Two more states fire payroll tax starting gun

Victorian and NSW general practices are on notice, with both states releasing their own rulings and no amnesties in sight.

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General practices in NSW and Victoria are out of legs to stand on when it comes to inaction on payroll tax compliance, as the state governments roll ahead without any concessions.  

On Friday, both Revenue NSW the Victorian State Revenue Office released rulings on relevant contracts and payroll tax as applied to a medical centre setting.  

It comes after news broke on Thursday that one northern NSW clinic had received a $450k payroll tax bill. 

Just a week before that, the Queensland Treasurer told a budget estimates hearing that he expected to collect around $100 million in payroll tax from the state’s 1400 medical centres each year.  

NSW and Victoria aren’t the first states to release rulings on the topic, Queensland having released one late last year and South Australia having released one in June.  

Save for a few references to state-based legislation, the four documents match up word for word. 

The key differences are that neither the NSW nor the Victorian government have committed to an amnesty program like Queensland and SA, nor have they agreed not to backdate any audits like the ACT. 

In fact, the NSW document expressly stated that its ruling was effective from July 2018.  

This means that any practices that do get audited in either of the southeast states could very well find themselves with a bill going back several years.  

While the new rulings do not necessarily contain new information, they do confirm that the revenue offices don’t plan on ignoring the developments in payroll tax case law.  

William Buck director Belinda Hudson said she felt it was now unlikely that either Victoria or NSW will create an amnesty program. 

“This effectively leaves practices in Victoria and NSW exposed,” she said.  

“Add that to the recent announcement in Queensland about the amount of expected payroll tax to be collected over the next few years and it is a real risk that practice owners cannot ignore.” 

Healthcare accountant David Dahm told The Medical Republic that it likely signalled the beginning of the end for practices that have been putting off or ignoring payroll tax as an issue. 

“If nothing else, [these states are] doubling down on practices,” he said.  

“Because it’s now published, you have got fewer excuses than you thought you might have to say you didn’t know about it.” 

Mr Dahm estimated that it would take most practices about a year to shift to a tax-compliant structure and urged them to waste no time in doing so. 

Having undergone a dramatic rise from obscurity over the last few years, payroll tax is also beginning to permeate discussions about the future of primary care. 

Speaking at an AMA-run webinar on Thursday, Department of Health and Aged Care primary care first assistant secretary Simon Cotterell said the department was carefully considering how payroll tax might interact with the incoming voluntary patient enrolment scheme, MyMedicare.  

“Our Minister and the Prime Minister are raising it with their counterparts in the states, because we are concerned about the implications there,” he said.  

Mr Cotterell said that the block funding available through MyMedicare would be split between doctors and practices to help GPs maintain payroll tax-compliant workflows.  

“Most of the money will be delivered directly to GPs via a service incentive payment and some money will be provided to the practice to help support the arrangements,” he said. 

More information on MyMedicare is set to be released in September.