Relevant contracts—medical centres

What this ruling is about

1. The purpose of this public ruling is to explain the application of the relevant contract provisions in the Payroll Tax Act 1971 (Qld) (the Act) to an entity that conducts a medical centre business (referred to as a ‘medical centre’), including dental clinics, physiotherapy practices, radiology centres and similar healthcare providers who engage medical, dental and other health practitioners or their entities (‘practitioners’) to provide patients with access to the services of practitioners.
2. References in this public ruling to section numbers are references to provisions of the Act unless otherwise specified.
3. This public ruling addresses the following issues:

Ruling and explanation

4. This public ruling explains the application of the relevant contract provisions in Division 1A of Part 2 of the Act to a contract between a medical centre and a practitioner who is engaged to serve patients for or on behalf of the medical centre. It should be read together with the Commissioner’s other public rulings that explain the general application of the relevant contract provisions.
5. Particularly, Public Ruling PTAQ014.1 Payroll tax exemption for wages paid to general practitioners outlines the terms of an administrative arrangement under which wages paid or payable by a medical practice (as defined) to a general practitioner (as defined) on and from 1 December 2024 are not liable to payroll tax and the mental health levy. Application of that administrative arrangement is limited by these defined terms. It therefore does not extend to wages paid or payable by other types of medical centre businesses (e.g. a dental clinic or physiotherapy practice). Nor does it extend to wages paid or payable to other types of health practitioners.

Liability for payroll tax

6. Part 2 of the Act imposes liability for payroll tax. Whether there is a payroll tax liability will depend on the particular facts and circumstances of each matter. Generally, payroll tax is payable by employers on all taxable wages paid to a common law employee (Part 2 Division 1 of the Act). Where there is no common law employer–employee relationship, liability for payroll tax will arise if it is established amounts are paid under a relevant contract to a contractor (Part 2 Division 1A of the Act). Thirdly, where there is no common law employer–employee relationship or no relevant contract involving a contractor, liability may still arise if it is established amounts are paid under a ‘employment agency contract’ to a service provider (Part 2 Division 1B of the Act).
7. If liability for payroll tax arises due to the operation of Division 1A or 1B, there are deeming provisions that apply to bring independent contractors and employment agents within the operation of Division 1.¹
8. Under Division 1, employers are liable to payroll tax on wages paid by common law employers to employees. The definition of ‘wages’ includes amounts paid ‘to an employee as an employee’. The term ‘employee’ is not defined in the Act, therefore common law employment tests apply to determine whether a worker is an employee. For further details refer to Public Ruling PTA038 Determining whether a worker is an employee.
9. In many cases, the common law employer tests can be difficult for businesses to apply to accurately assess their liability when they engage contractors. Further, it was recognised the increasing use of contractor arrangements to convert common law employees to contractor arrangements provided increased opportunities for revenue avoidance. As a result, the Act has, since 2008, included ‘contractor’ provisions (Part 2 Division 1A), which are substantially aligned with the ‘contractor’ provisions of New South Wales and Victoria.²
10. Consequently, the definition of ‘wages’ also includes an amount taken to be wages under another provision of the Act.³ Therefore, in addition to wages paid to a common law employee under Division 1, Division 1A makes payments to contractors providing services under a relevant contract liable to payroll tax unless one or more exemptions in Division 1A apply. The Division 1A exemptions are designed to exclude payments to genuine independent contractors.
11. This has the result that if the contract is a relevant contract, the principal is deemed to be an employer, the contractor is deemed to be an employee and payments made under the contract for the performance of work are deemed to be wages unless an exemption applies.

Application of relevant contract provisions to a medical centre

12. A contract between an entity that conducts a medical centre and a practitioner is a relevant contract under s.13B if all the following apply:
    1. the practitioner carries on a business or practice of providing medical-related services to patients
    2. in the course of conducting its business, the medical centre
       1. provides members of the public with access to medical-related services
       2. engages a practitioner to supply services to the medical centre by serving patients on its behalf
    3. an exemption under s.13B(2) does not apply.
13. Further to (b) above, factors to consider in determining whether a medical centre business is being conducted for the purpose of this ruling are provided in Attachment 1.
14. Under s.13A, ‘contract’ includes an agreement, arrangement or undertaking, whether formal or informal and whether express or implied.
15. If a medical centre engages a practitioner to practise from its medical centre, or holds out to the public that it provides patients with access to medical services of a practitioner, it is likely the relevant contract provisions will apply to the contract with the practitioner unless an exception (i.e. exemption) applies.
16. A practitioner engaged by a medical centre to serve patients for or on behalf of the medical centre under a relevant contract supplies services to the medical centre as well as to patients. (See The Optical Superstore Pty Ltd v Commissioner of State Revenue [2018] VCAT 169 at [82]-[85] (The Optical Superstore case) and Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA40 at [41])

