In the last few months, Queensland (QLD) and South Australia (SA) Payroll Tax Assessment Letters were issued to “Medical Practices or “Contracted General Practitioners” organisations.

Since last year, QLD and now SA have been issuing Medical Practice amnesty applicants notices of payroll tax liability assessments. 

Last week many SA medical practices may have received this interestingly worded notice ‘congratulating’ them for having been accepted and were eligible for the payroll tax amnesty meaning that they had no liability from the period from 1st July 2018 to 30th June 2024 was payable. 

However one glaring caveat applies. In the example sent to one practice it says in the fine print, you are liable for the past 5 years based on the following see section No amnesty if you engage “Common law employees”. 

Many GP Medical practices in  Queensland (QLD) and South  Australia (SA) that applied for last year’s payroll tax amnesty may be in for a rude shock. 

Some Medical Practices have scrambled for a second legal and accounting opinion; others are taking a more dramatic and, in my opinion, unnecessary approach.

Alarmingly they are telling their GP’s to work at other unrelated owner’s (as in competing) locations so they can take advantage of the 90 day payroll tax exemption rule. (I guess this is good news if you are recruiting for new “Tenant Doctors”. )

I am not sure how practical this is.  

There already exists, medico-legally patient and practitioner friendly continuity of care. This  “Administrative Business” model has been promoted by various State regulator payroll tax rulings.

They are a sustainable long standing payroll tax free Court and tax tested. Sadly poor legal and accounting advice and or implementation has led many “Medical Practices” to believe that their underlying structures are not correct: see our article Understanding the difference between a “Tenant Doctor” and an “Independent Contractor” for tax compliance is critical.  

Many thanks to Hamilton Bailey lawyers with their assistance in interpreting the responses from various state revenue payroll tax offices.  

Live QLD & SA Payroll Tax Amnesty Response Examples
SA GP Medical Centre Payroll Tax Amnesty Response  Example
This is a live sample letter a practice received that applied for a an amnesty.  

The red mark line alarmingly states:


Furthermore, it applies to any non-declared payments to registrars, non-GP employees or contractors captured by the Act. 

In other words it implies a variation of the following: 

Dear Medical Practice, could you please review your trading activities for the past five years to determine if you are responsible for paying payroll tax. It is essential that you confirm your past liability, since we have identified you as a potential non-compliant taxpayer. 

Furthermore, if you are a non-compliant taxpayer it continues to remain a criminal offence with significant penalties, and you were nice enough to have provided us your most recent  contact details in the Amnesty ‘Expression of Interest’.



QLD Payroll Tax Assessment Letters were issued for “contracted general practitioners” 

Similarly, QLD amnesty applicants in the example below were issued a similar, please volunteer more information  with evidence about how many taxable contractors. 

Use this form to disclose amounts paid to contracted GPs and other contractors for the previous 5 financial years”

There was no default, and you are no longer liable for payroll tax for the last 5 years.

Instead, they want more information and evidence before they decide on any liability. They, too, have many strings attached to this offer. 

Specifically, they are:

“The amnesty is not available for payments to:

  • contracted GPs where an exemption applies (because no payroll tax liability would arise if the payment is exempt)
  • GPs who are common law employees
  • other medical doctors or allied health professionals
  • other types of contractors.
QLD GP Medical Centre Payroll Tax Amnesty Response  Example
This is a live sample letter a practice received that applied for a an amnesty.  
Live QLD Payroll Tax Response Example
“Thank you for expressing interest in the payroll tax amnesty for contracted GPs (the amnesty). What to do next You have until 30 June 2025 to review your arrangements, register for payroll tax (if you haven’t already done so) and make a voluntary disclosure. Registration You can register for payroll tax via QRO Online. Follow the instructions for 'How to register online'. Do not include payments to contracted GPs in the registration form. These will be processed from your voluntary disclosure."
Voluntary Disclosure: last 5 financial years!!
"Voluntary disclosure: To make a voluntary disclosure, email the following information any time up to 30 June 2025: Contractor exemption reconciliation schedule (Form RS2.5) Use this form to disclose amounts paid to contracted GPs and other contractors for the previous 5 financial years."
More Evidence please!
"To claim the amnesty in the reconciliation schedule: under ‘exemption claimed’, select ‘Other – Provide details’ under ‘Explanation’, enter ‘GP amnesty’ under ‘Evidence available’, enter ‘Registered with Medical Board of Australia’. You also need to disclose contractor payments that are not eligible for the amnesty, such as those made to: other medical doctors or allied health professionals other types of contractors."
Comply with the Ruling's exact wording or el$e!
"More information: Eligibility for the amnesty is set out in the Administrative arrangement The Commissioner of State Revenue’s guidelines set out how the amnesty will be administered” The Commissioner has also published a public ruling on relevant contracts for medical centres If you need additional information: Call 1300 300 734 Email Source: Queensland Revenue Office amnesty applicant"
“Thank you for expressing interest in the payroll tax amnesty for contracted GPs (the amnesty). What to do next You have until 30 June 2025 to review your arrangements, register for payroll tax (if you haven’t already done so) and make a voluntary disclosure. Registration You can register for payroll tax via QRO Online. Follow the instructions for 'How to register online'. Do not include payments to contracted GPs in the registration form. These will be processed from your voluntary disclosure.
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An amnesty with more strings than a 100-string Santoor musical instrument

