NSW, Victoria prescribe GP payroll tax without amnesty sweetener
State revenue rulings clarify that medical centres will be liable for the levy under service fee arrangements.
Medical centres across Victoria and NSW have been left exposed to payroll tax after the states failed to follow Queensland and South Australia in offering temporary amnesties.
Two near identical rulings from the NSW and Victorian state revenue authorities, both released on Friday, recognise a landmark court decision last year that changed the game for GPs working at medical centres.
With Western Australia going its own way, the other four mainland states were aligned on the issue said William Buck health specialist director Belinda Hudson, except in one crucial respect.
“An amnesty operates differently to an exemption,” the Queensland Revenue Office said. “Under an amnesty, a liability for tax still exists, but certain amounts relating to the tax may not actually have to be paid. Because of this, you may have to provide records so we can assess your liability, even though tax may not have to be paid under the amnesty.”
South Australia announced a similar amnesty in July. The Queensland Treasurer has said the revenue foregone under the amnesty was about $100 million a year.
William Buck health specialist director Gil Abras said the Victoria and NSW rulings confirmed there was no change in legislation and they were merely providing clarity to their longstanding position.
“Historically, typical service fee arrangements where medical centres collect patient fees and then deduct a service fee to cover administration services (billing, room rental, staff costs, etc), were considered by many to be outside the payroll tax regime,” he said.
“After the conclusion of the Thomas & Naaz and Optical Superstores cases which both found in favour of the state revenue bodies, these practices have been highlighted as requiring change.”
“Many practices have been sitting and waiting for this moment to enact change in their processes and agreements – this should be the call to action.
“We are currently aware of audit activity across the states which increases the risk.
“Whatever the next steps are for practices, we are concerned this may ultimately lead to an increased cost of healthcare in Australia as practices deal with the impact of increased payroll tax.”
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