Update: Revenue NSW Payroll Tax Rebate from 4 Sept 2024 for Bulk Billing GP Practices in NSW

The NSW State Government has introduced payroll tax relief measures for General Practices, effective from 4 September 2024.

Here’s a breakdown of the key points:

Types of Relief Available

1. Exemption:
• Applicable To: Wages paid to GPs before 4 September 2024.
• Benefit: No payroll tax will be due on these wages.
2. Rebate:
• Applicable To: Wages paid to GP contractors on or after 4 September 2024.
• Conditions: Practices must meet specific bulk billing thresholds to qualify for this rebate.

Rebate Eligibility

Bulk Billing Thresholds:

• Sydney Metro Practices: Must have at least 80% of their services bulk billed.
• Other NSW Areas: Must have at least 70% of their services bulk billed.

Rebate Calculation:

• The rebate reduces the taxable wages for qualifying GP payments based on the proportion of bulk billed services.

Key Details for Rebate Calculation

• Total Practice: The bulk billing percentage is calculated for the entire practice, not for individual GPs.
  
• Per Location: If a practice is a multi-site practice, the rebate may only apply to sites meeting the bulk billing percentage, and the rebate may need to be apportioned if different sites have different percentages
• Per Service: The percentage is based on the total item number services which have been bulk billed versus all services, not on the value or number of appointments.

• Exclusions:
  • Services provided by registrars (trainees) are not included in the bulk billing percentage.
  • Wages for employed doctors are included in the rebate calculation, but only contractor wages are eligible for the rebate.

Thomas and Naaz Recap

To briefly recap the facts of the case, Thomas and Naaz operated medical clinics in Sydney. A written agreement was entered between the practice and the practitioner which provided that the practice collected patient fees on behalf of the practitioners and charged a percentage service fee against the income collected. The net amount was then paid to the practitioner and the practitioners were providing services to the medical practice under the agreement.

Importantly, as demonstrated in the Appeal Case Summary the Commissioner did not assess the Practice for payroll tax in relation to three particular Medical Practitioners. These Practitioners were excluded as they administered their own claims and banked their patient fees directly into their sole trader bank accounts. Therefore, there was no payment made by the GP Practice to the 3 Medical Practitioners.

In simple terms, leaving service agreement and other sundry issues out:

• Medical Fees banked directly to the Sole Trader Medical Practitioners bank account were excluded from the Relevant Contacts provisions and not subject to Payroll Tax
• Medical Fees collected by the GP Practice and then services fees deducted which resulted in a net payment from the GP Practice to the Medical Practitioner were subject to Payroll Tax

The result of banking the medical fees directly to the Sole Trader Medical Practitioners bank account was further endorsed by QLD Government PTAQ000.6.3 Public Ruling example 12 (Public Ruling PTAQ000.6.3 Relevant contracts—medical centres - Queensland Revenue Office (qro.qld.gov.au). We note however as Payroll Tax Legislation is State Based this ruling cannot be relied upon in NSW.

4 Key Items Practices should consider

The recent Revenue NSW Practice Note focuses on the rebate. Medical Practices (GP & Speciality Practices) should undertake a thorough review of their arrangements to reduce the risk of an adverse payroll tax finding.

The following key areas are still paramount to consider:

1. Banking and practitioner payment processes

The use of a trust account or clearing account where the practice controls the monies and makes a payment to a Doctor now creates significant Payroll Tax Relevant Contract Issues – this is again reiterated by the recent Commissioners Practice Note

2. Practitioner Service Agreements

Like any contract or agreement, it’s only as sound as the information included in it. A poorly drafted agreement the reflect employment terms can leave a practice exposed. See our checklist here Cutcher | Payroll Tax Exposure Checklist

3. Documentation stating that doctors work elsewhere

Doctors working elsewhere and providing services to the general public outside of the practice may potentially be exempt upon application to NSW Revenue. Evidence to support this should be obtained.

4. Advertising channels, including website and social media

Practices should review all advertising channels, such as their website and social media, to ensure that the medical practice is not promoting medical practitioners as staff.

What are the next steps for Practices?

It is important to note that this rebate is for GP Practices who continue to engage with General Practitioners under relevant contracts.

We suggest Practices review their structure and how they are engaging their doctors and consider the alternate options available to mitigate their potential payroll tax obligations.

If you would like to speak with one of our Medical Specialist Advisors regarding your potential payroll tax liability, please do not hesitate to contact us.