CPN 036v2: Relief to Medical Centres

Purpose

The purpose of this Practice Note is to explain the amendments made to the Payroll Tax Act 2007 (“the Act”) which were introduced as a result of an announcement made in the NSW State Government Budget 2024-25

The Revenue Legislation Amendment Act 2024 provides an exemption for past unpaid payroll tax that relates to “relevant general practitioner wages” and provides an ongoing rebate for relevant general practitioner wages.

The rebate and exemption only apply to contractor general practitioner (“GP”) services and does not extend to GPs engaged as employees and other staff such as nurses, reception, administration staff, pathology and allied health services.

Refer to PTA 041 for more information on how the relevant contract provisions apply to an entity that conducts a medical centre business.

This Note explains in detail when the exemption and the rebate will apply.

Background

An announcement was made as part of the NSW State Government Budget 2024-25 (handed down on 18 June 2024) to provide relief from payroll tax for medical centres who engage GP contractors.

Division 2A of Part 3 of Schedule 2 of the Act has been introduced to implement that announcement.

The relief announced will be in the form of:

1. an exemption for any unpaid payroll tax that was payable on wages paid or payable to relevant GP prior to 4 September 2024; and
2. a rebate for payroll tax on wages paid or payable to GP contractors on or after 4 September 2024 when certain conditions are met.

Commissioner’s Practice Note

Definitions

For the purposes of the rebate, wages are relevant general practitioner wages if:

1. the wages are paid or payable to a general practitioner:
   1. under a relevant contract, and
   2. for the provision of general practitioner services through a medical centre, and
2. the relevant contract is part of a practice arrangement, and
3. a relevant proportion of all the general practitioner services provided by general practitioners through the medical centre in the relevant financial year are provided under a prescribed billing arrangements.

The relevant proportion of general practitioner services that must be provided under a prescribed billing arrangements is:

1. for a medical centre in Metropolitan Sydney – at least 80%
2. otherwise – at least 70%

Prescribed billing arrangements, for general practitioner services, means either or both of the following:

1. bulk billing arrangements for the services,
2. veterans arrangements for the services

Bulk billing arrangement, for general practitioner services, means an arrangement where:

1. the person responsible for paying for the services assigns the person’s right to a Medicare benefit for the service to the general practitioner who provided the service, and
2. the general practitioner accepts the Medicare benefit as full payment for the service

General practitioner means a medical practitioner who is registered under the Health Practitioner Regulation National Law (NSW) in the speciality of general practice.

General practitioner services means professional services provided by a general practitioner.

Professional services means a professional service specified in the Health Insurance Act 1973 (Cth) section 3 definition of ‘professional service’ paragraph (a) – being a service (other than a diagnostic imaging service) to which an item relates, being a clinically relevant service that is rendered by or on behalf of a medical practitioner.

Relevant Contractⁱ is a contract under which a person supplies to another person services for or in relation to the performance of work as defined in section 32 of the Act.

Medical centre means premises, other than a private health facility, used to provide general practitioner services at the premises or remotely:

1. by telephone, or
2. using other technology that enables audio, or audio and visual, communication between persons at different places.

Practice arrangement, between a registered health practitioner or unregistered person, and an entity:

1. includes:
   1. a contract of employment, contract for services or another arrangement or agreement between the practitioner or person and the entity in relation to the provision of services; or
   2. an agreement for the practitioner or person to provide services for or on behalf of the entity, whether in an honorary capacity, as a volunteer or otherwise, and whether or not the practitioner or person receives payment for the services; but
2. does not include a contract or agreement not directly related to the provision of a health service.

Private health facilityⁱⁱ means premises at which any person is admitted, provided with medical, surgical or other prescribed treatment and then discharged, or premises at which a person is provided with prescribed services or treatments.

Veterans arrangement, for general practitioner services, means an arrangement:

1. approved by the Chief Commissioner, and
2. under which the general practitioner accepts as full payment for the services payment under one or more of the following Acts of the Commonwealth:
   1. the Australian Participants in British Nuclear Tests and British Commonwealth Occupation Force (Treatment) Act 2006,
   2. the Military Rehabilitation and Compensation Act 2004,
   3. the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988,
   4. the Treatment Benefits (Special Access) Act 2019,
   5. the Veterans’ Entitlements Act 1986.

Exemption

Relevant general practitioner wages paid or payable before 4 September 2024

Clause 10D of Schedule 2 of the Act provides that relevant general practitioner wages paid or payable before 4 September 2024 are exempt unless payroll tax has already been paid on those wages before that date.

Where payroll tax has not been paid in respect of relevant general practitioner wages paid or payable prior to 4 September 2024, an exemption applies and the employer is not required to declare those payments as wages for payroll tax purposes.

However, where an employer has already paid payroll tax in respect of relevant general practitioner wages paid or payable prior to 4 September 2024, that employer is not entitled to a refund of that tax.

Relevant general practitioner wages paid or payable before 4 September 2024 and payroll tax has not been paid at that date

If an employer operates a medical centre practice which pays relevant general practitioner wages, any amounts paid or payable before 4 September 2024 are exempt from payroll tax, if payroll tax has not been paid in respect of those amounts before 4 September 2024.

Relevant general practitioner wages paid or payable before 4 September 2024 and payroll tax has been paid at that date

If an employer paid payroll tax, before 4 September 2024, on relevant general practitioner wages, the employer is not entitled to a refund for the payroll tax paid before 4 September 2024.

