Payments made to contractors may be taxable if the arrangement is considered a relevant contract for payroll tax purposes. Revenue Circular PTA041 – Relevant Contracts – Medical Centres explains the application of the relevant contractor provisions under the Payroll Tax Act 2011 to an entity that conducts a medical centre business.
On 26 August 2023, the ACT Government announced the following arrangements for general practitioners engaged by a medical practice under a relevant contract.
Historical liabilities to 30 June 2023
Medical practices are liable to pay payroll tax on payments made to contracted general practitioners (GPs) unless a contractor exemption applies. Given a potential lack of awareness of the payroll tax treatment of contractors among general practitioners, the ACT Government will waive any payroll tax liabilities up until 30 June 2023 for medical practices which have not paid payroll tax on payments to general practitioners. Medical practices which engage general practitioners under relevant contracts will automatically receive this exemption and do not need to apply for it.
Exemption for liabilities over 2023-24 and
2024-25
To support medical practices in the delivery of services to the community including bulk billing, the ACT Government is providing a further temporary payroll tax amnesty until 30 June 2025. The amnesty for the relevant financial year will be available to GP clinics that:
- Bulk bill at least 65 per cent of GP attendances; and
- Have registered for MyMedicare;
- Register to receive the amnesty with the ACT Revenue Office by 29 February 2024.
Bulk billing requirement
Bulk billing is defined to mean where the practitioner, with the patient’s agreement, accepts the patient’s Medicare benefit as full payment for a service in accordance with section 20A of the Health Insurance Act 1973 (Cwth).
The bulk billing requirement refers to GP non-referred attendances*. It will be determined by the total number of bulk billed attendances divided by the total number of attendances.
*refer Quarterly Medicare Statistics reported by the Department of Health and Aged care - Medicare Benefits Schedule ‘GP non-referred attendance data’.
The percentage of bulk billing is determined at the level of the medical centre as a whole, not at the level of bulk billing by individual GPs. For payroll taxpayers operating at multiple locations, it will be determined by the combined totals at all locations.
For the 2023-24 financial year, the percentage will be calculated by reference to attendances over the six months from January to June 2024. For the 2024-25 financial year, the percentage will be calculated over the financial year as a whole. If a medical centre reaches the bulk billing target in some parts of either of these periods (January to June 2024; or 2024-25), but not over the period as a whole, they will be liable for payroll tax over the whole financial year.
Medical practices that register for the amnesty, and achieve the 65 per cent minimum level of bulk billing over the relevant period, will not be required to pay payroll tax on payments made to contracted general practitioners up until 30 June 2025. This will provide further time for general practices that support the community with reasonable levels of bulk billing to review their taxation arrangements, seek advice, and implement necessary changes to ensure future compliance with their payroll tax obligations.
Other requirements
To be eligible for the amnesty, a medical practice must also register with the Commonwealth Government’s MyMedicare program. This registration must occur prior to or within the financial year in which the amnesty is claimed.
The amnesty is limited to payments made to contracted general practitioners. For the purposes of the amnesty, a general practitioner is a doctor registered as a general practitioner with the Medical Board of Australia.
The amnesty is not available for payments to:
- contracted general practitioners where an exemption applies (because no payroll tax liability would arise if the payment is exempt)
- general practitioners who are common law employees
- other medical doctors or allied health professionals
- other types of contractors.
Practices liable for payroll tax in relation to administrative and support staff, must continue to lodge returns for those wages and will be assessed for payroll tax on those wages during the amnesty period.
Registrations for the amnesty
Medical practices wishing to apply for the amnesty must register with the ACT Revenue Office to be part of the amnesty by 29th of February 2024. Practices wishing to be part of the amnesty for both financial years are only required to register once. To register for the amnesty, send an email to returntaxes@act.gov.au and include in the subject heading “Registration for Medical Practice Amnesty”
Once the registration period has closed, ACT Revenue Office will contact each registered medical practice with details about the requirements for the amnesty.
Medical centres which are not part of the amnesty
Medical business operating in the ACT which:
- engage a medical professional under a relevant contract; and
- make payments to employees and contractors under a relevant contract in excess of $2 million in Australia-wide wages each year; and
- do not meet the requirements of the amnesty;
are required to register with the ACT Revenue Office for payroll tax. Information on how to register can be found here.
Medical centres with liabilities prior to the current financial year are encouraged to make a voluntary disclosure for these periods. This does not apply to payments to general practitioners under a relevant contract for the period prior to 30 June 2023. Once registered, the ACT Revenue Office will work with you to determine your prior year liabilities.
Medical business unsure about their payroll tax obligations should contact the ACT Revenue Office at returntaxes@act.gov.au or via phone on 02 6207 0028. We will work with you to help you:
- determine if you need to register for payroll tax in the ACT;
- identify if you are eligible for any contractor exemptions; and
- explain your ongoing obligations.
Compliance activity
Medical practices operating in the ACT should take time to review their arrangements and ensure they comply with their obligations under the Payroll Tax Act 2011. All medical centres operating in the ACT may be subject to compliance activity, including those that register for the amnesty over 2023-24 and 2024-25.
Presentation
Visit the following link to view the full presentation: Payroll Tax and Medical Centre Businesses Presentation