Reference to this article appeared in Revenue SA invites you to go tax yourself, The Medical Republic, 2nd July 2023 edition.

For those who want to know whether to apply for amnesty or not read below for more detailed information. 

Should you apply for a payroll tax amnesty?

Increasingly, this is becoming the number one question GP practice owners are asking themselves, especially after South Australia’s payroll tax office appears to have jumped on the bandwagon. 

Other states may follow. 

The answer is no if you comply. There would simply be no need to. 

Anything less than that may be seen as an admission of guilt. If this is the case, then do not apply until you have sought further accounting and legal advice that provides a proven, compliant, and viable solution.

Start implementing this holistic solution now. Do not wait to apply for the amnesty or for an audit. 

How do I know if I am complying?

That answer is simple. For instant feedback, take this free and confidential test:

1. For practice owners:

                     Employee/Contractor v Tenant Provider Self-Assessment Checklist. 

2. For Individual Providers:

                     Contractor Self-Assessment Checklist tool 

Now back to the recent SA announcement. After speaking to my legal colleagues, respectfully, the RACGP SA’s recent South Australian (SA) Payroll tax amnesty announcement may appear slightly premature.

Unusually, at the time of the announcement, the State Revenue Office, called Revenue SA (RSA), had made no public statement on the exact details on their website. The RACGP seems to have deeper insight. (I am happy to stand corrected on this.)

It may be said that it would be premature to speculate on what the exact details of the new RSA’s GP “Sick (Payroll) Tax” amnesty are; as the specifics are usually a matter for each State to determine separately.

From the announcement, the RACGP may have poked the RSA GP payroll tax bear.

Based on the RACGP commentary, impressed with the QRO approach, the SA Treasurer/RSA) appears to be very interested in running their own data collection drive of potentially incriminating information/fishing expedition.

Similar to other States, if you thought you did not have a problem, SA GP’s and practice owners are NOW all on notice.

What is becoming clear is that corporate practices are at higher risk of being considered a “deemed employee” if they pay lump sum upfront conditional payments to practitioners, as a mechanism to recruit and retain their workforce. Any amnesty will give them limited time to sell out of their arrangements.

This is often confused with the more tax compliant traditional (service entity/tenant doctor) practice arrangements Smart individual practitioner owners will be on the lookout for a financially tax safe compliant service facility provider.

Sadly, there will be some collateral damage arising from this latest well-intentioned initiative.

Tax amnesty may provide a lack of urgency and a false sense of security

If the reports are true, SA NOW has a dedicated GP payroll tax task force, and no medical business/practice appears to have had a substantial problem in relation to Payroll Tax. This is not to suggest there are no compliance issues. Having an amnesty declared does not mean you can breathe easy, in fact, it means the opposite.

If it runs similar to the partially retrospective Queensland State Revenue Office (QRO) amnesty, with several onerous conditions attached, then any feeling of instant relief may provide a false sense of security. This means you should urgently contact your legal and accounting advisers now.

An exercise in voluntary self-incrimination?

The QRO amnesty looks ‘deceptively’ straightforward. Unwittingly, it is easy for any GP practice owner or Medical Centre applicant to have an oversimplified understanding of the eligibility criteria and how tax audits and legal prosecutions actually work.

The QRO can easily withdraw their offered  amnesty to you based on the information you provide them. It is incredibly difficult to retract the information you provided the State Government at a later date, unless you were profoundly misled by your legal and accounting advisers.

Some examples of where your application for Payroll Tax amnesty may be refused include: The amnesty only applies to businesses that are considered a “medical centre” (you need to ask what defines a medical centre)

It should be noted that the amnesty explicitly excludes specialists and allied health. 

Furthermore, the QRO amnesty gives no amnesty if you have been deemed to have engaged “common law employees”. 

In the absence of carefully written service or independent contractor agreements, your agreements may instantly deem you to have a taxable employee based on the latest High Court and Court rulings. One word in a contract can make or break your case, such as the usage of the word “delegate”.

See JMC Pty Ltd v Commissioner of Taxation [2023] FCAFC 76. 

Writing a contract takes a little more than a lawyer’s gilded letterhead to sign off on each agreement. For example, to be seen as low-risk, the ATO has indicated you need to do more than just rely on a template.