Relevant general practitioner wages paid or payable before 4 September 2024 and payroll tax has been partially paid at that date

If an employer only paid payroll tax on relevant general practitioner wages for some, but not all, months up to 4 September 2024, that employer is not entitled to a refund on payroll tax paid but may be entitled to an exemption from unpaid payroll tax on wages paid or payable to the GPs before 4 September 2024.

Rebate

Relevant general practitioner wages paid or payable on or after 4 September 2024

An employer is entitled to a rebate of payroll tax paid or payable for relevant general practitioner wages if the wages are paid or payable on or after 4 September 2024.

Although the rebate is only available for wages paid or payable to contractor GPs, for the purpose of determining whether a medical centre meets the relevant proportion, the employer must consider the total number of GP services that are provided under a prescribed billing arrangement as a proportion of the total number of GP services that are provided at the medical centre (whether it’s a prescribed billing arrangement or not) including those GP services provided by GPs who are engaged as employees.

A service is defined as per the definition of “professional services” above.

The relevant proportion is not determined based on the number of GPs, patients, appointments or consultations. One consultation may include a number of services some of which may be provided under a prescribed billing arrangement and some may not be.

Wages paid or payable on or after 4 September 2024 by a medical centre operating in Metropolitan Sydney where at least 80% of GP services are provided under a prescribed billing arrangements

If an employer operates a medical centre in Metropolitan Sydney and engages GP contractors, under a relevant contract to provide GP services and the relevant proportion of GP services (at least 80%) are provided under a prescribed billing arrangement, the wages paid to the GPs are relevant general practitioner wages and the employer is entitled to a rebate of the payroll tax paid or payable on those wages.

Wages paid or payable on or after 4 September 2024 by a medical centre operating in Metropolitan Sydney where less than 80% of GP services are provided under a prescribed billing arrangements

If an employer operates a medical centre in Metropolitan Sydney and engages GP contractors, under a relevant contract, to provide services, and the proportion of GP services that are provided under a prescribed billing arrangement are less than 80% of the total GP services, the wages paid by the employer are not relevant general practitioner wages. Accordingly, the employer is not entitled to a rebate of the payroll tax paid or payable on those wages.

Wages paid or payable on or after 4 September 2024 by a medical centre that engages some GPs under relevant contracts and some as employees

If an employer operates a medical centre and engages GPs, some under a relevant contract and some as employees, to provide GP services, the relevant proportion of GP services (at least 80% in Metropolitan Sydney or at least 70% elsewhere) must be determined having regard to all GP services provided by both contractor GPs and employee GPs at that medical centre.

If the relevant proportion is met, the rebate only applies to wages paid or payable to contractor GPs and not on wages paid or payable for GP services provided by GP employees.

Where an employer operates multiple medical centre locations and engages GP contractors to work at each respective location

If an employer operates across multiple medical centre locations, the relevant proportion and entitlement to the rebate is determined having regard to GP services at each location.

Where an employer operates at multiple medical centre locations and engages a GP contractor who works at the various locations

If an employer engages a GP contractor to provide GP services at multiple medical centre locations, the employer must determine whether the relevant proportion has been met at each medical centre location.

If the relevant proportion has been met at all locations, the employer is entitled to a rebate related to the entire wage paid to that GP.

If the relevant proportion has only been met at some locations but not at others, the employer will need to pro-rata and reduce the applicable rebate in line with the proportion of GP services provided by the GP at the locations that met the minimum threshold.

Wages paid or payable on or after 4 September 2024 by a medical centre providing services to patients where the cost is covered by an arrangement apart from a prescribed billing arrangements

If an employer operates a medical centre and engages GP contractors, under a relevant contract, to provide GP services to patients where there is no out of pocket cost or gap fee for the patient due to an arrangement apart from a prescribed billing arrangement, those services are still regarded as GP services but are not considered "prescribed billing arrangements".

General Practitioner Trainees

Section 10A(b) of the Act defines general practitioner as a medical practitioner who is registered under the Health Practitioner Regulation National Law (NSW) in the specialty of general practice. This does not include GP trainees as they are not a medical practitioner registered in the specialty of general practice. This means wages paid to trainee GPs are not eligible for the rebate. Equally, any services provided by a trainee GP would be excluded from calculation of the prescribed billing threshold as these would not be “general practitioner services” since the trainees are not “general practitioners”.

Amount of the Rebate

The amount of the rebate for a financial year is the difference between:

1. the payroll tax payable for the financial year when the relevant general practitioner wages are included, and
2. the payroll tax that would be payable for the financial year when the relevant general practitioner wages are not included.

Records you should keep

To allow the Chief Commissioner to verify the amount of any rebate claimed for a financial year, you must maintain sufficient records to enable RNSW to calculate the amount of the rebate.

Records that you should maintain include:

• the number of GP services bulk-billed and the number of GP services that have out of pocket expenses if you are a mixed billing practice
• the locations where GP services are provided if you operate more than one medical centre
• how you have pro-rated for any GPs engaged under a relevant contract if the GP works at more than one medical centre location
• the relevant general practitioner wages for the financial year
• the payroll tax payable for the financial year when the relevant general practitioner wages are included
• the payroll tax that would be payable for the financial year if the relevant general practitioner wages are not included.

Footnotes

ⁱ See sec 32 of the Payroll Tax Act 2007
ⁱⁱ Private Health Facilities Act 2007