Separate businesses conducted by medical centres and practitioners

17. Under a relevant contract, the medical centre and each practitioner engaged by the medical centre conducts separate but related businesses (see, for example, Commissioner of Taxation v Healius Ltd [2020] FCAFC 173 at 32). The medical centre provides patients with access to medical services provided by practitioners. The medical centre also provides services and facilities to the practitioners and patients by attracting patients, advertising the services offered by practitioners, managing the services provided to patients including arranging appointments and billing patients either directly or by bulk billing Medicare, and maintaining patient records.
18. Practitioners have professional responsibility for the medical care and advice they provide to patients. The services provided by practitioners are provided in the course of their own business. However, the medical centre has operational or administrative control over the practitioners if it is able to influence matters such as who practises at the centre, the hours and days when they practise, and the space within the centre where that occurs. Additional factors that may indicate operational or administrative control over a practitioner by the medical centre are provided in Attachment 2. These factors are not exhaustive, and a medical centre may have operational or administrative control even if one of the factors in Attachment 2 is not present.

When is a contract a relevant contract?

19. A contract is a relevant contract under s.13B(1) if it provides for the supply of services ‘in relation to the performance of work’ by one party for or on behalf of the other party unless one of the exemptions in s.13B(2) applies. The reference to services ‘in relation to the performance of work’ is satisfied if the services performed under the contract are work related.
20. The requirement that a practitioner supplies services to a medical centre is satisfied if the practitioner serves patients for or on behalf of the medical centre. This principle has been endorsed by the High Court in Accident Compensation Commission v Odco Pty Ltd [1990] HCA 43; (1990) 95 ALR 641 at 652 (paragraph 30) concerning similar Victorian legislation regulating workers’ compensation.
21. This principle has also been applied by courts and tribunals in a range of industries⁴ including cases involving medical centres.⁵
22. Some factors or terms indicating that a contract between a medical centre and a practitioner would more likely be a relevant contract are provided in Attachment 3. However, each contract must be considered individually on a case-by-case basis taking into account all the relevant facts and circumstances to determine whether it is a relevant contract. If the contract provides, either expressly or by implication, that a practitioner is engaged to supply work-related services to the medical centre by serving patients for or on behalf of the medical centre, the contract is a relevant contract under s.13B(1).

Example 1—Supply of services for or in relation to work by practitioners

Recent decisions

23. The terms and conditions of contracts held to be relevant contracts under equivalent provisions to s.13B(1) in two recent tribunal decisions are summarised below.

The Optical Superstore (TOS) Case

24. In the Optical Superstore case, the Victorian Civil and Administrative Tribunal concluded that contracts between TOS and optometrists—or companies or trusts associated with optometrists (‘optometrist entities’)—were relevant contracts under the equivalent provision to s.13B(1) (at [53]). The Tribunal concluded as follows:
    1. TOS was supplied with the services of optometrists for or in relation to the performance of work.
    2. The optometrist entities ensured the attendance of optometrists at agreed locations and times, and the optometrists provided optometry services to TOS customers.
    3. The arrangements also benefitted TOS by potentially leading to increased sales of frames, lenses and other optometry products.
    4. The services of the optometrists were provided to TOS as well as to the patients.
    5. The contracts were not tenancies because the optometrists did not have rights to exclusive occupancy, and were more consistent with a contracting arrangement.
25. The Tribunal’s decision that some contracts between TOS and optometrist entities were relevant contracts was not challenged by TOS in appeals by the Victorian Commissioner of State Revenue to the Victorian Supreme Court in Commissioner of State Revenue (Vic) v The Optical Superstore Pty Ltd [2018] VSC 524 (see paragraph 16), or to the Victorian Court of Appeal in Commissioner of State Revenue (Vic) v The Optical Superstore Pty Ltd [2019] VSCA 197, which upheld the Commissioner’s assessments.

