and at the commencement of the 12-month period.

The ACT has proposed, but not yet legislated, that it will take the following steps:

• waive some historic payroll tax liabilities for medical practices that have not previously paid payroll tax on GP payments, provided these practices register with the ACT Revenue Office by 29 February 2024;
• allow general practices that support the community with reasonable levels of bulk billing until 30 June 2025 to review their taxation arrangements, seek advice, and implement changes to ensure future compliance with their payroll tax obligations; and
• offer a payroll tax exemption on GP payments until 30 June 2025 for healthcare businesses making payments to GPs that are bulk billing 65% of all patients, are registered for MyMedicare and register with the ACT Revenue Office by 29 February 2024.

TheNorthern TerritoryandTasmaniarevenue offices have not, to date, issued public rulings or amnesties regarding payroll tax for health practices, but their payroll tax legislation is harmonised with the other eastern states and territories.

In Western Australia the payroll tax legislation is different, and payroll tax is generally only payable on wages paid to health practitioners where they are engaged as employees at common law.

To ensure they are complying with these changes, practices should seek legal, tax and accounting advice about their operating model and agreements with health practitioners.

We can help you

We have prepared a payroll tax risk indicator checklist for you to use in determining your potential exposure for payroll tax. Download here.

We have also assisted with preparing for and responding to revenue office audits and investigations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.