QLD Payroll Tax Amnesty In early February, the QLD Government announced an intended “payroll tax amnesty” for medical centres making payments to General Practitioners. While the amnesty was initially seen as a welcome relief in the aftermath of PTAQ000.6.1 (Relevant contracts – medical centres), the subsequently released detail around eligibility for the amnesty may not be as pleasing. We recommend practices obtain individual legal and accounting advice before registering an expression of interest for the amnesty. Eligibility The Queensland Revenue Office website (updated 10 February 2023) and its expression of interest form state that medical practices that successfully apply for the amnesty will not be required to pay payroll tax on payments made to contracted GPs up to 30 June 2025, and for the previous 5 years. Other eligibility requirements include: The amnesty is limited to contractor payments made to GPs. For the purposes of the amnesty, a GP is registered as a general practitioner with the Medical Board of Australia. The amnesty may be available to medical practices that have: - Not been paying payroll tax on payments to contracted GPs - been, or currently are, subject to compliance activity in relation to payments to contracted GPs. The amnesty is not available to: - other medical doctors or allied health professionals - medical practices that are already complying with their payroll tax obligations - new medical practices Evolving Terms We reached out to the Queensland Revenue Office for clarification on some of the amnesty eligibility wording and received communication on 16th February 2023 noting that Government is still deciding the final terms of the amnesty. We advise our clients not to complete an expression of interest or registration application until the terms of the amnesty are finalised and understood. Proceed With Caution We are concerned about the current wording of the amnesty and whether agreeing to the amnesty terms is akin to nominating that the medical centre is indeed making taxable payments to contractor GPs, which will in the future be liable for payroll tax. We note that many medical centre entities are structured and operated in a manner where no payments are made from the medical centre to GPs for services. These entities seemingly do not fit the amnesty eligibility criteria and should be cautious in agreeing to criteria that do not reflect their actual conduct and operations. While it is understandable that many medical centres want relief from the threat of a large payroll tax liability, registering for the amnesty (based on the current detail) may run the risk of the practice unknowingly self-nominating themselves for future payroll tax liabilities once the amnesty period ends. We certainly hope this is not the case and the final terms resolve this concern, however, we suggest a cautious approach to registration in the interim. Further Advice We will continue to keep you updated on the evolving terms of the amnesty. For specific concerns please contact kelly@growth-md.com. We also encourage you to obtain further legal and individual accounting advice in relation to your practice arrangements, structure and payroll tax liability risk.

The QLD Office of State Revenue released PTAQ000.6.1 – Relevant Contracts – Medical Centres on 22nd December 2022. In a Nutshell (Our Interpretation) If applied, the OSR's position in this ruling will see more QLD medical centre entities assessed for payroll tax in relation to independent practitioners providing services from their centres The ruling does not contain new or altered application of the payroll tax legislation The ruling is the QLD OSR's interpretation of legislation and recent case law However, it does delve deeper and provides specific guidance on service entity and tenancy-type arrangements. The examples provide a narrower and stricter interpretation than previously published Office of State Revenue guidance The ruling implies a “typical” service arrangement, and many tenancy arrangements are viewed as relevant contracts by the OSR and therefore payments will be considered taxable wages and subject to payroll tax Examples are provided that are reflective of many current medical centre arrangements Trust account arrangements are likely to be ineffective in isolation Changing banking arrangements so that the medical centre does not collect fees is not in itself a solution to avoiding payroll tax liability Medical centres should re-consider if their arrangements with independent practitioners are likely to be classed as relevant contracts Relevant Contract - Medical Centre Setting Payroll tax liability is not restricted to situations where an employee-employer relationship exists. When amounts are paid to contractors under a “relevant contract” they are considered to be taxable wages unless a specific exemption applies. This ruling defines a relevant contract between an entity that conducts a medical centre and a practitioner when: the practitioner carries on a business or practice of providing medical-related services to patients in the course of conducting its business, the medical centre provides members of the public with access to medical-related services engages a practitioner to supply services to the medical centre by serving patients on its behalf an exemption does not apply. The relevant contract provisions were introduced in 2008 to capture payroll tax revenues lost when an entity engaged contractors rather than traditional employees. The relevant contract provisions in NSW, Victoria and QLD are substantially aligned. Ruling Key Points OSR Interpretation The detail in the ruling, in addition to the numerous examples shared, puts all medical centre operators on notice. Previous ambiguous or varied interpretations are effectively squashed by this ruling meaning that there is less confusion over where the line in the sand sits when it comes to audit activity and the OSR's position. It should be noted that this ruling is the OSR interpretation of legislation and recent case decisions only. However, in the absence of a test case that examines the legal basis for this interpretation, it appears that a medical centre providing services to independent practitioners under an agreement will likely be assessed for payroll tax in relation to the practitioner's services or payments. The onus will be on the medical centre to object to this payroll tax assessment. QLD Audit Activity As a result of consultation between the QLD OSR and various interest groups including AMA Queensland, written confirmation has been provided confirming audit activity in General Practice will be limited to the 2022 financial year and onwards. While this is welcome and provides some comfort around the size of potential audit liabilities, it still leaves a large portion of the health practice community exposed and vulnerable to audit liability and penalties moving forward. Exemption Eligibility There are limited exemptions, which are available on application to the commissioner. In our experience, the majority of medical centres and independent practitioner arrangements do not meet the exemption criteria. The exemptions are: 1. The practitioner provides services to the public generally 2. The practitioner performs work for no more than 90 days in the financial year 3. Services are performed by two or more persons Recommended Action All health practices should re-engage with legal and accounting experts knowledgeable in payroll tax application to health and medical centres. GrowthMD is working with other leading medical accounting and legal advisers in QLD to provide clear communication to health practice owners over the coming weeks and months. While we have always operated a payroll tax risk minimisation strategy for our clients, looking ahead we intend to work through various business model changes and reporting options available. Further communications will be circulated to our clients shortly. This information is general in nature. We encourage all readers to obtain specific legal and accounting advice. This information is based on our interpretation of the content examined and may change as further information becomes available.