The Thomas and Naaz Case

26. In Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2021] NSWCATAD 259 (the Thomas and Naaz case), the NSW Civil and Administrative Tribunal (NCAT) concluded the typical agreement entered into between Thomas and Naaz Pty Ltd (Thomas and Naaz), being the entity that conducted the medical centres, and various doctors was a relevant contract under the equivalent provision to s.13B(1) (at [41]). The Tribunal determined as follows:
    1. The terms of the agreement indicate the doctors agreed to (at [38]):
       1. provide services on a five day per week basis, including weekend rosters
       2. provide advance notice and obtain approval of vacations limited to four weeks per annum
       3. promote the interests of Thomas and Naaz, including not channelling patients away from its business
       4. abide by Thomas and Naaz’s operating protocols and complete all necessary documentation
       5. comply with a restrictive covenant for two years after the doctor departs from the medical practice owned by Thomas and Naaz.
    2. The terms of the agreement secured the provision of the services provided by the doctors to the patients of Thomas and Naaz’s medical centres. Where such services were a necessary part of Thomas and Naaz’s business, doctors provided their services to the medical centre as well as to patients (at [39]).
    3. The services provided by the doctors were provided for or in relation to the performance of work, and the services supplied were work-related (at [40]).
27. In an appeal by Thomas and Naaz to the Appeal Panel of NCAT in Thomas and Naaz Pty Ltd (ACN 101 491 703) v Chief Commissioner of State Revenue [2022] NSWCATAP 220), Thomas and Naaz argued the Tribunal made an error of law by finding that the doctors provided their services to Thomas and Naaz as well as patients, and by concluding there was a relevant contract. The Appeal Panel rejected these grounds, deciding they were findings of fact and did not raise questions of law. Although these decisions were not reviewed, the Appeal Panel noted the Tribunal’s approach was entirely orthodox and in accordance with binding authority (see paragraphs 64–69).
28. An appeal to the New South Wales Court of Appeal (Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40) was dismissed.

Engaging a practitioner from practitioner’s entity

29. In some cases, a practitioner’s services may be obtained under a contract between a medical centre and a related entity (such as a company) established by the practitioner (practitioner’s entity). A practitioner may be engaged by the practitioner’s entity either as an independent contractor or as an employee.

Example 2—Supply of a practitioner’s services using a company

Exemptions from relevant contract provisions under s.13B(2)

30. If an exception (i.e. an exemption) applies under s.13B(2), no payroll tax liability under the relevant contract provisions arises.
31. Under s.13B(2), the three exemptions more likely to apply to a contract between a medical centre and a practitioner are:
    1. The practitioner provides services to the public generally—s.13B(2)(b)(iv).
    2. The practitioner performs work for no more than 90 days in a financial year—13B(2)(b)(iii).
    3. Services are performed by two or more persons—13B(2)(c)(i).
32. When claiming an exemption, a medical centre must be able to substantiate the exemption with sufficient evidence.

Providing services to the public generally—s.13B(2)(b)(iv)

33. A contract between a medical centre and a practitioner is not a relevant contract in relation to a financial year if ss.13B(2)(b)(i) to (iii) do not apply to the services supplied under the contract and the Commissioner is satisfied the practitioner who provided the services under the contract ordinarily performs services of that kind to the public generally in that financial year. A principal (medical centre) which intends to claim this exemption may apply to the Commissioner for an exclusion determination under s.13B(2)(b)(iv) of the Payroll Tax Act (this is not necessary if the principal is using the 10 days or less per month method). The exemption is explained further in Public Ruling PTA021 Contractors who ordinarily perform services to the public.
34. To qualify for the exemption, the practitioner must provide services of the same kind to other principals, such as other medical centres or hospitals. For the avoidance of doubt, the reference in s. 13B(2)(b)(iv) to ‘services of that kind’ applies to the services the practitioner performs or renders to the medical centre under the relevant contract.⁷ It does not refer to the services the practitioner provides to the clients of the medical centre. Therefore, the provision of services to patients for or on behalf of a single medical centre may not satisfy the requirement that services are provided to the public generally (see, for example, Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2021] NSWCATAD 259 at [57]-[58]). If a practitioner practises at multiple medical centres but those centres are members of the same group for payroll tax purposes, the medical centre may not be entitled to the exemption (see Public Ruling PTA021).

Example 3—Providing services to the public generally

Working for 90 days or less in a financial year—s.13B(2)(b)(iii)

35. If a practitioner performs work under a contract for no more than 90 days during a financial year, the contract is exempt for that financial year. Each calendar day on which the practitioner performs work counts as 1 day, regardless of the time spent working on a particular day. The exemption is explained in Public Ruling PTA035 Contractors–90-day exemption and Public Ruling PTA014 What constitutes a day’s work?

