AMA(SA) has successfully advocated for provisions to help private medical specialists understand and navigate their new payroll tax obligations, but many questions remain.

After months of determined advocacy by AMA(SA), a meeting with RevenueSA officials on 19 June answered important questions about how the payroll tax would be applied for private medical specialists from 1 July.

The meeting was convened following persistent efforts by AMA(SA) CEO Nicole Sykes to seek clarification about many aspects of the new cost for private practices.

During the meeting, which included tax experts from AMA(SA)’s preferred legal provider Norman Waterhouse, detailed discussions addressed the complexities of payroll tax implications for members and colleagues.

Some of the answers below are general in nature. AMA(SA) members are encouraged to contact the AMA(SA) membership team with ongoing queries. For additional assistance with specific contractual or financial concerns related to payroll tax obligations, Ms Sykes recommends seeking  legal advice from Norman Waterhouse and financial guidance from preferred financial advisor Hood Sweeney.

My practice is not currently registered for payroll tax. What steps should I take?

You are advised to register with RevenueSA by the deadline of 30 June 2024. It is important to proceed with registration regardless of whether your practice’s taxable wages appear to fall below the threshold or if you have lodged an objection to RevenueSA’s ruling on relevant contracts.

How can I confirm if my practice is already registered for payroll tax?

To verify your practice’s registration status, contact RevenueSA directly at (08) 8226 3750. Keep in mind that prior registration does not necessarily mean your practice remains registered.

I have received legal advice indicating that my practice is not liable for payroll tax. Is there any action I need to take?

Despite the legal advice, RevenueSA advises registration to benefit from the retrospective amnesty. This proactive step is crucial as it protects your practice in the event of an audit where undeclared wages might be discovered. Registering for payroll tax does not constitute an acknowledgement of liability for the tax.

What is the payroll tax amnesty?

AMA(SA) has successfully secured a retrospective amnesty for all medical specialists in private practice, ensuring they will not be assessed for payroll tax for the past five years. This amnesty aligns non-GP specialists with GPs and was achieved through extensive lobbying efforts with the government.

What do I need to do to qualify for the amnesty?

Medical practices with contracted non-GP specialists need to have registered with RevenueSA by 30 June 2024. Registering for payroll tax by this date will have automatically qualified a practice for the amnesty. Those practices with contracted GP specialists that missed the earlier deadline of 30 November 2023 may appeal to RevenueSA under "special circumstances" for late registration, though these cases require extenuating circumstances due to the elapsed time.

I was already registered and paying payroll tax – am I still covered by the amnesty?

If you are already registered and have been paying payroll tax, there are no refunds for previously declared and paid taxes related to medical specialist contractors. No further action is required if you are already registered.

How does payroll tax registration work?

Initially, you must register for RevenueSA online. Following this, you will receive a link to register for payroll tax. During the registration process, you'll enter your practice’s wage data for the previous five years, excluding wages paid to contract medical specialists due to the amnesty conditions. However, you will need to report wages for other staff members. If combined wages exceed $1.5 million in any year, a liability will arise.

What happens after I register?

Upon registration, you will typically be placed on a monthly return schedule. If an annual registration better suits your circumstances, RevenueSA will review and advise accordingly. In July 2024, you will need to provide an estimate of your total practice wages for 2024-2025, which will be reconciled in July 2025.

Why do I need to provide five years’ worth of practice data when registering?

RevenueSA requires this as a part of its record-keeping requirements starting from when you first become liable.

What happens if I didn’t register for payroll tax by 30 June 2024?

Failing to register by 30 June 2024 will exclude your practice from the amnesty for prior years' payroll tax and leave you unprotected against audits for undeclared wages. AMA (SA) has requested an extension to register due to the short lead in time provided.

After registration, what is the penalty for incorrect payroll tax reporting?

Penalties will vary based on the level of culpability and whether the incorrect reporting was deliberate.

What are the grouping provisions, and are interstate practices assessed for payroll tax in South Australia?

Each medical practice that is part of a group with other wage-paying entities, whether in South Australia or interstate, must report wages on this basis. Payroll tax is assessed only on wages paid to employees who perform services within South Australia, and the $1.5 million South Australian threshold considers Australia-wide wages and adjusts deductions proportionally.

What is the 90-day exemption, and how is it calculated?

This exemption applies if a relevant contract involves the provision of services by a person to a principal for no more than 90 days in a financial year. Any work performed on a given day counts as a full day, and the days worked do not need to be consecutive.

Am I liable for retrospective payroll tax payments if I am now retired?

The practice for which you worked holds the responsibility for any due payroll tax. If you were an owner, it's crucial to consult on your specific contractual obligations. You are advised to contact your former practice to determine if they have registered for the amnesty, as this would exempt them from retrospective payroll tax liabilities.

How does the 90-day exemption apply to medical specialists who predominantly work out of hospitals and spend less than 90 days in their rooms but still pay service fees to the service entity?

Advice from RevenueSA regarding this specific scenario is still pending.

If I am liable for payroll tax on the income I receive from patients minus the service fees, are the costs of tools of trade, such as Ahpra fees and medical indemnity, also deducted?

Pending further investigation by RevenueSA.

What are the implications for federal tax, leave, superannuation, etc., for self-employed GPs?

These matters fall under separate regulations by the Australian Taxation Office (ATO) and do not pertain to RevenueSA. For detailed guidance, further advice should be sought from the ATO.

Will the SA Health exemption apply to payments under contracts with local health networks?

Clarification on this matter is pending. Further updates will be provided as they become available.

AMA( SA) requested that South Australia remain harmonised with QLD. Why won't the Queensland model be considered in South Australia?

RevenueSA does not support the approach taken in Queensland, citing practical issues with its implementation in South Australia.

What happens if a test case challenging the application of the payroll tax is successful?

Should a test case be won, the tax assessments affected would be reassessed and impacted parties receive refunds. However, the timeline for such processes remains unclear.

How can a specialist practice agree to an amnesty when we have not received the wording of the amnesty?

RevenueSA has updated its website to officially confirm the amnesty protection for non-GP specialists following discussions with AMA(SA). For more details, visit RevenueSA’s website.

Is it lawful to agree to an amnesty when the bill to legislate it has not yet passed parliament?

RevenueSA confirms that it is not unlawful to agree to the amnesty; however, the most secure approach is to formalise the amnesty through legislation.

Can the timeframe to register for payroll tax and the amnesty be extended?

RevenueSA has agreed an extension would be helpful. AMA(SA) has submitted a request to the Treasurer for an extension to allow time to educate the medical network. The response is pending at press time.

Click here to read RevenueSA's response to more frequently asked questions.