What you can do about payroll tax changes

What’s payroll tax?

Payroll tax is a tax levied by state and territory governments, which is paid by employers on employee wages, salaries, and other forms of compensation. It is one of the largest sources of revenue for state and territory governments and is used to fund public expenditure. 

What’s the concern?

Revenue authorities in NSW, Vic, Qld and SA have recently published rulings related to payroll tax as it affects medical centres. Dental practices are affected by this. Other jurisdictions may follow. 

The ruling is problematic because it has the effect of treating certain parties, such as independent contractors who operate at the practice as if they were employees for the purpose of assessing payroll tax in certain circumstances. 

Independent contractor dentists working under a service facility agreement may be deemed employees for the purposes of payroll tax, leading to potentially sudden and retrospective liabilities for practice operators, and uncertainties around self-assessment. Potential retrospective liabilities are the greatest concern.

Some states are carving out concessions for GPs, but not for dentists or other health professionals. 

The ADA is employing a range of strategies to help ensure state governments understand the effects this could have on dentists across much of Australia. (So far only Tasmania and WA are not affected by the changes, or have ruled out implementing them).

How to tell if you’re affected

States and territories apply varying thresholds below which businesses are exempt from payroll tax. Details are available here.

For advice that considers your business’s particular circumstances, you may like to consult your accountant in the first instance. 

What you can do

We’re asking ADA members to contact their state MP and highlight how this measure will affect their business, staff, contractors, and patients.