Example 4—Practitioner works for no more than 90 days

Services performed by two or more persons—s.13B(2)(c)(i)

36. This exemption applies if a medical centre contracts with a practitioner, and the practitioner and at least one other person employed by or who provides services for the practitioner perform the work required under the contract.
37. The second person that provides services to or for the practitioner may be a company, but the work must be performed by a natural person.
38. The work performed by the second person must be work required to be performed under the contract between the medical centre and the practitioner.
39. The exemption does not apply if:
    1. the second person is engaged by the medical centre, not by the practitioner, to provide the services
       or
    2. the second person provides general business-related services that are not required to be provided to the medical centre under the relevant contract (e.g. tax, accounting or business advisory services provided to the practitioner).
40. A practitioner or the practitioner’s entity that employs or engages another person in the course of a business carried on at a medical centre may be grouped with the medical centre under s.70 (groups arising from the use of common employees). Public Ruling PTA017 Grouping of professional practices and administration businesses explains the application of the grouping provisions to professional practices and service entities.

Example 5—Practitioner engages a second person to perform services

Example 6—Medical centre engages a second person to perform services

Example 7—Second person does not perform work required under the contract

Who is the employer under s.13C?

41. Section 13C(1) deems the employer under a relevant contract to be the person:
    1. who supplies services to another person
       or
    2. to whom the services of persons are supplied.
42. Paragraph 13C(1)(c) applies to a person who gives goods to individuals and is not generally applicable in relation to contracts involving medical centres.
43. If both paragraphs (a) and (b) under s.13C(1) apply to a relevant contract, s.13C(2) provides the person who is supplied with the services of another person is deemed to be the employer.
44. Applying s.13C(1)(b) to a relevant contract between a medical centre and a practitioner, the medical centre is taken to be the employer because it receives the services of the practitioner who serves the patients. Those services are work-related because the practitioner performs work in the course of supplying the services. (See, for example: Accident Compensation Commission v Odco Pty Ltd [1990] HCA 43; (1990) 95 ALR 641 at 652 (paragraph 30); The Optical Superstore Pty Ltd v Commissioner of State Revenue [2018] VCAT 169 at [82].)

Example 8—Medical centre is taken to be an employer

Who is the employee under s.13D?

45. Under s.13D(1)(a), a person who performs work in relation to which services are supplied to another person under a relevant contract is taken to be an employee.
46. Paragraph 13D(1)(b) only applies to a relevant contract under which goods are resupplied.
47. Under a relevant contract between a medical centre and a practitioner, the practitioner, being the person who performs the work required under the contract, is taken to be the employee (see, for example: The Optical Superstore Pty Ltd v Commissioner of State Revenue [2018] VCAT 169 at [82]; Homefront Nursing Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 145 at [46]). If the relevant contract is between a medical centre and a practitioner’s entity, and the practitioner’s entity engages the practitioner to provide services under a separate contract with the practitioner, the practitioner is taken to be an employee under s.13D.

Example 9—Practitioner taken to be an employee

Deemed wages—common payment arrangements

48. The following common payment arrangements between a medical centre and a practitioner under a relevant contract have been identified and are discussed further below. Whether certain payments to the practitioner are considered deemed wages is summarised below.

Which payments are deemed wages under s.13E?

49. Under s.13E(1) amounts paid or payable under a relevant contract by a medical centre (the deemed employer) are wages for payroll tax purposes if the payments are in relation to the performance of work relating to the relevant contract by the deemed employee. The situations where practitioners are paid by third parties or by patients directly are discussed separately at paragraphs 54–68.
50. The phrase ‘in relation to work’ requires either a ‘direct’ or ‘indirect’ relationship between the payment and the performance of work (see Commissioner of State Revenue (Vic) v The Optical Superstore Pty Ltd [2019] VSCA 197 at [65]). In Thomas and Naaz the Tribunal decided (at [67]–[68]) that there was such an ‘indirect’ relationship where the contractual relationship included the following characteristics:
    1. the doctors provided the services to patients
    2. the patients assigned their medical benefits to the doctors
    3. Thomas and Naaz, on behalf of the doctors, submitted the assigned claims for the medical benefits to Medicare
    4. Medicare paid those benefits to Thomas and Naaz
    5. Thomas and Naaz retained 30% of the amounts received from Medicare and paid the remaining 70% to the doctors as the payments.
51. It does not matter that payments to a practitioner are paid from money received by the medical centre on behalf of practitioners, whether from ‘out-of-pocket’ patient fees or assigned Medicare benefit from patients, even if the practitioner is beneficially entitled to that money (see Commissioner of State Revenue (Vic) v The Optical Superstore Pty Ltd [2019] VSCA 197 at [67]). When the practitioner’s entitlement is recognised and the money is paid or becomes payable, it constitutes wages for payroll tax purposes.

