The taxpayer has appealed against the decision of the New South Wales Civil and Administrative Tribunal in Thomas and Naaz Pty Ltd and Chief Comr of State Revenue [2021] NSWCATAD 259 (3 September 2021, S Goodman SC). See related TT Article.
The case concerned payments to doctors under Agreements between the owners of medical centres and the doctors carrying on their businesses in the centres.
- It involved 5 payroll tax notices of assessment, totalling $795,292.95, covering the period from 1 July 2013 to 31 March 2018.
- The Tribunal held that the Agreements between the owners and the doctors carrying on their businesses in the centres were “relevant contracts” for the purposes of the Payroll Tax Act 2007 (NSW).
- The Tribunal said it was satisfied that s 35 of that Act operated so as to deem the payments from the medical centre operator to the doctors to be wages.
The taxpayer’s appeal is set for a hearing before the Appeals Panel of the Tribunal in Sydney on 25 March 2022. I’m not sure what the appeal avenue is, in NSW – the Victorian administrative appeals tribunal (VCAT) allows appeals, I think, only to a Court. It seems to me, however, that it is a shame this matter is not proceeding to a Court.
The structure ruled on, is incredibly prevalent in medical practices across Australia (that is: a doctor deriving their own fees and paying a service fee, to the clinic, for their surgery space and administrative and clinical support). When one looks at the list of indicia applied (clinic keeps the patient notes; working on rosters; minimum hours; obliged to give notice of leave, etc) it seemed very difficult to ‘structure’ around. I’m not sure that payroll tax liability would ‘kill’ the structure, but it kicks a bit of a ‘hole’ in it (see related TT Article). And, if all (or a significant portion of) medical practices could, now, have arrears of Payroll Tax payable, professionals servicing them, have a mammoth job advising them, and planning how to handle a potentially massive, unexpected liability.
[Tax Month – March 2022 – Previous Month, 18.3.22] [LTN 51, 17/3/22]