On 30 June 2023, RevenueSA released Revenue Ruling PTASA003 detailing the Commissioner of State Taxation’s views as to how the “relevant contract” provisions in Division 7 of the Payroll Tax Act 2009 (SA) will be applied to medical practices in South Australia, and Information Circular 106 providing details of an amnesty available to medical practices relieving them from any liability for additional payroll tax in respect of previously undeclared amounts paid to contracted medical practitioners until the end of the 2024 financial year.
The publications come as a relief to medical practices who have been waiting for information as to how RevenueSA would be approaching these issues following the decision of the Court of Appeal of the NSW Supreme Court in Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue  NSWCA 40.
The issue at hand is whether amounts paid by a medical practice to contracted medical practitioners are taxable wages for the purposes of the payroll tax legislation. The Thomas and Naaz case found that they were, which is contrary to the way in which these amounts have been treated for payroll tax historically. As a result, a significant number of medical practices are now potentially exposed to large reassessments of payroll tax for the past 5 years on the undeclared amounts paid to practitioners.
Thankfully, the Commissioner for State Taxation has announced that she will be granting eligible medical practices with an amnesty, relieving them from any payroll tax liability in respect of amounts paid to contracted medical practitioners that would otherwise be taxable under the “relevant contract” provisions between the 2018-19 financial year and the 2023-24 financial year.
To be eligible for the amnesty, the medical practice must:
- make payments to contracted medical practitioners;
- either be registered for payroll tax in South Australia but not declaring the above payments as wages, or not be registered for payroll tax but be eligible to be registered;
- submit an expression of interest to RevenueSA by 30 September 2023;
- make a voluntary disclosure in relation to the amounts paid to contracted practitioners that have not been declared as wages and (if not already registered) register for payroll tax by 30 June 2024; and
- comply with its ongoing payroll tax obligations after making its voluntary disclosure.
Once an application has been made, medical practice will have until 30 June 2024 to provide to the Commissioner information required to be able to determine the practice’s payroll tax liability.
Importantly, the amnesty is not automatic. Medical practices must apply for the amnesty and provide all relevant information to the Commissioner to enable a determination as to whether the practice is eligible. A decision by the Commissioner that the practice is not eligible for the amnesty is a non-reviewable decision.
If a medical practice does not apply for the amnesty, or if the Commissioner determines that it is not eligible for the amnesty, the Commissioner may go back and reassess the practice for payroll tax for up to 5 years (and potentially even longer) to include the payments to contracted practitioners as taxable wages.
Medical practices wishing to take advantage of the amnesty should therefore act quickly to lodge an expression of interest.
If you run a medical practice and want any further information regarding the application of the payroll tax legislation to your specific circumstances, or wish to discuss lodging an expression of interest for the amnesty or potential structuring opportunities to minimise payroll tax liabilities moving forward, please get in contact with our specialist tax team below.