Example 10—Payments by a medical centre to practitioners taken to be wages

52. If a practitioner’s services are provided under a relevant contract between a medical centre and the practitioner’s entity, and the practitioner is taken to be an employee of the medical centre, payments by the medical centre to the practitioner’s entity that are in relation to the performance of work related to the relevant contract are taken to be wages.

Example 11—Payments by a medical centre to a practitioner’s company taken to be wages

53. If a payment by a medical centre to a practitioner includes an amount that is not attributed to the performance of work, only the amount paid for the performance of work is subject to payroll tax. A payment for something other than the performance of work is not subject to payroll tax, but it must be substantiated with sufficient evidence that the practitioner is required to provide it under the contract. Reimbursement of general business expenses of the practitioner cannot be claimed as a deduction from payments by the medical centre that are taken to be wages under s.13E(1).

Third-party payments taken to be wages under s.51

54. Under s.51, ‘third-party payments’ of money or other consideration may be taken to be wages paid or payable by an employer to an employee. This provision applies to a third-party payment under a relevant contract that would be wages if paid by an employer to an employee under the contract.
55. A person taken to be an employer under s.13C is taken to be an employer under s.51, and a person taken to be an employee under s.13D is taken to be an employee under s.51.
56. A third-party payment may consist of:
    1. a payment by a person other than a deemed employer to a deemed employee
    2. a payment by a deemed employer to a person other than a deemed employee
    3. a payment by a person other than a deemed employer to a person other than a deemed employee.

Assignment and payment of Medicare benefits and out-of-pocket patient fees from patients to practitioners

57. Under normal business arrangements, the payment of an assigned Medicare benefit to a practitioner and the payment of out-of-pocket patient fees from patients directly to practitioners will not constitute wages under either s.13E or s.51.

Medicare benefits

58. A patient who incurs expenses for medical or pathology services is entitled to receive Medicare benefits from the Commonwealth Government under the Health Insurance Act 1973 (Cwlth) (HIA Act).⁸ Further, the Medicare benefit is payable by Medicare on behalf of the Commonwealth Government to the patient who incurs the medical expense.⁹
59. Instead of the patient paying the practitioner for a medical service and then claiming the Medicare benefit from the Commonwealth Government, the patient may enter into an agreement with the practitioner whereby the patient assigns the right to payment of the benefit to the practitioner and the practitioner accepts the assignment in full payment for the service.¹⁰ The Medicare benefit is payable in accordance with the assignment or agreement.¹¹ Under a relevant contract between a medical centre and a practitioner, where a patient assigns their right to the Medicare benefit to the practitioner and the benefit is paid directly to the practitioner (i.e. rather than to the medical centre on behalf of or directed by the practitioner), the payment of the benefit is not taken to be wages as a ‘third-party payment’ under s.51.
60. The payment of the assigned Medicare benefit to the practitioner is not considered to be wages under s.13E, because it is not paid or payable by the deemed employer (the medical centre) under the relevant contract.
61. Further, assigned Medicare benefits are not paid or given (or to be paid or given) for an ‘employee’s services as an employee of an employer’ under s.51(1)(a). Instead, the payment of the Medicare benefit is a statutory payment pursuant to the HIA Act that the patient has assigned. On accepting the assignment, the practitioner has a right enforceable at law against Medicare.¹² Whether the practitioner has provided medical treatment in the capacity as a deemed employee is immaterial to the making of the payment.

Example 12—Assigned Medicare benefits paid directly to a practitioner

Payment of out-of-pocket patient fees from patient to practitioner

62. Where a patient pays out-of-pocket patient fees—in addition to any assigned Medicare benefit—directly to the practitioner (i.e. rather than to the medical centre on behalf of or directed by the practitioner), those payments are not considered to be deemed wages under s.13E because they are not paid or payable by the deemed employer (the medical centre). Further, the payment of out-of-pocket patient fees directly to the practitioner are not deemed to be wages under s.51 because they are not paid or given by the patient for the practitioner’s services as an employee, but rather for the provision of medical services to the patient.

