William Buck calls for clearer payroll tax legislation
The professional services company believes various payroll tax issues are still yet to be addressed in legislation despite proactivity from multiple state governments.
Payroll tax continues to be a significant concern for practice owners across Australia and more needs to be done to effectively address these issues, according to William Buck.
William Buck said despite various state governments actively working to clarify the application of payroll tax to general practices, there are still issues which remain unclear and unresolved.
The NSW government has been the most recent authority to draft legislation; however, William Buck believes it has somewhat “missed the mark”.
“New South Wales has taken a more definitive approach, incorporating payroll tax exemptions into its legislation and issuing a new Commissioner’s Practice Note (CPN036) to clarify the application of these exemptions,” William Buck said.
“However, various issues have not been directly addressed in the legislation or the new practice note.
“Clarification would provide practice owners with a clear position on an accepted way forward and allow them to make informed decisions about how they wish to deal with payroll tax.”
The Queensland government has also been proactive in trying to address the persistent issues; however, many practice owners remain confused regarding compliance requirements.
William Buck said the existing payroll tax amnesty, in place until 30 June 2025, provides some relief, yet this could change if the Liberal National Party is elected in the upcoming election.
This is based on the Liberal National Party’s promise to scrap tax for general practices.
“Anxiety persists in Victoria and South Australia as legislation addressing potential exemptions for bulk billing arrangements has yet to be introduced,” William Buck said.
The main issues that remain unaddressed by Australian state governments in current payroll tax legislation and guidelines include the flow of patient fees process, influencing bulk billing percentages, and a return to bulk billing.
Queensland is the only state to have provided clarity surrounding the flow of patient fees process, according to William Buck.
The company said the Thomas and Naaz case highlighted the importance of how patient fees are handled.
“Practitioners who received patient fees directly to their personal accounts were not included in payroll tax assessments.
“This suggests that practice owners should consider implementing a process where all patient fees are paid directly to practitioners, with service fees collected separately.”
Influencing bulk billing percentages is another critical issue without exercising administrative control over practitioners.
Victoria, NSW and South Australia have all announced changes for payroll tax, depending on practices’ bulk billing percentages.
“Achieving a certain bulk billing percentage or influencing it could demonstrate administrative control by the practice over the practitioner, potentially classifying practitioners as contractors for payroll tax purposes,” William Buck said.
After many GP practices abandoned bulk billing prior to the increase in Medicare rates last year, the company noted a return to bulk billing may be difficult in the current market and tough financial conditions.
This would also be made difficult from the lack of documentation for Commonwealth medical taxes, if payroll tax applies.
The professional services company has recommended for all practice owners to review their processes to aid in navigating payroll tax.
“Practice owners are advised to review and update their service agreements, patient forms, invoices and websites to reflect arrangements that comply with the latest rulings if that is the true nature of the arrangement,” William Buck said.
“Trading as individuals rather than under a company or trust structure may also help mitigate payroll tax liabilities for practitioners.”
