Before you blow your dough: Questions you need to ask in writing from your tax lawyer and accountant

The latest payroll and income tax blitz on medical and healthcare practices due to the AMA/RACGP national “patient payroll tax”medical campaign is drawing more than usual attention from the regulators. The ATO are doubling down their efforts.

The recent High Court 2022 employee v contractor decisions are driving a consistent convergence of rules amongst regulators.  This is providing more opportunities than problems for service entities (Important to Note: incorrectly referred to as “practice owners”). 

The actual enemy of anyone working as a doctor, allied health, or practice owner is not having enough time to make sure they are compliant.

Lawyers and Accountants can be expensive;if you are not afraid of losing your livelihood…

If everyone got the right advice (or have naively assumed they did from a reputable firm), there wouldn’t be a national patient payroll tax-free media campaign.  

I wouldn’t have to write this article about how you can quickly and affordably start a tried-and-tested peace-of-mind solution. 

We have a  solution that has been successful in defending a practice’s from  payroll and income tax liability.

The good news is there is no need to worry if you can follow these two simple steps. Make sure you have first educated and tax-tested yourself. Feel confident to ask the right questions. Ensure all legal and accounting advice is in writing, before applying for any amnesty or exemptions. 

Surprisingly you may find it fun, easier and more affordable than you think. Completed correctly you should feel at the first meeting with advisers the solution should give your practice an exciting recruitment and retention edge. 

1. Educate and self-test yourself 

This article’s conclusion explains how to do this, such as conducting a free “practice” self-assessment before applying for amnesty or exemption.

Start asking the right question, identify key areas you need to address e.g. your website and stationary, workflow and legal and tax structures and agreements and simply forward these results to your advisers for advice.

2. To save money and time ask for all legal and accounting advice in writing

Email your tax lawyer (and your accountant) this article.

To save time and money, ask them in writing if they can provide you with a “safe harbour” signed letter  based on all the laws and information listed below, and how much it will cost.

If your advisers don’t know or if their advice hasn’t been followed properly, this could trigger an audit. Remember if it were so easy to follow all the key rules, there wouldn’t be an industry wide concern about it, 

The last thing you need are untimely vague answers to technical questions that your advisers should know the answer to. The Court rulings they should be familiar with are clear.

Legally and ethically your legal and accounting advisers should not be advising you in areas where they lack experience and expertise.  

Similar to a general practice, your preferred professional advisers should decline any engagement with you and refer it on to a specialist they know (where possible) who can provide appropriate advice.

Given the recent media campaign, we expect many practices are likely to fail an audit. 

Safe Harbour Letter for Medical and Healthcare Practice Tax Arrangements:A new recruitment and retention strategy

Addressing these issues now will help you recruit and retain practitioners who want to locate their practice in an environment less likely to attract an audit.

Offering “safe harbour” tax arrangements will provide a significant competitive advantage, that should well exceed any costs of becoming compliant.

To get started  (if you have not already done so)

Questions you need to ask in writing from your tax lawyer and accountant

Is your lawyer an experienced medical and health tax lawyer or a commercial lawyer? Similar to patients it is easy to asume all titles are the same. For a myriad of reasons, the reality there is a big difference when you go to a specialist or a Gp.

The same applies when you are choosing your lawyer and accountant to handle a specialist area. 

If they are a  commercial lawyer their advice may be limited in accessing the “Safe Harbour” tax rules. Many commercial lawyers and public accountants do not specialise in medical and healthcare tax stucutures and advice. 

Practices often forget to ask. Many assume they will tell you, which sadly does not happen often enough. It is why there is a big tax problem out there.

This run around can waste a lot of your time and money. The anxiety or uncertainty is hurting your practice and your patients. So here some key steps.

1.To determine their technical competence request in writing a confirmation if they can address points three and four, you may have found the right advisory team.

1.1 Have they won any relevant payroll or income tax cases? Can they provide examples?

(You will need to have your accountant or a specialist accountant involved if they do not have the expertise contact us for more information).

1.1.2 Do they have the technical competency and experience? 

Does their advice cover the 21 key areas that affect medical and healthcare practices see The regulatory history of independent contractor law affecting medical and healthcare practices:

1.1.3 Does their advice cover the new safe harbour rules and can they sign off  in accordance with the draft ruling see The Medical Republic Another Tax Problem and The   ATO safe harbour rules for medical and health contractors: what you need to know

1.1.4 Does their solution cover the evidence that the ATO and Payroll Tax Office will ask for?

Given the national RACGP/AMA Patient Payroll Tax campaign we expect a high level of audit activity. So it is important to be prepared.

It is interesting to note on the QLD SRO payroll tax website, the chatbot’s response to doctor payroll tax audit questions. 

For ongoing legal, tax and accounting compliance, as you may be aware, implemented correctly the Doctor’s (e-Service Fee Agreement ) Pay Calculator™ simplifies and covers many if not all of the issues raised.

Where to from here? 

Be ready and preapred educate and self test yourself: 

In light of the new ATO and Payroll Tax enforcement program we have updated our confidential self assessment checklist to address the new safe harbour rules. 

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

1. Free Self-Assesements Checklists 

2.Payroll and Income Tax Webinar(s)

Are you still having difficulty in getting a straight answer?

Available through Health and Life recommended independent lawyer(s) customisable safe harbour compliant unitholders agreement and service agreements need to be updated with these new ATO requirements. 

We can suggest experienced commercial and tax lawyer(s) who we have successfully worked together with to the benefit of our clients.

They were able to offer a timely and cost effective fixed fee sign off subject to the accounting requirements being met by the client. This means no more unnecessary delays and not being billed for “general research” time. 

Contact us for any more information.

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.

Recommended Posts

No comment yet, add your voice below!


Add a Comment

Your email address will not be published. Required fields are marked *