Example 13—Out-of-pocket patient fees paid directly to a practitioner

63. However, further to paragraph 59 and 62 above, assigned Medicare benefits and/or out-of-pocket patient fees (patient revenue) that are not in fact paid directly to the practitioner may be deemed wages. That is, if certain banking arrangements in fact involve an initial payment by the patient followed by one or more further payments by the medical centre or a third-party, then these further payments may be deemed wages.
64. A further payment may be made even if no money directly flows from the medical centre to the practitioner.¹³ Close consideration must be given to whether, under the relevant contract, the practitioner’s ability to access the patient revenue paid to them is conditional on the approval or direction of the medical centre (see Example 14 below). Each payment arrangement will be considered on a case-by-case basis to determine whether the payment(s) are deemed wages.

Example 14—Assigned Medicare benefits and out-of-pocket patient fees not paid directly to a practitioner

Other third-party payments to practitioners and practitioner entities

65. Assigned Medicare benefits and any out-of-pocket patient fees paid by the medical centre to the practitioner’s entity may be wages under s.13E (as outlined at Example 11). In those cases any subsequent payments from the practitioner’s entity to the practitioner will not be wages.

Example 15—Wages paid by a medical centre to practitioner’s entity (s.51(1))

66. In contrast to the above, assigned Medicare benefits and any out-of-pocket patient fees paid by third parties to the practitioner or to the practitioner’s entity may be wages under s.51.

Example 16—Wages paid by a third party to a practitioner (s.51(1))

67. If a practitioner’s services are provided under a relevant contract and the practitioner is taken to be an employee of the medical centre, and under the contract patient revenue is paid directly by patients to the practitioner’s entity, payments from the practitioner’s entity to the practitioner in relation to the performance of work related to the relevant contract are taken to be wages.

Example 17—Wages paid by practitioner’s entity to practitioner (s. 51(1))

Example 18—Wages paid by medical centre trust to the practitioner (s.51(1))

Example 19—Wages paid by practitioner’s own trust to practitioner (s.51(1))

68. For the avoidance of doubt, the payments from the 123 Unit Trust in Examples 18 and 19 would still be taken to be wages under s.51(1) even if 123 Unit Trust was a discretionary trust.

Other matters

Tenancy contract that is not a relevant contract

69. Under a tenancy contract, a landlord (who may be a sub-lessor) by lease or licence provides a practitioner with use of a suite or space in, for example, a building from which the practitioner conducts their own independent medical practice. The tenancy contract will reference the specific space being leased or licensed and generally includes provisions for fit-out and alterations to accommodate the practitioner’s requirements and services such as building maintenance and signage for the practitioner’s operating hours.
70. A tenancy contract is not a relevant contract if the practitioner does not supply work-related services to patients for or on behalf of the landlord. In these circumstances, the practitioner must operate their own independent medical practice responsible for such matters as advertising and attracting patients, providing medical services to their own patients (i.e. not for or on behalf of anyone else), managing patient appointments and records and directly submitting claims for medical benefits to Medicare; with Medicare paying those benefits to the practitioner (or the practitioner’s entity).
71. If a tenancy contract refers to a medical centre as a ‘landlord’ and the practitioner as a ‘tenant’, but in substance the practitioner is providing medical services for or on behalf of the medical centre to its patients, the tenancy contract is more likely to be a relevant contract.

Example 20—Tenancy contract not a relevant contract

Example 21—Tenancy contract is a relevant contract

A contract with an administration entity may be a relevant contract

72. Multiple medical practices conducted by individual practitioners may operate from the same premises and use the same entity that provides administration and support services (administration entity) to practitioners. A contract with the administration entity may be a relevant contract depending on the terms and conditions of each contract. In some cases a contract may be a relevant contract under s.13B(1), but an exemption may apply under s.13B(2). The terms and conditions of each contract must be considered on a case-by-case basis having regard to ‘When is a contract a relevant contract?’ above.

Grouping of practitioners and administration entities

73. An entity that provides administration services only to practitioners may be grouped with practitioners or the practitioners’ entity under Part 4. Public Ruling PTA017 Grouping of professional practices and administration businesses explains the application of the grouping provisions to professional practices and service entities.

Reference to practitioner being ‘principal’ not determinative

74. A contract between a medical centre and a practitioner may state the practitioner is the principal, and/or the medical centre only provides administrative services to the practitioner. Such clauses do not prevent the application of the relevant contract provisions if the medical centre is able to exercise operational or administrative control over the services provided to patients, or is able to exercise operational or administrative control over a practitioner to influence decisions about who practises at the centre, when they practise, and the space within the centre where that occurs. The manner in which the parties describe or label their relationship in contract cannot change the character of the relationship established by their rights and obligations.¹⁵

Example 22—Practitioner referred to and described as ‘principal’

75. This principle is also illustrated in Example 21 where, despite the parties being referred to and described as ‘tenant’ and ‘landlord’, the reference and description adopted does not change the legal relationship of the parties in determining the tenancy contract is a relevant contract. The same principle applies where a medical centre business is referred to or described as a ‘health complex’, ‘medical centre suites’ or a ‘medical and health precinct’.