No  GP amnesty for “common law” employees

It is clear that QLD and SA had many strings attached to their amnesty. You would be forgiven if you had felt slightly entrapped with all the legal mambo jumbo and the urgent need to submit an application on time. 

Normally I would allow at least 12 months to prepare a squeaky clean “evidenced based” submission.

Technically, the relevant State Revenue Offices ‘did make their opinion clear’ (as mud for some), so you only have your advisers or yourself to blame for not reading the complicated and incredibly convoluted fine print that even some of the best lawyers and accountants in Australia may struggle with. 

If you did not use an independent and seasoned law and accounting firm but instead relied on colleagues or friends, this may have been the biggest mistake you have made.

There are a myriad of ‘out clauses’ the regulators had put in place. For example, “deemed” common law employee rules apply in the SA Ruling:

“A contract can be either implied or expressed orally or in written form.

Factors that have been considered by the courts in determining whether a worker is an employee include: 

  • control and direction; contract and practical relationship; 
  • contracts to achieve a ‘given result’; independent business; 
  • power to delegate; risk; provision of tools and equipment; 
  • and other indicators.”

After reading the rules in detail with legal counsel, in particular with the Adelaide-based solicitor that I frequently consulted throughout my ordeal whilst dissecting the relevant payroll tax rulings, opinions, and ‘congratulatory payroll tax eligibility’ emails (that almost made it feel like the medical practice had just won a gameshow prize), I will never forget the moment when, after reading all of the material relating to the SRO Amnesty,  the solicitor, in astonishment, exclaimed: “God damn it, David, I think this is a trap. This bull@#$% Amnesty is not going to protect our doctors”   

What is clear and often misunderstood, even though you are “eligible” for a GP amnesty, it is not available to you regardless of payment flows or anything else if your “Medical Centre”  is deemed to have GP’s who are deemed as “common law employees”.

As you can see in the QLD example below, both QLD and SA Amnesty programs have made this clear from the outset.  The devil is in the case law detail. 

The Revenue Office(s) appear to be requesting more information to determine if any final liability will apply for the last 5 years if they have advised you have a “relevant contract” and are liable for payroll tax. 

If they are not, they have put you on notice. You must self-assess yourself to ensure you have correctly declared and paid up any outstanding payroll tax. 

Is the Amnesty lawful?

Respectfully, we did try to warn you last year outlining our rationale regarding the entire payroll tax amnesty program in both States that appeared to be a “fishing expedition” to obtain potentially self-incriminating evidence against your “Medical Practice” . 

The payroll tax office made an offer you should have refused?!

No regulatory body can take legal action against you unless there is evidence. Therefore, the most effective approach is for you to “willingly” volunteer the evidence to them. Sadly the tone on a number of Rulings may have inadvertently scared practices to apply and provide piecemeal evidence without seeking season independent expert legal and accounting advice. 

Depending on who you ask, it is understandable why individuals may mistakenly characterise themselves into believing that they are responsible for payroll tax when there are equally as many excellent legal reasons why they are not liable.

Practices dodged a bullet if their local State regulator did not grant them an amnesty.

It is notable and unusual to see that these States have not passed a Bill endorsed by Treasury that will allow practices off the hook for any past payroll tax liability that has not been declared and paid.

Many individuals have reported feeling forced and trapped into falsely labelling their business as a “Medical Centre” or “Practice” after consulting with independent legal and accounting experts. In such cases, the strict State and Federal tax Rulings come into play.

If so this is where the draconian State and Federal tax Rulings apply.

To the contrary, the business owners report their original intention was to always operate an “Administrative Business” in order to avoid medico-legal liability; and therefore none of these contractor rules would  apply.

If nothing else they have been the victims of either poor legal, accounting, management advice and/or poor implementation of advice.

Five Key Takeaways

Here are my key takeaways from this letter should you receive one: 

1. Being eligible for a payroll tax amnesty does not mean you are not liable for the last 5 years of unpaid payroll tax. 

Firstly, in all States like the Federal ATO tax system, the State payroll tax system is largely self-assessment. 

