A recent case in which a medical practice received a payroll tax bill of almost $800,000* has shocked practice owners into taking a long, hard look at their own payroll tax exposure.
Scrutiny is intensifying from state revenue offices throughout Australia, including Western Australia, amid investigations uncovering high levels of non-compliance.
Are you doctors subcontractors or employees?
In medical practices, it can be unclear whether your doctors are subcontractors or employees in the eyes of RevenueWA.
You may regard your doctors as independent to the practice, but RevenueWA may not agree. An audit may deem them to be employees, which could put you over the payroll tax threshold and trigger a potentially large payroll tax debt. This is what happened in the Thomas and Naaz case, where a group of medical practices in New South Wales received a retrospective payroll tax bill of almost $800,000.
Careful documentation of business models, systems and service agreements to clarify the service arrangement between your practice and the doctors will help guard against this. Handshake agreements between practice owners and subcontractors will not suffice.