NSW payroll tax update imminent

Meanwhile, tax lawyers advise clinics to stop and think before rushing into the SA and Victorian bulk billing offer.

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GPs and practice owners in NSW can expect a big update on payroll tax sometime over the next two weeks, as the RACGP confirms that negotiations with the state revenue office have likely reached a conclusion.  

It comes following recent developments in Victoria and South Australia, where respective state governments have announced tax breaks based on the level of bulk billing at each individual practice. 

NSW has been relatively quiet on the issue since a 12-month amnesty on payroll tax penalties and interest was announced last year. It expires in August.  

The college has been at the negotiating table with the state the entire time but has been unable to update members due to an active non-disclosure agreement in place, RACGP NSW chair Dr Rebekah Hoffman revealed at the college’s Practice Owners Conference yesterday.  

“I can promise you there was an awful lot going on behind the scenes,” she told delegates. 

“In New South Wales, we don’t have a government coming up for an election.  

“We don’t have a government with lots and lots of money.  

“We have a government [which thinks] GPs are in the highest income bracket and have lots of spare money to pay tax.  

“We’re still under the NDA, but I can tell you that we will hopefully have an announcement in the next two weeks.” 

Dr Hoffman said the forthcoming announcement would be different to anything announced anywhere else in Australia. 

She also warned that it was unlikely to be “as good as” the second ruling released by Queensland, which outlined the cash flows and business structures that would not incur payroll tax. 

“We’ve fought a hell of a long way to get what we’re hoping it will be, but it’s definitely not going to be perfect, 
Dr Hoffman said. 

Speaking at the same session, Avant Law senior associate Ben Ryan touched on last week’s state government pledges on payroll tax in SA and Victoria.  

At this stage, he said, the promised bulk-billing discount is still just that: a promise. 

Until it is put into legislation in both states, it’s unclear if it will apply in all situations or whether there will be tricky exceptions.  

Mr Ryan warned practice managers and owners against making a unilateral decision that all GPs at their practice should start bulk billing a certain amount.  

“That does seem, from our perspective, a little bit like a trap from the revenue office,” he told delegates. 

“Because if you suddenly say to every single one of the GPs – who we’re trying to say are actually independent doctors not being engaged by the practice – that you must bulk bill, that is control and that will lead to a relevant contract. 

“So please do not do that. Unless they are employees, in which case go hell for leather.”  

He also warned practices against assuming that a contract or payment flow that is working for one practice will be appropriate in other practices.   

Time is better spent being put into creating clear and personalised contracts.  

“The best defence is a clear agreement, a clear website and clear patient registration forms,” Mr Ryan said.  

“You need to make sure that the relationship [between practice and doctor] is consistent across the board.” 

Checking whether the language on the practice website makes it sound like an employer can go a long way with the audit office.  

“The revenue office will pull at any thread that they possibly can,” Mr Ryan said.  

“We’ve seen them quoting people’s websites back to them in audits, saying ‘oh we see that this website says our doctors have been providing care to the community’.” 

The MDO lawyer also impressed the importance of the practice being able to reflect what is in its contracts.  

A clean contract won’t be much use, he said, if the clinic is still enforcing an informal roster policy.  

One way that some practices have taken on this challenge is to work out how much revenue they need from each tenant doctor in order to cover costs and to charge it as a minimum monthly payment instead of a percentage of billings.  

“Before you start worrying about what that is going to cost and how’s that going to work – it’s effectively the same arrangement as what most of you will have your landlords in terms of rent,” Mr Ryan said.  

He also mentioned the surcharge model, in which practices charge patients an additional fee to cover payroll tax. 

Ultimately, Mr Ryan encouraged practices to seek independent legal and accounting advice. 

The RACGP’s Practice Owners Conference 2024 was held at the Cairns Convention Centre in Queensland between 24 and 26 May.