It is like an honour system, ignorance of law is no excuse and your legal and accounting advisers, if you have instructed them, are meant to keep an eye on it from the time you are liable to pay the tax. 

Clearly if you receive a letter like the one above that states in future you must pay the tax from 1st July 2024, you are in fact obliged a second time to check that you have correctly calculated and paid tax in the last 5 years you have been trading. If not, do not be surprised if you get another large bill to pay! 

Let’s face it you are really on their radar now, so cough up if you want to eat well and sleep well the penalties can be up to double that will need to be shared between owners depending on who has the deepest pockets. Furthermore it is a criminal offence. 

How does a “Medical Practice” know when to declare something that it did not know at the time to declare and pay taxes on? 

Affect practice values as a contingent liability exists. Any corporate or ASX company would have to make disclosures to the market if a liability had been raised or the potential for one. 

2. 60 days to object to a Court  

If you have been hit with a liability notice, it is possible to object to the Commissioners decision. This means the liability can be immediately claimed as a tax deduction but you do not have to immediately pay the payroll tax bill. Then it can be deferred for payment until you argue it out in Court. 

This gives a Medical Practice a second chance to resubmit and correctly argue your case, just in case you forgot some import points as will be detailed below or you did not seek professional experienced profession advice at the time of applying, 

If you find that you have been hit with a large assessment and/or are liable in future years it is worth considering with your payroll tax experienced independent legal and accounting experts whether it is worth objecting. 

“Profoundly misled” 

There are many legitimate reasons. Some that we have successfully fought include a Medical Practice that was profoundly misled by their advisers and management. This was a useful legal defence reportedly used in 2014  by Jamie Packer and Lachlan Murdoch Ontel defence. See James Packer and Lachlan Murdoch foot $40m One.Tel bill. This could help reduce any penalties and or assist in resubmitting evidence that may have initially looked self-incriminating which required a clearer context . 

It is not unusual to come across poorly drafted service and legal agreements. Many are not backed up with evidence that a Court seeks in deciding whether you are guilty or not. 

Many are modified service agreements prepared by employment lawyers that change the overall characteristics of an initially legitimate arrangement. Worse many are copied from other practices that have not been reviewed by seasoned lawyers or accountants. 

Your agreements together with your legal and tax structure, financial statements and returns appear to be the key but not only evidence used against medical practices.

In relation to a “Medical Practice”, the most often overlooked defence is that your business is actually an “Administrative Business” i.e. you are a service trust or service company where either poor advice or implementation has led to a mutated view of the arrangements. 

Prove it was it your “intention” to establish a “Tenant Doctor” arrangement 

Initial Legal and Accounting Advice

A useful starting point is to review any advice your lawyers and accountants had provided when you first established your arrangements. The main reason people use a service entity is to avoid legal liability from their fellow colleagues. They simply wish to just share the facilities. This is usually evidenced in written advice provided at the time of establishment and this “intention” is imputed in the documents such as where your trust deed refers to a “Service Trust”. 

This is a powerful starting point often overlooked. In the end the factual evidence that follows is key. Remember recently we have seen Full Federal Court cases:  JMC Pty Ltd v Commissioner of Taxation [2022] FCA 750 (JMC) where you only need one argument, even a word to successfully object to a claim. 

Misclassified Financial Statements and Tax Returns

Another common mistake is when your accountant does not understand the nature and importance of a service trust and cannot explain to you the medico-legal need for it. Often your financial statements are prepared incorrectly. This starts with incorrectly naming the entity as a Medical Centre or Practice when it was intended to be an administrative entity. 

Often we see patient fees recorded in the revenue line, contractor payments in the expense line, doctor clearing bank accounts on the balance sheet and GP registrars employed and paid from the same entity. This incorrectly represents the initial purpose of the entity. They should have been aware of this. 

Furthermore on your tax returns the accountant(s) misclassify your business as a “Medical Practice” and not an “Administrative business on your annual tax returns . Sadly by signing such a declaration and not checking whether it is correct you may find yourself making a careless and reckless mistake.

Attention to detail matters, tick-and-flick budget accountants and lawyers are not a good idea if your end game is not to lose a lifetime of hard earned money. 

You need carefully curated evidence to back up your case. The last thing you want is an incompetent lawyer or accountant that misunderstands and misrepresents your case. 

We have acted for clients who use highly reputable Big-4 international accounting firms and they have also not got it right. The devil is in the details. 

