QLD payroll tax amnesty for medical practices
The Queensland Government has implemented a targeted payroll tax amnesty (Amnesty) for payments made by medical practices to contracted general practitioners (GPs).
The Amnesty will allow non-compliant medical practices to ‘press pause’ on their payroll tax obligations with respect to payments made to contracted GPs from 1 July 2018 to 30 June 2025. The purpose of the Amnesty is to allow eligible medical practices to rectify any historical non-compliance and work with the Queensland Revenue Office (QRO) to ensure future compliance.
To be eligible for the Amnesty, an expression of interest must be lodged by 29 September 2023 and additional requirements must be adhered to by 30 June 2025.
Understandably, employers may be hesitant to dredge up issues that have not (yet) been raised by the QRO, particularly in the current economic climate. However, as a result of recent developments in relation to payroll tax, notably the decisions in Thomas & Naaz and Optical Superstore, medical and allied health practices are squarely in the sights of the QRO and face a substantial risk of audit. For details, you can read our article on the Thomas & Naaz and Optical Superstore cases, ‘Healthcare practices under payroll tax microscope’.
The Amnesty will no doubt be followed by a sharp increase in compliance activity from the QRO, aided by the QRO’s increased data matching and analysis capabilities (we expect this process has already begun!).
We recommend that medical practice operators use this opportunity to review their current payroll tax procedures and apply for the Amnesty if they are eligible.
In reviewing their arrangements, medical practices should have regard to Revenue Ruling PTAQ000.6.1, which explains the QRO’s application of the ‘relevant contract’ payroll tax rules to those who operate medical practices, including dental clinics, physiotherapy practices, radiology centres and similar healthcare providers who engage practitioners to provide patients with access to the services of practitioners.
The generally negative response of tax practitioners and medical practice operators to the ruling is suspected to have prompted the decision to offer the Amnesty.
Eligibility for the Amnesty
To be eligible for the Amnesty, a medical practice must be an employer for payroll tax purposes that conducts a medical centre business (as set out in Public Ruling PTAQ000.6.1), referred to as a ‘designated medical practice’.
The medical practice operator must also:
- by 29 September 2023, submit an expression of interest form via the QRO website; and
- by 30 June 2025, register for payroll tax in Queensland (if not already registered) and make a voluntary disclosure to QRO. A voluntary disclosure is generally required to set out all relevant information necessary for QRO to determine the medical practice’s payroll tax compliance. In particular, this should include annual wage information, including total payments to contracted GPs for the financial year in which the disclosure is made and the five preceding years. This may vary if the medical practice has been subject to, or is currently undergoing, a QRO audit.
Where a medical practice is a member of a group for payroll tax purposes, each group member must separately apply and satisfy the eligibility requirements to be eligible for the Amnesty.
Once the Amnesty ends, from 1 July 2025, the medical practice will be required to commence complying with its payroll tax obligations.
See the Commissioner’s Administrative Arrangement for details of the eligibility requirements and the Guidelines for Administration for information on how the Amnesty will be administered. There are some notable exclusions from eligibility (see Practical considerations below).
Benefits of the Amnesty
Eligible medical practices will not be required to pay payroll tax on payments to contracted GPs during the Amnesty period, 1 July 2018 to 30 June 2025. Payroll tax obligations of participating medical practices will recommence from 1 July 2025, where an exemption to the relevant contract provisions does not apply.
The Amnesty is intended to incentivise and support non-compliant medical practices to review their arrangements and ensure that they comply with their future payroll tax obligations. Medical practice operators may also take this period to consider implementing changes to their arrangements to transition to more efficient operating models.
If a medical practice has already paid payroll tax in relation to payments to contracted GPs during the Amnesty period as a result of audit activity, refunds may be available.
The Amnesty will also apply for the purposes of determining a medical practice’s liability for the mental health levy until 30 June 2025.
Some key limitations to be aware of include:
- the Amnesty is limited to payments made to GPs registered with the Medical Board of Australia. The Amnesty is not available in respect of payments made to: (a) GPs who are common law employees, (b) other medical doctors or allied health professionals, (c) other contractors, or (d) contracted GPs to whom an exemption applies (as no payroll tax would otherwise be payable).
- the Amnesty is not available to medical practices that commenced operation on or after 10 February 2023.
- the Amnesty is not available to medical practices that have been lodging and declaring payroll tax payments to contracted GPs before 10 February 2023 without being subject to audit activity. This is a peculiar exclusion, as it means those who have properly complied with their payroll tax obligations with no QRO audit activity will not be eligible for the Amnesty and will be required to continue to be liable to payroll tax as an additional operating cost.
Don’t delay. We recommend that all Queensland medical practices operators review their current arrangements and eligibility for the Amnesty as a matter of priority, so that an expression of interest may be made before the 29 September 2023 deadline.
As always, identifying and disclosing past non-compliance is far more cost effective than managing an audit. You can save yourself a lot of time, money and stress by getting ahead of and making a disclosure during the Amnesty period.
Practices that are eligible for the Amnesty, but which choose not to participate remain exposed to unpaid payroll tax for periods prior to 1 July 2025. In contrast, eligible practices who participate in the Amnesty will not be required to pay payroll tax in respect of their contracted GPs in the period to 30 June 2025.
Hall & Wilcox can assist you with reviewing current and past arrangements, identifying potential exposures, and making Amnesty applications and supporting voluntary disclosures to the QRO.
If your medical practice is not eligible for the Amnesty or does not apply, its payroll tax obligations will continue as usual. Medical practices that do not participate may be subject to QRO compliance activity regarding their current and past arrangements, and may be subject to substantial penalties.
This article was written with the assistance of Tracey Hoffman, Law Graduate.
You might be also interested in...
Tax | 29 Aug 2022
A recent payroll tax decision of the NSW Civil and Administrative Tribunal will further embolden revenue authorities in their payroll tax reviews and audits of medical healthcare practices.
Health & Community | 10 May 2023
The Federal Government’s 2023-24 Budget for health, aged care and disability is welcomed due to its funding of the review and improvements.