The Queensland Revenue Office has issued an updated public ruling on relevant contracts and medical centres (PTAQ000.6.2).
For the most part, the new ruling remains consistent with the original ruling, with some notable additions, as detailed by Hayley Lock, Stacey Biggar and Ritika Dongre.
Common payment arrangements
What are considered deemed wages for payroll tax purposes?
The good news is that the updated ruling confirms medical centres will not be subject to payroll tax on:
- out-of-pocket patient fees paid directly to the practitioner from the patient; or
- Medicare benefits assigned by the patient to the practitioner and paid directly to the practitioner from Medicare.
Importantly this only applies if payments are directed to an individual/sole trader practitioner.
Alternatively, if payments are made by the patient or Medicare direct to a practitioner’s interposed entity (such as a company or trust) and the practitioner’s entity then allocates a portion to the practitioner and a portion to the medical centre, the payments are deemed wages paid or payable by the medical centre.
While the update may provide a way forward for some medical centres, there remains several common payment arrangements (including arrangements through third parties such as clearing houses) which are considered deemed wages and having payments flow direct from patients to individual practitioners will likely not be a commercially viable option for some medical centres.
There is also no guarantee that the other states (Victoria, New South Wales, Australian Capital Territory) which have previously issued rulings similar to the original ruling will follow suit with the Queensland updates.
Is my business deemed a medical centre or administrative service?
An attachment to the public ruling outlines the factors to consider in determining whether a medical centre business is being conducted, as opposed to an administrative service business.
If a medical centre business is not being conducted the ruling will likely not be applicable.
Factors to consider include (but are not limited to) how the business is promoted/advertised, who determines billing practices and nature of medical services to be provided, who determines hours/rosters, who retains control over patient records, who has concerns about patient dissatisfaction and the extent of restrictive covenants on practitioners.
Do medical centres have operational or administrative control over practitioners?
An attachment outlining the additional factors that may indicate that a medical centre has operational or administrative control over a practitioner has been included in the ruling.
If a medical centre does not have operational or administrative control over a practitioner, it is less likely that there is a relevant contract.
Factors to consider include (but are not limited to) specified periods of work, leave policy, specified location where services are to be provided, compliance with operating protocols and patient fee/payment protocols.
If your business is impacted by these changes and you would like to discuss your specific situation with a specialist in payroll tax, please contact us.
