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Kelly Chard was recently featured on the Scale My Clinic Podcast hosted by Dr Todd Cameron and Dr Sachin Patel talking about the recent payroll tax case decision impacting General Practice. Topics covered Overview of crucial recent case decisions What is new that GP owners need to be aware of? Where to from here?

We are aware that many clients have read media articles and been privy to online discussions surrounding this recent NSW Payroll Tax case and that this has caused some alarm and concern. It is essential to understand the underlying facts of the Thomas and Naaz case. We have prepared a scaled-down summary of key discussion points and takeaways below so that you can make an informed decision regarding any impacts to you or actions required in your business. We also highlight some key set-up concerns relating to the reporting of income and doctor payments on the tax lodgements of Thomas and Naaz. Key points of Thomas and Naaz Thomas and Naaz operated three bulk billing medical centres in NSW Doctors engaged with these medical centres undersigned written services agreements, paying a 30% service fee for room rental and shared administration and medical support The medical centres collected Medicare benefits from patients on behalf of the doctors and remitted 70% to the doctors (comprising billing after the withholding of a 30% service fee) Revenue NSW issued five assessment notices totalling $795,292 to Thomas and Naaz, covering 1 July 2013 to 31 March 2018, on the basis that payments to doctors were taxable wages for payroll tax purposes. The assessments included payroll tax, interest, and penalties Thomas and Naaz objected to the assessments on the basis that the doctors were not supplying services directly to the medical centre and that a large proportion of the doctors were providing services to the public each year (outside of the medical centres and therefore, an exclusion applied) The commissioner rejected the objection, and Thomas and Naaz subsequently applied to the NSW Civil and Administrative Tribunal (NCAT) to review the objection decision NCAT upheld the NSW Revenue assessments, including the application of penalties and interest Key Issues of Concern from the NCAT decision Our opinion is that the first and major issue of concern to our clients in the Thomas and Naaz case is whether there was a "relevant contract" between the medical centre and the doctor. A relevant contract is required to establish that payments to contractors may be considered taxable wages and be subject to payroll tax. The second issue of concern is whether the payments made to doctors are "for or in relation to the performance of work relating to" the agreements. Can the payment of the 70% net billings paid to doctors be considered a payment relating to the provision of services and, therefore, payment of taxable wages for payroll tax purposes. Findings – Issue One NCAT found that doctors were providing services to patients AND the medical centre, and therefore a "relevant contract" between the medical centre and the doctor existed. The basis for this decision examined the terms of the service agreement between the doctor and the practice entity, including: Reference to shifts, work hours and rosters provided/specified to the doctors Doctors were to comply with protocols set by the medical centre Doctors were to promote the business of the medical centre Reference to a leave policy (6 weeks' notice, maximum four weeks per year, requirement to submit leave application to the medical centre for approval) Doctors were paid hourly rates on occasion A restraint covenant was present in the agreement (2 years, 5km radius) The medical centre retained ownership of the patient records Findings – Issue Two NCAT considered whether the payments made to the doctors were "for or in relation to the performance of work". Amongst other things, Thomas and Naaz argued that payments were simply a return of doctors' monies only and that the funds at all times belonged to the doctors. NCAT did not accept this argument and cited a clear relationship between the provision of services by the doctor and the payment from the medical centre to the doctor, even if that relationship was indirect. Essentially this means that NCAT concluded that the source of the payments did not impede the operation of the Payroll Tax Legislation. Paying 70% net billings to doctors would be considered taxable wages for payroll tax purposes. Key Takeaways At this stage, our advice concerning the business operation and the minimisation of payroll tax exposure remains unchanged. GrowthMD has always taken the approach that this is a complex area with developing case precedents where medical service businesses should seek to minimise risk. Takeaway One - Relevant Contracts The backbone of the Thomas and Naaz case was a decision that a "relevant contract" existed between the medical centre and the doctors. The relevant contract feature appears to have been established predominantly on the terms of the service agreement in place. This highlights the importance of quality written agreements and carrying out day to day operations per the agreement. Service and Facility Agreements should be regularly reviewed and updated by a reputable solicitor experienced in payroll tax legislation and the medical practice industry. Should you require, we can provide details of a solicitor who will draft agreements for your practice, considering the most recent case law and legislation. We highlight that many of the terms included in the agreement in the Thomas and Naaz case, such as rosters, leave policies, and restraints, have always been considered high risk, in our opinion. Takeaway Two - Payment and Banking Arrangements Previous cases have established that funds received by a medical centre from Medicare, where the medical centre acts only as a "collection agent" or a "bank of convenience", were not payments to the "performance of work". The Thomas and Naaz decision deviates from this concept and has caused some surprise across the medical practice industry. Our advice in this area will be evolving, and we are currently consulting with industry and legal partners about this aspect. At this point, we encourage medical centres to focus on the method of and agreements involved in engaging with doctors as the first line of defence. Takeaway Three - Financial and Tax Reporting Although not widely discussed throughout the judgement, it is noted that Thomas and Naaz had reported amounts paid to the doctors as "contract, sub-contractor and commission expenses" of the business in their 2015 and 2016 income tax returns. Business income reported in the income tax returns and business financial statements also included ALL of the doctors' billing. GrowthMD has always stressed the importance of correctly reporting and reflecting the independent nature of doctors by only recognising service fees in the financial statements, BAS and income tax return lodgements. Again, this case decision highlights the importance of correctly structured accounting and tax records. We will continue to keep you updated on any relevant information that may impact your business. Click here for full decision details.

