Is your practice 'payroll tax audit ready’?

Most of the Payroll tax attention has been on GPs, and while this continues to be a focus for the relevant authorities, the scope is broader and includes dentists, specialists, allied health, etc.

As you may know the 12-month pause on NSW payroll tax audits for GP medical centres ended last week, the QLD amnesty ends 30 June 2025 and South Australia ended 30 June 2024. With Victoria, ACT, and NSW making announcements regarding bulk-billed services, the amnesties apply specifically to GPs and not other medical centres. Now is the time for all medical practices to review and plan for payroll tax! It is crucial for medical practice owners to act now to understand and minimise future payroll tax obligations and protect your practice’s profit margin.

What is your potential exposure?

• Payroll tax claims by OSR (excluding penalties) on these audits range from $50,000 for smaller practices to up to $700,000 on larger practices.
• At least 20 audits have been conducted by NSW OSR in the last 18 months. 
• Now that the amnesty periods are coming to an end the State Revenue offices are now likely to increase the level of payroll tax audits of medical and other professional health practice such as dental practices.

As an example, a practice with 5 GP’s with gross patient fees of $3m and a 33% service fee structure would see a net $2m paid out by the practice to the GPs across a year. Assuming another $500,000 for administrative and nursing staff, this would result in annual taxable payments for payroll tax purposes of $2.5m, well above the current tax-free threshold in all states and territories. As an example, this would result in an annual payroll tax liability of $70,850 in NSW, $65,143 in Queensland or $34,250 in the ACT. 

Next steps

For further details and to review your own practice arrangements, contact one of our specialist health advisory team directors to arrange for a no obligation, no charge payroll risk review meeting. The purpose of the meeting is to:

1. Establish whether you are at risk.
2. Recommend remedial action to minimise risk.
3. Scope out the work required including review of service agreement, administration of payments and records, service provided and other important factors.

Brendan Campbell Director of Business Services and Taxation Email	Ashley Quinton Director and Financial Adviser Email	Sam Gadani Director of Business Services and Taxation Email