The lawyer needs proof for each individual practitioner outlining that your business has the correct systems and processes in place, or the judge presiding on your matter (hypothetically) may dictate that your agreement is no more than  confetti, in the event the respective Commissioner’s office  is able to effectively establish the arrangement(s) between the business owner and the practitioner is a sham.

Therefore, solving one tax problem, may trigger a new set of medico-legal, tax, and commercial headaches. 

There are over 21 key commercial and tax laws your legal and accounting advisers, who must (should) work in tandem in relation to each practitioner, need to be aware of before drafting the first word on your contracts, the document of which has been in our experience a key defence relating to questions relating to Payroll Tax.

If you do not have an up-to-date and consistent system, that oversees and enforces your business’ structures and contracts, such as Tenant Doctor TM staff employment job descriptions and staff training, you may not be eligible for the amnesty or any other tax exemption that will potentially be announced in the near future. It is a complex, multifactorial process that the tax authorities follow.

It is possible to become sustainably compliant by spending some time educating yourself. Then obtain more holistic (and less tokenistic) tax and commercial advice from medically experienced legal and accounting professionals. 

Make sure your legal and accounting advisers have secured recent payroll tax exemptions and you (or they) have a clear commercial payroll and income tax solution before applying. You may find you do not need to at all. 

Payroll and Income Tax Pandemic: Poor advice or management?

None of these tax or contractor rules are new. It is possible to sustainably comply. In fact, there is a silver lining.

We have a payroll and income tax pandemic for a good reason. People have deviated from the basic principles of setting up and running a medico-legally safe and sustainable practice

Corporatisation has blurred the lines, creating copycat models that have avoided robust and consistent nationwide legal or tax scrutiny and compliance until now.

It is a convergence of rather empty State and Federal budget coffers, obtaining poor advice (or ignoring the right advice)  and the unfortunate poor implementation of any advice, respectfully arising from either ignorance, hubris, or arrogance. 

Regulators now have access to better tax compliance enforcement laws, including but not limited to data sharing and matching, which make it harder to avoid detection, and they are running public awareness campaigns, including their own professional bodies.

Do not rely on family, friends or fools for advice

Do not rely on your more senior colleagues, corporate head office, family friends, or fools for advice that they have never had a problem, so it will be “ÖK”, or that they are on top of it! 

No matter how well educated or intentioned you are, there can be no oversimplified five minute answer to a complex issue. 

If so, ask for written proof and seek independent professional accounting and legal advice.

If you cannot afford to become compliant, consider becoming an employee

Now is a great time for some serious self-reflection.

Whether you are an owner or a practitioner and no longer want the compliance hassle, becoming an employee is probably a move worth considering. Maybe it is time to sell.

Take a pay cut and loose some freedom and flexibility

Remember, you will need to take a pay cut, have somebody to report to, and they will tell you what to do. Your earnings may not move in line with inflation or interest rates. 

Alternatively, stay in business, accept that you can’t afford to recklessly lose your or someone else’s livelihood, and be prepared to pay to become compliant. 

People do talk in the lunch room; you cannot control this. 

Eventually, they will find out and leave you. Your job is to make people feel safe and not breach their trust, or you may never get this back.  

I understand that paying for lawyers and accountants is a grudge purchase, but with the right ones, it is well worth it.

To protect your financial and personal freedom, it is the cost of doing business.

Ensuring tax compliance should feel normal. It is your ultimate responsibility (not your accountant’s or lawyer’s). It is not really a choice or an opportunity to cut more corners or leave it to others. 

With your adviser’s oversight, be open and transparent with your practitioners. Nobody wins if there is a dispute. It is about eating and sleeping well.

Points to consider when applying for amnesty

If you are considering applying for an amnesty, approach it like the gun amnesty (relating to the farming community). You would not hand in your gun if you needed it later for activities that are usual on a farm. 

Ask your accounting and legal advisers for a total compliance solution before applying. This is not a simple form-filling exercise. 

For the non-compliant, this problem is not going away as easily as COVID. Know that there is a vaccine.  

What we know is that the Tenant Doctor (referred to by the RACGP as “Tenant GP”) approach is a payroll and income tax-tested solution worth considering or refining in your practice. It has also been referred to in the

QRO medical centre payroll tax ruling.

