Payroll tax: what to do

By John Deery

Payroll tax has been on the agenda for practice owners since the successful prosecution of the Optical Superstores by the Victorian State Revenue Office in 2019. 

There is an active audit program ongoing within NSW. Our members in WA have also reported facing SRO audit as well. 

The crux of the matter is dependent upon the relationship between your business and the contracting doctors. 

The SRO determines the nature of that relationship looking at various factors. 

Firstly, they will look at the contract you have with your contracting GPs. If you don’t have a contract, then it would be a good idea to get this organised now. 

Your contracts should be clear that:

The GPs are contracting your business for services. They are seeing their patients and renting space from you. 

The services provided by you to them and by them to you. 

The ATO and Fairwork have several resources regarding employee vs contractors which should help you in developing your contracts. (links at end of article)

Secondly, practical matters regarding to the administration of the practice.

It should be clear with your contracting GPs that they are contracting you. The SRO will likely ask your contractors the nature of this relationship. 

There should be separate bank accounts for the collection of all contractor payments and payments made for the practice expenses. 

All payments to contractors should come from the collection account. 

All payments for business expenses should come from the expense account. 

The service fee should be paid from the collection account to the expense account. 

There should never be any expenses paid from the collection account and vice versa. 

Clearly the business should not be paying superannuation on behalf of the GPs. 

Yours

Dr John Deery

PS We are wanting to grow our membership. If you know a practice owner that wants to get involved in political advocacy for the business of general practice please tell them about us. 

https://www.fairwork.gov.au/ArticleDocuments/723/Contractors-and-employees-whats-the-difference.pdf.aspx
https://www.ato.gov.au/Calculators-and-tools/Employee-or-contractor/?2015SmallbusinessnewsroomDecember=

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