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State Revenue Office Update on Payroll Tax for Medical Practices

3 min read

01 Dec 2023

The State Revenue Office of Victoria (SRO) and Revenue New South Wales (Revenue NSW) have released revenue rulings (Rulings) outlining their respective positions (see SRO and Revenue NSW) on when medical and allied health practices need to pay payroll tax to doctors and practitioners.

According to the Rulings, these practices must pay payroll tax for payments made to practitioners providing services on behalf of the practice.

Similar Rulings are also in place in Queensland and South Australia.

The Rulings reinforce decisions from the New South Wales Court of Appeal in Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2021] NSWCA 40 and the Victorian Court of Appeal in Commissioner of State Revenue (Vic) v The Optical Superstore Pty Ltd [2019] VSCA 197 (following the High Court of Australia’s refusal to grant special leave to the taxpayer).

Diagram of Fund

Medical Allied Health Practice infographic


Relevant Contracts

Practices operating on this structure shown above are subject to payroll tax, whether payments go directly to practitioners or to their entities (like companies or trusts) under contract with the practice. It’s important to note that the names given to relationships don’t prevent them from being considered relevant contracts.

How We Can Help – Review of Business Structures and Payroll Tax

Despite the broad impact of these Rulings, not all medical and allied health practices are automatically liable for payroll tax.

Liability depends on the business structure used in a given financial year.

Contact us on 1300 907 335 or send an email to [email protected] to discuss your situation, and we can provide tailored advice on your payroll tax obligations based on these Rulings.

Disclaimer: This article has been prepared for general information purposes and may not apply to your situation. This information should not be relied upon for legal, tax or accounting advice. Your individual circumstances will alter any legal advice given. The views expressed may not reflect the opinions, views or values of PCL Lawyers and belong solely to the author of the content. © PCL Lawyers Pty Ltd.

If you require legal advice specific to your situation please speak to one of our team members today.

About The Author - Thomas Abraham

Thomas Abraham is an accomplished senior lawyer with expertise in state taxation advice and litigation. His extensive background and experience make him an invaluable asset to our...

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