The income of GP and health service businesses decreases by approximately 35% in January compared to the monthly average! This quick video talks about seasonality and three suggestions for planning and making use of your quiet months.

Labor released the 2022/23 Federal Budget on 25th October 2022. We have prepared an informal 5-minute recap on the budget's tax, finance and health announcements.

Key Information: ✅Extra 20% deduction for employee training and skills improvement ✅Small business technology investment boost ✅ATO's tough new stance on lodgements and debt collection ✅New rules on allocating profits to medical practice owners

Single Touch Payroll (STP) has been in place for some time now and you (the employer) will be aware of the requirement to file pay run information with the ATO each time you process payroll. You may have also heard of STP Phase 2, where additional information is now collected and filed to the ATO with each pay run (you can read about STP Phase 2 on the ATO website here). Although the official start date for STP Phase 2 reporting was 1 January 2022, some accounting software (Xero included), have a deferral in place, meaning their users are not required to comply with STP Phase 2 until 31 March 2023. Setting up for STP Phase 2 in Xero Recently Xero has begun rolling out STP Phase 2 (beta), this means some users can see the STP Phase 2 settings and begin preparing their Xero Payroll file for STP Phase 2. Once released to you, Step 1 is available in the STP Phase 2 Portal of your Xero file. Here you will update your employee profiles to select employment type: Employee or Contractor. For employees, you will also select income type: Salary and wages, Closely held payees or Working holiday maker. What Options Should I Select? We have had questions from our clients regarding the employment type and income type options. Please review the information below before making your selection. Employee or Contractor - For our medical industry clients, most payees will be engaged as employees. The contractor employment type should be selected when payees have their own ABN and have entered into an agreement to provide services to you via a contract relationship. You may have these individuals set up in your payroll system in order to meet superannuation or PAYG withholding obligations. Note: Practitioners paying service fees to your entity and running their own business are not required to be set up in payroll or reported via STP2. Closely Held Payees – This is a payee who is directly related to a small employer entity (19 or fewer employees) from which they receive payments. This can include family members of a family business, directors or shareholders of a company, and beneficiaries of a trust. Working Holiday Maker – Foreign residents working in Australia, who have a visa subclass of either ‘417 Working Holiday’, or ‘462 Work and Holiday (backpackers)’. Salary and Wages – The most common income type, encompassing everyone except the previously mentioned two categories. We will be in touch again in early 2023 as Xero finalises the STP Phase 2 settings and rolls these out to all users. For most Xero users, setting up STP Phase 2 will be straightforward (STP Phase 2 changes in Xero). If you require any assistance preparing your Xero Payroll file for STP Phase 2, please engage your GrowthMD adviser.

A reminder to our clients holding current longer forms of .au domain names that the priority allocation period for the new .au direct domain is ending. We encourage you to register the .au direct version of your current domain name to protect your business. Earlier this year, Australian businesses became eligible to register .au domain names - e.g. growth-md.au. Businesses were given a priority allocation period of 6 months which provided priority registration rights to registrants of matching domain names in other .au namespaces, such as .com.au and .org.au. Essentially this meant that if you owned an Australian domain such as "growth-md.com.au" you would have priority on being able to register the new shorter domain "growth-md.au". This priority period expires after 20 September 2022 which means direct .au names will be available to the general public. Businesses that have failed to register their .au direct name are at risk of competitors or other similarly branded businesses registering the .au direct version of their domain. How to register priority allocation You domain provider (e.g., GoDaddy, Crazy Domains) will be authorised to register you with a new .au domain name under the priority allocation period. Please visit their website and follow the link to register a new .au domain. You will require details of your business such as ABN, ACN or trading name registration. A list of authorised domain providers accredited for this services is here: auDA accredited registrars. For further details on the .au domain changes please visit: https://www.auda.org.au/ .

