Payroll Tax & Medical Centre Businesses
The intricacies of payroll tax in the context of medical businesses, including obligations, taxable wages, payments to contractors, and exemptions. Gain insights on how to register, provide voluntary disclosure, and navigate the Payroll Tax Act of 2011 effectively.
Payroll Tax & Medical Centre Businesses
PowerPoint presentation about 'Payroll Tax & Medical Centre Businesses'. This presentation describes the topic on The intricacies of payroll tax in the context of medical businesses, including obligations, taxable wages, payments to contractors, and exemptions. Gain insights on how to register, provide voluntary disclosure, and navigate the Payroll Tax Act of 2011 effectively.. Download this presentation absolutely free.
Presentation Transcript
Payroll Tax & Medical Centre Payroll Tax & Medical Centre Businesses Businesses David Ellis, Senior Director, Compliance
Topics Topics What is payroll tax How payroll tax applies to a medical business Which payments are captured Amnesties for payments to General Practitioners How to register and provide a voluntary disclosure Note: The slides of this presentation need to be viewed in their totality. This presentation is intended as a high-level overview only and does not replicate all the information and examples contained in relevant ACT Revenue circulars and the payroll tax pages on the ACT Revenue website referenced through-out these slides.
What is payroll tax? What is payroll tax? Tax on wages over the annual threshold of $2 million in Australia- wide wages (or $166,667 per month) Rate is 6.85 per cent Self-assessed tax businesses are expected to understand their obligations, calculate liable wages and lodge themselves Businesses can be grouped together (single threshold)
What are wages? What are wages? Payroll tax is applied to taxable wages Taxable wages is defined broadly, covering o Wages and salaries, and other payments such as fringe benefits, superannuation, employee share schemes, payments to directors and contractors o Payments to contractors are liable for payroll tax unless an exemption applies
What is a contractor? What is a contractor? Payments to a contractor operating under a relevant contract are liable for payroll tax A relevant contract is one where a person supplies services to someone else in relation to the performance of work (unless an exemption applies) The Payroll Tax Act 2011 makes a distinction between employees and contractors as there are exemptions available for certain contracts
The supply of services The supply of services Services Medical Practice Patients Medical Services Services Medical Practitioners
The supply of services (continued) The supply of services (continued) Services Patients Medical Practice Medical Services Services Services Medical Practitioners
The supply of services (continued) The supply of services (continued) The Revenue Office will look at the substance of the totality of the arrangements to determine if the practioner is providing services to the medical centre A contract includes an agreement, arrangement or undertaking, whether formal or informal and whether express or implied The written contract does not have to say the medical professional provides services to the medical practice for the agreement to be a relevant contract
The supply of services (continued) The supply of services (continued) A contract between a medical centre, and a practitioner is a relevant contract if all the following apply: 1) The practitioner carries on a business or practice of providing medical-related services to patients; and 2) While conducting its business, the medical centre: i. provides members of the public with access to medical-related services; and ii. engages a practitioner to supply services to the medical centre by serving patients on its behalf; and 3) An exemption does not apply.
The supply of services (continued) The supply of services (continued) A quote from a recent relevant legal case: Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSW Court of Appeal 40 [45] Unquestionably the medical practitioners provided valuable contractual promises to the applicant, which were conducive to the conduct of the applicant s business. Indeed, it does not strain language to regard the provision of medical services to patients as amounting also to the provision of a service to the applicant, in order to permit it to operate its medical centre business (and without which services the applicant would be unable to operate its business).