Actual conduct may be relevant

76. In some cases the actual conduct of the parties under the contract will not accord with its written terms. This may indicate the parties’ rights and duties are not comprehensively committed to a written contract, that the contract has been varied or that the contract is a sham. In those circumstances the Commissioner will consider all the relevant facts when determining whether a contract is a relevant contract and if payments are wages.

Example 23

Medicare provider number

77. A practitioner, being an eligible health professional, must apply for a unique Medicare provider number (MPN) to provide services listed under the Medical Benefits Schedule (MBS) and, where eligible, refer patients to relevant specialists and/or consultant physicians and request certain imaging and pathology services. Further, an MPN is required to access and claim Medicare services and benefits. Only an eligible health professional, being a natural person, can be a granted an MPN meaning the medical services under the MBS are provided by a practitioner to a patient.
78. The MPN requirement does not alter the outcome that, under a relevant contract, where a practitioner is engaged by a medical centre to serve patients for or on behalf of the medical centre, the practitioner is still providing medical services to the medical centre and to the patients, consistent with the principles determined in the Optical Superstore Case and the Thomas and Naaz Case.

Records must be kept for at least 5 years

79. Medical centres must keep records that enable their tax liability under the Act to be properly assessed and must keep the records for a minimum of 5 years after the end of the financial year in which wages were paid or became payable (see Part 9 of the Taxation Administration Act 2001).
80. An employer who disputes the correctness of a payroll tax assessment in an objection to the Commissioner or in a request for review by the Queensland Civil and Administrative Tribunal or an appeal to the Supreme Court bears the onus of proving the assessment was incorrect on the balance of probabilities (see ss.66, 70A and 73 of the Taxation Administration Act).

Date of effect

81. This public ruling takes effect from 1 December 2024.

Simon McKee
Commissioner of State Revenue
Date of issue: 6 December 2024

References

Attachment 1

Determining whether a medical centre business is being conducted

Outlined below are factors to consider in determining whether an entity is conducting a medical centre business, for the purpose of this ruling. These factors are not exhaustive and the absence of one or more will not necessarily mean a medical centre business is not being conducted.

Attachment 2

Factors which may be influenced indicating ‘operational or administrative control’

The medical centre is considered to have ‘operational or administrative’ control over a practitioner if it is able to influence matters in the relationship between the medical centre and practitioner. For example, the practitioner is subject to the following:

1. specified period of work including, for example, attendance and availability, prescribed days and hours to be worked, set start and finish times and public holiday requirements
2. leave policy including, for example, specified leave entitlements, the requirement to provide advanced notice of planned leave, certain limitations on leave (e.g. timing and duration) and leave approval
3. directed to provide medical services to patients from a physical location (e.g. specific medical centre) and space within the medical centre as required
4. compliance with operating protocols including, for example, meeting roster commitments, being physically present during rostered sessions, sign-in and sign-out procedures, and completion of necessary documentation
5. promotion of the business and interest of the medical centre including, for example, expanding the turnover and patient base of the practice, upholding the quality and image of the services provided and not channelling patients away from the medical centre
6. property in business records remains with the medical centre at all times including, for example, an obligation that the practitioner must promptly provide the medical centre with all information and documents as required at any time during and following completion or termination of the agreement
7. control and property in patient records remains with the medical centre at all times including, for example, an obligation that practitioners must not copy patient records or remove them from the medical centre during the agreement and practitioners are prevented from or limited to accessing patient records following completion or termination of the agreement
8. patient fee and payment protocols including, for example, an obligation that the practitioner is required to bulk bill patients for services, charge patients based on rates set by the medical centre and adopt concessional arrangements as directed (e.g. reduced fees for infants, veterans)
9. types of restrictive covenants including, for example, an exclusivity restraint during the agreement and a restraint of trade following completion or termination of the agreement.

The above factors are indicative only and are not exhaustive. The extent of ‘operational or administrative’ control between a medical centre and practitioner must be considered on a case-by-case basis, taking into account all the relevant facts and circumstances.