Thank you to BP Software for inviting Kelly Chard to share her expertise in their new "Be In The Know" webinar series. Kelly joined Matt Smith to talk about: Tips and tricks in extracting financial reports from BP Setting up ABNs and doctor trading entities in BP Payroll tax, invoicing service fees and risk areas

Barely a workday has gone by over the last 11 months when a client, prospective client or colleague hasn't asked me a question about payroll tax, engaging with practitioners and health practices. Social media, online publications and workplaces continue to buzz on the latest appeal news, the various tax risk areas or the everyday processes that don't ring true for a service entity or tenant doctor arrangement. It is good to keep the topic front and centre…..but what are practices doing on the ground? I find that is what people want to know. So, let me give you an "On The Ground" update based on the conversations and experiences we are having with our GrowthMD clients. Before we get started, please remember that this isn't specific advice for your practice or service entity – this is general information presented from our own real-life experience. Change of Banking Arrangements Within our client group, around 12% of practices have already taken steps in changing practitioner banking arrangements, with an estimated 25% planning to make changes over the coming months. These changes involve all patient receipts being deposited directly to the practitioner's business bank account. The operational hurdles by those that have made the change include the following: Communicating the new banking workflow to practitioners and support staff - resistance has been shown at the practitioner level in a small number of cases Devising a service fee invoicing and collection system that is easy to administer and keeps practice cash flow viable, e.g., payment terms, auto payments, credit card payment options Implementing a procedure for receipting and tracking of non-Medicare/point of sale invoices Reconfiguring current systems and integrations (e.g. telehealth/online payment collection, Surgical Partners) to allow continued use with the new banking workflow Considering reports provided to the practitioner to assist with their tax and reconciliation obligations. Working with practitioners and customers to update banking details While this has been time-consuming (particularly for the Practice Managers!), it has overall, to date, been an achievable process. Interestingly each practice I have worked with on this change has implemented slightly different systems to overcome the hurdles listed above. Some practices are taking a more "hands-on" role by accessing the practitioner's bank account to ensure reconciliation of cash banking to services invoiced; others believe the practitioner (as the business operator) bears the responsibility to reconcile and check the cash receipts. Both approaches have their pros and cons. Legal and Accounting Reviews The overwhelming majority of our clients have undertaken additional accounting and legal reviews of their business post the Thomas and Naaz decision. The outcomes here have been most valuable when the accountant and solicitor are jointly involved in the review process. Areas of consideration and review have included: Is the business running a legitimate service entity? Service and Facility Agreements Websites, promotional materials, terminology Operational and policy review (particularly any involving leave, rosters, obligations) Income streams, type of goods and services offered by the business Overall business structure/s Invoicing, cash/banking flow and tax status review Employee Practitioners In the last few months, we have had two clients decide to switch to engaging with all practitioners as employees. These practices join a small group of clients who had already engaged under an employee/employer model. The deciding factor for all of these practices in choosing this model was their desire for simplicity and certainty in the obligations of both parties. While I often hear that this is "just not affordable" for the service entity, I am finding that those that have proceeded down this path have been able to come to mutually advantageous arrangements. It is still very much the minority arrangement, however. Know your Customer With our clients operating under a service entity/tenant doctor type arrangement, we have been advising owners/PMs to prepare a "Practitioner Customer Register". This register should be kept on file and updated regularly and includes: Customer/Practitioner Trading Entity ABN number and GST registration status Trading Entity Bank Account Details Copy of signed Services and Facilities Agreement Sample invoice generated from PMS (e.g., BP/ Medical Director) with trading entity ABN Practitioners' other regular services provided outside this practice setting (e.g., other locations where services are provided if known) Business Restructures In the last nine months, we have seen an increased appetite for restructuring business operations and entities. We have heard some accountants and lawyers are pedalling restructures to "get rid of your old payroll tax liability". I like to exercise a degree of caution about restructures. A restructure purely to avoid a tax liability or obligation is unlikely to be effective. Quality lawyers and accountants should be engaged to ensure the restructure is completed with a commercial purpose. Restructures are also expensive, and once a business is restructured to a new entity, you will want to ensure your accounting and legal systems are optimally set up moving forward (so your money isn't wasted!). My Final Thoughts I want to express that I feel (and experience with you) your pain in this period of change. It is never lost on me that my clients are in business to provide health care and support to our community. Dealing with financial, legal, and taxation intricacies is an added burden on your already overloaded team and resources. I hope that our team at GrowthMD and our excellent partners are helping practices navigate these issues and changes with the least amount of stress possible. If you feel your practice's accountant doesn't understand or address these issues with you, please reach out to me here: https://www.growth-md.com/working-together

GrowthMD has moved into new offices, representing the company's growth over the past few years. To celebrate we welcomed our GrowthMD family of clients and supporters into our office for drinks, live music and in-person connection. Thank you to our amazing GrowthMD family for sharing these special moments.