In a note to clients, Hall & Wilcox warned that state revenue departments across Australia are taking a closer look into businesses specifically operating in the healthcare industry in a bid to ensure compliance with payroll tax obligations.
“The revenue authorities are currently focusing on medical, dental, and optometry clinics, and the manner in which the clinics have structured their arrangements regarding medical professionals at that clinic,” the note said.
“In many cases, medical practitioners are engaged by a service entity (or medical centre operator) as contractors to work in these clinics. The Revenue Offices have sought to apply payroll tax to the payments made by the centre or clinic to the medical practitioners.”
The law firm noted a recent decision in the Victorian Civil and Administrative Tribunal against an optician as an example of this renewed tax focus.
“In Optical Superstore, the applicant was the owner and operator of an optical clinic. The Victorian State Revenue Office (SRO) raised amended assessments for payroll tax in respect of payments made by the applicant to optometrists who provided services to the general public at the applicant’s facilities,” it said.
“The features of the arrangements in the Optical Superstore case will be familiar to medical and healthcare providers, in that the applicant:
• owned and managed an optical store,
• collected income from optical sales and the provision of eye tests to customers, and
• paid a portion of the income from its customers to the optometrists.”
According to Hall & Wilcox, business operators will need to consider the legal agreement they have with relevant medical professionals as well as how patient payments are divided.
“Consult a legal adviser to confirm your payroll tax obligations (if any) on the payments you make to the medical professional,” it warned.
It follows a separate warning by tax and advisory firm HLB Mann Judd in June that payroll tax audits are becoming more frequent, as growing businesses overlook the need to register once they reach the relevant threshold dictated by their state or territory.