While William Buck welcomes the Queensland Revenue Office’s (QRO) Payroll Tax Ruling issued yesterday, we believe there are still some areas that require further work and clarity.
The new ruling:
- Confirms that when patients make payments directly to practitioners, payroll tax will not apply.
- Confirms that when payments are made directly to the practitioner through Medicare benefits assigned to the practitioner, the payments will not be considered deemed wages for payroll tax.
- Confirms that where a medical practice collects patient fees on behalf of a doctor, the payment made to the doctor will be treated as deemed wages and therefore subject to payroll tax.
Paul Copeland, Head of Health Services at leading accounting and advisory firm William Buck said while the new ruling clarifies a few pain points from the previous one, issued on 22 December 2022, there are still some scenarios that the QRO has not clarified.
“The QRO has still not provided a worked example of a practice being engaged to provide services to the practitioner and using a clearing account as part of its service offering,” said Paul.
“And, while the ruling provides an example on the use of unit trusts to engage practitioners whereby instead of receiving a payment for services, they would receive a distribution from the trust, it looks upon this scenario negatively.
“However, the example provided was with only one practitioner. As such, further consideration is likely to be needed should you wish to pursue this option,” Paul explained.
The ruling also indicates that where patient fees are collected by a ‘third party’, including but not limited to a company, a trust account, or even a practitioner-controlled entity on behalf of the practitioner, the subsequent payment to the medical practitioner would still be deemed wages for payroll tax purposes.
Paul said a solution to this issue would be for doctors to trade as sole traders.
“In most cases, this option will not significantly impact taxation or asset protection for the doctor. The practice would still need to ensure that its services agreement is clear that the practitioner is engaging the practice to provide services to facilitate the practitioner providing care to their patients,” said Paul.
Hopefully, this ruling signals the beginning of the end of payroll tax being an issue for general medical practice. Importantly, the wider medical industry, also impacted by this ruling, still needs to be aware that payroll tax could apply to their arrangements as well.
“The end of payroll tax as an issue for general practice can hopefully lead to a great focus on the need for more doctors in our communities and how to once again attract medical graduates to train as general practitioners,” said Paul.