  1. Torpedoed Medical Practice Valuations 
For poorly established practices who have undercapitalised on their legal and accounting systems, this issue has certainly torpedoed their value see:How much is my practice worth? Tax non-compliant medical practices may see their values drop to “zero” or they may be seen as a significant unknown negative liability. It would be hard to raise bank funding if you were a practice owner or potential buyer, where the only asset is the written down value of the plant and equipment. Any such claim should be disclosed to any potential buyer, otherwise you could face a misleading and deceptive claim that lacked any good faith.  Having said that it remains “buyer beware”. Any future owner could get stuck with your past bills if you decide to exit.

4. Separate Banking Arrangements

In any tax or Court dispute your external accountant who is a member of a high profiled professional body will be seen as a primary witness that may be cross examined.

As a result, the advice and conduct of your accountant is paramount in securing a strong defence. 

One common high risk factor is if your accountant does not clearly understand your arrangements. 

A case in point is that the accountant has not proactively advised you to not bank your Tenant Doctor fees using the same ABN that you pay your “Medical Receptionist” and “Practice Manager” see: Payroll Tax: The Flow of Separate “Banking” Funds Myth Busted?!

If you’re not implementing a separate reconcilable banking system or, alternatively, a cost-effective, quasi-centralised Quistclose Trust arrangement with your tenant doctors.

Start playing Chess, and not Checkers.

Seek independent expert medical and healthcare legal and accounting advice from advisers who have been through and have successfully object to a payroll tax assessment. 

The new “tax agent dob in laws” (see article The ATO’s new Mandatory reporting targets unethical accountants and you) commencing on the 1st July 2024 will add further pressure to make these disclosures as this has significant and immediate income tax, superannuation, Workcover and Fair Work implications. 

It is a cautionary tale, where the amnesty  reveals one is liable for payroll tax that may have  also inadvertently opened the Medical Practice and it’s practitioners to a pandora’s box of ‘other’ State and Federal regulators laws and liabilities see our article: Medical and healthcare payroll tax is killing bulk billing, where to from here? 

5. Accountants, to protect themselves, should disclose any potential liability 

Many practice owners may find themselves at a crossroads with the endless news stories about payroll tax and overall tax compliance and regulatory red tape. For many it may be time to exit. 

Your friendly accountant or lawyer may go a little cold!

As some practices/practitioners desperately search for a lifeboat, and it starts to sink they may be tethered to the Titanic, be not surprised if your relationship with your advisers may go a little ‘cold’. No pun intended.

In addition for all the reasons given above, expect higher fees to address your additional compliance work. Add remediation to that list. Do not be surprised if they tell you this is outside their scope of expertise and to seek additional expert advice.

This is certainly the case if you and your advisers refer without evidence to your organsiation as a “Medical Centre” or Practice and are not an “Administrative Business” as covered in our article: Understanding the difference between a “Tenant Doctor” and an “Independent Contractor” for tax compliance is critical.

To initially avoid liability, accountants will have to make disclosures to you if a potential liability exists and what external expert legal and accounting advice to seek if they cannot assist. To protect yourself obtain this in writing.

Obtain an independent medical and health experienced tax adviser 

Australian accountants are bound by professional and ethical standards that require them to maintain professional competence and due care in their work. If an Australian accountant does not have the specialist subject matter expertise in a particular area, their responsibility under CAANZ/CPA/IPA professional standards is to ensure that they do not provide advice or services beyond their competence. 

According to the Accounting Professional and Ethical Standards (APES) 110, accountants must comply with fundamental principles, which include professional competence and due care.

This is also a requirement under the national Tax Agents Board Code of Professional Conduct.

In either case like a GP, accountants and lawyers should refer work out if they they feel have insufficient experience in to an expert in their field. In this case an expert medical and healthcare tax and accounting adviser in this area. 

Furthermore for accountants to protect themselves, they may start to encourage you to disclose this non-complying information on your financial statements for your financiers and potential buyers to see The ATO’s new Mandatory reporting targets unethical accountants and you). 

This should be disclosed on your financial statements as to the nature and extent of non-compliance and (where possible) to prevent any potential liability.  

If you object you may find you may be forced to find a new accountant. No accountant thinks it is worth risking their entire livelihood over one client. 

WARNING: After the 1st July 2024 under the new mandatory tax agent reporting rules, your new accountant may report your existing accountant for breaching the tax code or risk facing the same penalties as your existing adviser. 

Things will start to get a lot more complicated if you are seeking a second opinion, so start now. 

To get started, here are some additional free self-assessment checklist resources that can assist:

  • For Practices (“Medical Centre’s): 

                Employee/Contractor v Tenant Provider Self-Assessment Checklist.

  • For Individual Providers (Practitioners): 

                     Contractor Self-Assessment Checklist tool 

Stay hungry, humble, curious, and focused.

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 (

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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