Are you performing your responsibilities as a business owner? How to set aside 'quality time' in your practice to work out the key things you can do that will drive the long-term permanent value in your business. Watch my video on the questions you need to ask yourself during the quality time you set aside to focus on your business. In this video, I talk about: The stress that comes with doing too much "on the tools work" How I have personally had to be disciplined in planning Blocking and stacking time for strategic planning

Host John Schol FCA chats to our own Kelly Chard CA and Brad Turville from Modern Firm Practices about moving from a jack of all trades to a specialist. Kelly discusses the advantages and the downsides and how do you decide what to specialise in.

I have seen a recent shift in the considerations for GP clinic owners when engaging with GPs. No longer just engaging based on "cost to the business" and the "way it has always been done".

Grants have now been made available to businesses in NSW to help ease the financial hardships suffered due to the recent lockdown. NSW Small Business Support Grant The Small Business COVID-19 Support Grant is available to businesses impacted by the Greater Sydney lockdown. The grants can be used to fund expenses such as rent, wages and utilities. Available grant amounts depend on your business decline in turnover during the lockdown period. $5,000 grant for a decline of 30% or more $7,000 grant for a decline of 50% or more $10,000 grant for a decline of 70% of more Eligible recipients must be: small business or sole traders with a turnover of more than $75,000, and fewer than 20 full time equivalent employees, and have a wage bill that is below the NSW 2020-21 payroll tax threshold of $1.2 million at 1 July 2020, and have an ABN registered in NSW or be able to demonstrate they are physically located and primarily operating in NSW GrowthMD impacted clients will be able to discuss applying for this grant, proving the decline in turnover and the accountant’s support required with us over the coming weeks. Book with your adviser here: https://calendly.com/growthmd Applications for the grants will be open from late July. NSW Small Business Fees and Charges Rebate Sole traders, owners of small businesses, and not for profits in NSW may be eligible for the small business fees and charges rebate of $1,500. Eligible recipients must be: small businesses, sole traders or non-for-profit organisations have an ABN registered in NSW or have business premises physically registered and operating in NSW One $1,500 rebate is available for each eligible ABN. Eligible expenses include various government fees and licenses, most notably including council rates. The rebate can be submitted online. More details here: Small business fee and rebate grant Federal COVID-19 Disaster Payment (Currently available in VIC and NSW) The Federal Government COVID-19 Disaster Payment is a one-off cash payment provided to workers who have been impacted in each period of lockdown. Payment rates: If you have lost less than 20 hours of work, you can apply to receive $325 If you lost 20 hours or more of work, you can apply to receive $500. The payment is only accessible if the lockdown which impacts the worker extends for more than 7 days and the worker’s location is a declared Commonwealth Hotspot. A liquid assets test applies if the lockdown is less than 21 days. Applications can be made by MyGov or Centrelink online. NSW payroll tax deferral for COVID-19 affected businesses Revenue NSW has announced that businesses affected by COVID-19 will be able to defer July payroll tax liabilities until August 2021. The 2021 annual reconciliation lodgment and payment due date has been extended to 30 August 2021. However, the due date for the July 2021 monthly return of 9 August remains unchanged. We are here to help you If you have questions regarding your business and eligibility for the grants please contact your GrowthMD accountant as soon as possible to discuss the help available to you.

Key Learning: ✅ Optimising deductions before 30 June ✅ Tips and tricks in purchasing, financing and writing off assets ✅ Using the Company Loss Carry Back rules to refund the prior-year tax paid ✅ Super and carry forward limits to maximise contributions Click here to get our Free Tax Planning Resources.

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New Year Resolutions, most are vague, unachievable shockers that are in the bin by Australia Day. Yet many of us, year after year, continue to make loose resolutions around what we will do differently or better "next year". Crazy hey! In 2021, if you will make resolutions for your health practice, then really COMMIT to making them specific and relevant. Put some weight behind them by making them action orientated. Make your resolutions big or make them small but make them achievable.