Payroll Tax and Medical Practitioners

Late last year, the Queensland Revenue Office (“QRO”) released PTAQ000.6.1 (“the Ruling”) to align Queensland payroll contractor provisions with New South Wales and Victoria.

Under the Payroll Tax Act 1971 (Qld) (“the Act”), payroll tax is generally payable by employers on all taxable wages paid to employees.  The Act extends payroll tax liability for inter alia, amounts paid under “relevant contracts” to a “contractor”.

Professionals in medical practices are generally retained as contractors, as opposed to employees where medical centres generally collect patient fees and Medicare rebates on behalf of practitioners and remit those monies (after a deduction for service fees) to practitioners.

Under the updated regime, a contract between an entity (e.g. medical centre) and a contractor (e.g. practitioners) will be a relevant contract if:

1.  the practitioner carries on a business/the practice of providing medical-related services to patients;
2. in the course of conducting its business, the medical centre, provides members of the public with access to medical-related services and engages a practitioner to supply services to the medical centre by serving patients on its behalf; and
3. an exemption does not apply.

The Ruling sets out that the Commissioner’s view what is a on relevant contracts and is based on The Optical Superstore Pty Ltd v Commissioner of State Revenue [2018] VCAT 169 (“TOS Case”) where it was found that:

A practitioner engaged by a medical centre to serve patients for or on behalf of the medical centre under a relevant contract, supplies services to the medical centre as well as to patients.

This view was supported in New South Wales in Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2021] NSWCATAD 259.

Accordingly, most medical practitioner contractor arrangements will be relevant contracts for the purpose of the Act (however this will need to be assessed on a case-by-case basis), unless an exemption applies.  The three main exemptions are:

1.  practitioner provides services to the public generally;
2. practitioner performs work for no more than 90 days in a financial year; or
3. services are performed under the relevant contract by two or more persons (excluding general business-related services).

The onus on substantiating the exemption with sufficient evidence rests with the medical centre.

Importantly, the main exemption of providing services to the public generally requires an application to be made to the Commissioner each financial year. 

Please contact our office should you require further information in relation to the exemptions, the applicability of the Ruling or payroll tax generally.