Payroll tax - Avant Law's top five tips
Following the decisions of Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2021] NSWCATAD 259 and Commissioner of State Revenue (Vic) v The Optical Superstore Pty Ltd [2019] VSCA 197, and various state revenue office (‘SROs’) public rulings, ‘payroll tax’ has been ringing in the medical profession’s ears. Over the last 18 months, we have noticed an increased general awareness of the payroll tax ramifications for private practice, but practices still express confusion as to how should they structure and document their provision of facilities and/or services to practitioners.
It is apparent that the SROs are reviewing the way practices engage with health practitioners and how practices portray that relationship to the public. Accordingly, it is fundamental that the five following areas are clear and consistent in the manner in which they present the business of the practice as a provider of facilities and/or services to independent health practitioners.
1. Facilities and service agreements
The most fundamental agreement to establish the relationship between a doctor and a practice, is the Facilities and Services Agreement. A properly drafted Facilities and Services Agreement should reflect that the doctor engages the practice to provide the doctor with facilities and/or services and, most fundamentally, that the patient relationship remains between the doctor and the patient (not the practice). This means that certain features will usually be required:
- The patient pays the doctor directly for the services provided. The doctor then pays the practice for the services it receives.
- The doctor sets their own hours.
- The practice will not stipulate how the doctor can perform their work or other impositions on the doctor’s practice.
- The patient relationship is with the doctor, not the practice. As a result, records belong to the practitioner, not the practice.
- Each party should maintain their own insurances (specifically that the practitioner will not be covered under the practice’s public liability coverage).
- The doctor is not subject to a restraint of trade which prevents them from engaging in a competing business. At most, you may consider a non-solicitation of other doctors to protect your business.
2. Patient consent forms
The patient consent form should also reflect the relationship between the doctor and practice. It should be clear on that form that the practice is gathering the information on behalf of the doctor (and only for the purposes of providing services to the doctor).
It is also important from a privacy perspective to ensure that it is clear to the doctor’s patients who will be accessing their personal and sensitive information and why they will be accessing that information, as well as capturing any consents to undertake direct marketing to those patients.
3. Supervision agreement
To continue facilitating new doctors coming into the profession, experienced doctors will often be called upon to supervise students and registrar doctors with the practice assisting to facilitate the administrative aspects of this supervision. Subject to the terms of the supervision, it may be that a discrete and separate supervision agreement is used to record the arrangement between the practice and the doctor.
Such supervision agreement should be short-form and clearly outline:
- The details of the student or registrar being supervised;
- That the practice does not contract or otherwise engage the supervisor to provide it with services, and that the relevant supervision arrangement is between the supervisor and the student or registrar;
- The way that the doctor is being paid for that supervision;
- What the practice is required to do to assist the doctor to facilitate the supervision; and
- What amounts (if any) the practice will be paid for their work assisting the doctor with some administrative aspects of the supervision.
4. Marketing materials and website
Often, one of the services a practice provides to doctors is the facilitation of online bookings through a website. Given the frequency of online booking, a website is often the first place that people interact with their doctor, so it is important that the relationship between the practice and the doctor is not misinterpreted or misrepresented.
Practices should ensure that they are careful with the language that they use on this website by avoiding phrases like:
- “We’ve been providing care to the community for the last 20 years”;
- “Our doctors”;
- “About Us” (where this reference includes doctors); and
- “The Team” (where this reference includes doctors).
The website should be clear that it is the doctor who is providing the medical services, not the practice. Below we have included some examples of how some practices are inadvertently misrepresenting the relationship with patients and some recommended language to reduce this risk:
- “We provide a full range of medical services”-> “The doctors we support provide a full range of medical services to their patients”.
- “We are a practice focused on the health of your whole family” -> “We are a practice focused on supporting your doctor to look after the health of your whole family”.
Given independent doctors can set their own hours, it is often preferable to remove their working days from the website. These days can be subject to change by the doctor at short notice which could cause confusion for that doctor’s patients where they may be different to what is set out on the website.
5. Social media
As social media continues to grow along with its use in marketing and business development, it is also being used increasingly in the medical profession. Practices and doctors should be mindful that the relationship portrayed in social media is consistent with the other areas of the practice. Particularly the use of language as discussed in relation to the website.
We are aware that SROs are looking at social media sites to understand the relationship between the doctor and the practice. Care should be taken that the relationship is correctly reflected in all posts.
For example, we have observed many practices use social media to advertise facilities and services available to doctors. While there is no issue with advertising the availability of facilities and services for the practitioners, some practices are using language that confuses the relationship that doctor would have with the practice and which could be problematic. The below are common examples of phrases used in this type of advertisement, and how each of the phrases could be set out more appropriately:
- Recruitment-> remove - this phrase should not be used as it implies and employee/employer relationship
- Work with us -> let us support you
- Join our team -> engage our team of administrative and reception staff to support you
- We're hiring -> facilities and services available at competitive fees
Avant Law are here to help
At Avant Law, our lawyers are experienced with all the matters discussed above. If you would like our assistance with any of these matters or to discuss payroll tax, please contact us to arrange a 15-minute obligation-free discussion.
Disclaimer: The information in this article does not constitute legal advice or other professional advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of this content. The information in this article is current to 20 March 2024. Liability limited by a scheme approved under Professional Standards Legislation. Legal practitioners employed by Avant Law Pty Limited are members of the scheme. © Avant Mutual Group Limited 2024.