Attachment 3

Factors and terms indicating a contract is more likely to be a relevant contract

Whether an arrangement between a medical centre and a practitioner is a relevant contract depends on if:

1. the medical centre conducts a business of providing medical services to patients
2. there is an arrangement between the medical centre and the practitioners whereby the practitioners will provide medical services to patients of a medical centre
3. payment or remuneration of some kind will be provided in return for the services supplied by the practitioner to patients of the medical centre.

The following factors and contractual terms between a medical centre and a practitioner, or the practitioner’s entity, indicate the contract is more likely to be a relevant contract:

1. The medical centre and the practitioner agree that the practitioner will provide competent, professional medical services to patients of the medical centre.
2. The medical centre controls the manner in which services are provided, specifically the extent to which the medical centre can influence those factors in the relationship between the medical centre and practitioner outlined in Attachment 2.
3. The medical centre determines patient fee arrangements, including decisions as to which patients may be only bulk billed to Medicare, the extent of out-of-pocket patient fees charged, payments by the Department of Veterans’ Affairs (DVA) and other specified fees and amounts paid or payable.
4. The medical centre determines how patients’ fees (including assigned Medicare benefits) are shared between the medical centre and the practitioner or the practitioner’s entity. The mechanism by which the medical centre calculates the payment to the practitioner or practitioner’s entity (e.g. as an hourly rate, a percentage of billing or a variable management fee) will not in itself change whether the payments are wages.
5. The medical centre directs the assignment and administers the payment of an assigned Medicare benefit or DVA benefit from the patient to the medical centre.
6. Provision is made for the practitioner to periodically invoice the medical centre for services provided to the medical centre; for example, by serving patients for or on behalf of the medical centre.
7. Hours or days of attendance by the practitioner are specified.
8. The practitioner’s entitlement to take a leave of absence is specified, including any requirement to seek approval from the medical centre or to ensure a minimum number of practitioners are available to serve patients.
9. The practitioner is required to provide the medical centre with specified information and documents.
10. Ownership of, and access to records, including patient information is controlled and retained by the medical centre and not the practitioner.
11. There are restrictions on copying or removing records from the medical centre.
12. The practitioner is required to promote the interests and welfare of the medical centre.
13. The practitioner is required to commit to provide a share of duties relating to after-hours calls, home visits and nursing home visits.
14. The medical centre agrees to provide the practitioner with administration services, clerical and professional staff and facilities, plant and equipment necessary for the practitioner to provide medical services to patients of the medical centre.
15. Any other factors and contractual terms indicate a medical centre business is being conducted (refer Attachment 1), which requires a practitioner to be engaged to provide medical services in the manner required by the medical centre (i.e. the medical centre has operational and administrative control over the practitioner) (refer Attachment 2).

These factors are not exhaustive and the absence of one or more will not necessarily mean a relevant contract does not exist.

Footnotes

1. Ss.13C, 13D and 13E (contractor provisions) and ss.13H, 13I and 13J (employment agents)
2. Payroll Tax Act 2007 (NSW) Part 3, Division 7 and Payroll Tax Act 2007 (Vic), Part 3, Division 7
3. Definition of ‘wages’ [1(i)] under the Schedule to the Act
4. See for example: Levitch Design Associates Pty Ltd ATF Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215 at [54]; Freelance Global Ltd v Chief Commissioner of State Revenue [2014] NSWSC 127 at [173]; Bridges Financial Services Pty Ltd v Chief Commissioner of State Revenue [2005] NSWSC 788 at [223]­[226]).
5. See for example: The Optical Superstore Pty Ltd v Commissioner of State Revenue [2018] VCAT 169 at [85]-[86]; Homefront Nursing Pty Ltd v Chief Commissioner of State Revenue [2019] NSWCATAD 145 discussed at [46]-[48]; Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2021] NSWCATAD 259 at [38]-[41]).
6. A patient who consults a practitioner engaged by a medical centre to serve patients of the medical centre is considered to be a customer of both the medical centre and the practitioner.
7. Drake Personnel v Commissioner of State Revenue (Vic) (1994) 28 ATR 1082 at [46]-[48], Nationwide Towing & Transport v Commissioner of State Revenue (No. 2) (2018) 108 ATR 842 at [42]
8. HIA Act, s.10(1)
9. HIA Act, s.20(1)
10. HIA Act, s.20A(1)
11. HIA Act, s.20A(3)
12. Health Insurance Commission v Peverill (1994) 179 CLR 226 at 265
13. Federal Commissioner of Taxation v Rozman (2010) 186 FCR 1 at [20]-[23]
14. Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40, [7] and [64]
15. See CFMMEU v Personnel Contracting Pty Ltd (2022) 96 ALJR 89 at [63]–[66].