Applying for amnesty may trigger a cascade of related regulatory audits

Your practice could collapse like a house of cards if the amnesty triggers a regulatory minefield. This will have an impact on your profits and, more importantly, on staff morale.

Applying for a payroll tax amnesty may result in more severe compliance issues, such as any additional contractor

income tax

, superannuation, and workcover non-compliance obligations that are not exempt from the amnesty. 

Fair Work may be involved in any underpayment of leave entitlements, which also attracts severe penalties and fines. 

Payroll tax investigations require the payroll tax office to gather evidence. State payroll tax offices are forced to engage in data matching and share it with the ATO and other State and Federal regulators. It is naive to think otherwise.

A succession planning, recruitment, and retention competitive edge:
Be tax literate now or do not own a business; it is not a choice but a personal legal responsibility!

Become tax-compliant and take advantage of  tax safe harbour arrangements. Do not DIY. If you have been dragging your feet, take this seriously now. 

Start by ensuring each practitioner sets up their own independent website that they regularly market to their patients. 

Sadly, the proposed  amnesty will most likely not save you if you are not compliant. 

In fact, it may do more harm than good if you continue to do nothing and do not review your own arrangements now. Whether you are a practitioner or a practice owner, you only have yourself to blame if you continue to do nothing.

Do not unwittingly put yourself or your colleagues on their hit list. Being a healthcare practitioner does not provide special immunity from the taxman. The opposite may be true. 

Do not accidentally expose yourself to an irreversible hornet’s nest of problems that may threaten your local community’s access to GP services, everyone’s livelihood, and possibly your life’s savings. Fighting the tax office is sustainably avoidable. It is time to embrace change now, when you can afford it. It is a myth that you cannot.

Given that other States may follow the Queensland and South Australian example,our free TMR Payroll Sick Tax Solved webinar will address these issues and provide a solution for those who are concerned.

Its important to being open to continuous tax literacy; or if you do not wish to deal with administration and taxation issues, you could consider becoming an employee.

There are more opportunities than problems in the above. 

Ensure you are Tenant Doctor compliant and spend more time with patients and less time with lawyers and accountants.

We are embarking on a new inflection point, to something that I like to refer to  as the “Great GP Emancipation”, with their patients and the community support. Stay humble, hungry, curious, and focused.

Additional resources:

These are some additional free self-assessment checklist resources that can help you get started:

      1.    Payroll and Income Tax  Compliance (slide show)

View our Tax Vax Clinic Program on How to avoid unnecessary medico-legal,payroll and income tax liabilities:The “Five Tenant DoctorTM  Principles” – An Evidenced Based Medico-Legal, Tax Compliance Program click HERE.

     2.    Free Self-assessment Checklists 

  • For Practices: 

                Employee/Contractor v Tenant Provider Self-Assessment Checklist.

  • For Individual Providers: 

                     Contractor Self-Assessment Checklist tool 

     3.    Payroll and Income Tax Webinar(s) 

Payroll and Income Tax Traps and Pitfalls for Medical and Healthcare practices: A Practical Deep Dive Webinar (recorded)

Be on the lookout for our webinar. Register your interest HERE

For more insights visit our blog.

About me: David Dahm BA (Acc.), CA., FCPA, CTA, FFin, CPM, FAAPM, FAIM, FGLF.

Chartered Accountant, Chartered Tax Adviser, Registered Tax Agent, Former AGPAL Surveyor 10 years of service

David Dahm is CEO and founder of the national medical and healthcare chartered accounting firm Health and Life and global Founder and CEO of the not for profit project the International Healthcare Standards and Ethics Board (www.ihseb.org)

After a serious work related car accident in 1989, and nine operations later I continue to be a patient and provider advocate. I enter my third decade as a national Chartered Accountant for Medical and Healthcare practices in Australia. I am a former 10-year Australian General Practice Accreditation surveyor. I come from a medico family. I have served on the AAPM national Board and was the inaugural national Chair of the Certified Practice Manager CPM post nominal. I continue to provide accounting tax and practice management advice to many practices all over Australia.

You know who you are and I thank you for this real honour and privilege to serve you and your community through you. Note, I am not a lawyer please seek appropriate legal and accounting advice. This information is for general information and discussion only.

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