Does a relevant contract exist? Does a relevant contract exist? Consider o What your business does and how it presents itself o Arrangements with medical practitioners, including written contracts o Aspects of the arrangements which are informal or implied Read circular PTA041 Relevant Contracts Medical Centres Payroll Tax Act 2011 Seek advice from a relevant professional on the application of the ACT payroll tax requirements to your business arrangements
Contractor exemptions Contractor exemptions There are four exemptions available in the ACT Payroll Tax Act 2011 The ACT does not have all the exemptions which exist in other jurisdictions ACT Exemptions Services which are ancillary to the supply of goods Services are not ordinarily required Services supplied with the conveyance of goods by a vehicle Services are provided to the public generally (of the exemptions, this is the one that might be most applicable to a medical centre business)
Services provided to the Services provided to the p public exemption exemption ublic For the exemption to apply, the practitioner must provide services of the same kind to other principals Refer circular PTA021.1 Exemption for Contractors Ordinarily Perform Services to the Public
Flow of payments Flow of payments Amounts paid or payable in relation to the performance of work relating to a relevant contract are taken to be wages which are liable for payroll tax Payroll tax cannot be avoided by: o Having another entity make the payments o Having another entity receive the payments o Use of another entity by the medical practioner, such as a company or trust
Flow of Payments (continued) Flow of Payments (continued) Payment Less service fee Payment/Medicare rebate Patients Medical Practice Medical Practitioners/Entity Payment of service fee Payment/Medicare rebate Patients Medical Practice Medical Practitioners/Entity Both scenarios are liable for payroll tax. The amount subject to payroll tax will depend on the arrangements between the Medical Practice and the Medical Practitioner/Entity
Automatic amnesty re contractor Automatic amnesty re contractor GP payments before 30 June 2023 GP payments before 30 June 2023 The ACT Government is providing an automatic retrospective amnesty on payroll tax for payments to contracted general practitioners until 30 June 2023. There is no need to apply for this. This means that all payroll tax liability calculations prior to 30 June 2023 do not need to include payments to contracted general practitioners. This amnesty does not apply to contractor non-GP specialist payments
Specific amnesty to support medical Specific amnesty to support medical businesses providing GP services with businesses providing GP services with high rates of bulk billing high rates of bulk billing The ACT Government is providing a further temporary payroll tax amnesty until 30 June 2025. The amnesty is available to medical businesses that provide GP service where: at least 65 per cent of GP attendances provided by the business are bulk billed; and The business has registered for MyMedicare; and the business registers to receive the amnesty with the ACT Revenue Office by 29 February 2024. If you elect to apply for the amnesty, you are required to self-assess your bulk-billing percentage and substantiate it to the Revenue Office if asked. Look at the information on our website.
Summary of contractor GP amnesty Summary of contractor GP amnesty Automatic Amnesty For payments to contractor GPs until 30 June 2023 no registration required. Registration Required Amnesty 1 July 2023 to 30 June 2025 Register by 29 February 2024 Only applies to contractor GP payments Medical practice must meet the following: o bulk bill at least 65 per cent of GP attendances; and o Register for MyMedicare Information is on website: www.revenue.act.gov.au/payroll-tax
Payments to General Practitioners Payments to General Practitioners Registration for tax & amnesty Registration for tax & amnesty Register for Amnesty: Email ACT Revenue at returntaxes@act.gov.au with the subject heading Registration for Medical Practice Amnesty Register for Payroll Tax: Form located on website www.revenue.act.gov.au/payroll-tax No interest or penalties for registrations done by 31 December 2023
Payments to other health Payments to other health professionals professionals If your business is liable for payroll tax on payments to other health professionals, you are required to register and provided a voluntary disclosure for the period from 1 July 2019 No interest or penalties for registrations and disclosures done by 31 January 2024 Register via out website: www.revenue.act.gov.au/payroll-tax
When to register for payroll tax When to register for payroll tax Registrations for payroll tax are required when: o monthly Australia-wide wages exceed $166,667; or o annual Australia-wide wages exceed $2 million Registrations must be done within 7 days after the end of the month that you go over the threshold.
Charities exemption Charities exemption Wages paid by most charities in the ACT are exempt from payroll tax. Charities are required to apply to the ACT Revenue Office to receive this exemption Further information is available on the website: www.revenue.act.gov.au/charities
Further information Further information Payroll Tax Act 2011 Revenue Circular PTA041 Relevant Contracts Medical Centres https://www.revenue.act.gov.au/publications/circulars ACT Payroll Tax Website https://www.revenue.act.gov.au/payroll-tax ACT Revenue Office Payroll Tax Team Ph (02) 6207 0028 returntaxes@act.gov.au David Ellis Senior Director, Compliance Ph (02) 6205 4811 david.ellis@act.gov.au
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