In the evolving landscape of Australian tax law, medical practices engaging doctors as contractors are finding themselves under increasing scrutiny by State Revenue Offices. The complexities of payroll tax obligations have become a focal point for audits, potentially exposing practices to significant financial liabilities. This reality highlights the need for strategic legal guidance to safeguard against unintended payroll tax consequences.
Recent legal cases, notably Thomas and Naaz v Chief Commissioner of State Revenue, highlight the rigorous assessment by tax authorities of arrangements between medical practices and contracted doctors. Such cases reveal that payments under service agreements attract payroll tax, especially if the contractual framework does not explicitly align with the exemptions provided under Payroll Tax legislation.
The implications of these legal findings are profound, with practices facing the risk of payroll tax liabilities, plus substantial penalties and interest. These outcomes not only strain the financial health of medical practices but also serve as a cautionary tale for the medical profession at large.
At Tobin Partners, we specialise in providing comprehensive legal services tailored to the unique needs of medical practices. Our approach focuses on aligning operational practices with documented agreements and policies and structural changes to minimise payroll tax.
Our services include:
Contractor Agreement Review and Restructuring: We meticulously analyse existing contractor agreements to identify potential vulnerabilities to payroll tax liabilities. Our goal is to advise on how to restructure medical practices to clearly delineate the nature of the relationship between the practice and the doctors, ensuring compliance with the relevant Payroll Tax Act provisions.
Operational Compliance: Recognising that in some cases, agreements alone do not suffice, we can also advise on implementing practices that reflect the terms of the agreements, further reducing the risk of payroll tax assessments.
Payroll Tax Consultation: Beyond contractual matters, we offer insights into payroll tax calculation, exemptions, and strategies to minimise exposure to payroll tax liabilities.
To explore how we can assist your practice in mitigating payroll tax risks please contact Peter Tobin at peter@tobin.net.au or call 0438 001 809. Let us help you safeguard your practice against unforeseen tax liabilities and contribute to a more stable and prosperous future.
There has been a recent shift in focus by the State Revenue Offices throughout Australia targeting medical practices which engage doctors as contractors. A shift which may have implications for medical practices in regard to payroll tax obligations. It is
Medical and Other Professional Practices and Payroll Tax Because of the decision in Commissioner of State Revenue (Vic) v The Optical Superstore Pty Ltd as trustee for OS Management S Trust & Ors, [2019] VSCA 197 (“the Optical Superstores case”)
Disclaimer: This page provides general information only and should not be taken as legal advice. For advice specific to your circumstances, please consult with Tobin Partners directly.
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