In the recent NSW case of Uber Australia Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 1124, the NSW Supreme Court ruled in Uber’s favour determining it was not liable to pay payroll tax assessments to the tune of over $81million.
The Court determined that payroll tax was not payable by Uber because, although there was a ‘relevant contract‘ for the purpose of the Payroll Tax Act 2007 (Act), the payments paid or payable by Uber to drivers were not ‘wages’ for the purpose of the Act.
In making its decision, the Court seemed to share the frustrations of many medical practices trying to interpret and apply the payroll tax legislation to their business operations.
Does this decision impact medical practices?
Firstly, this decision will not be relevant to Queensland GP practices given the recent commitment by the Queensland government to exempt contracted GPs from payroll tax liability. You can read about the recent announcement here. Note, this exemption only applies to contracted GPs and not to other allied health professionals in Queensland.
Secondly, it is important to mention that the Commissioner may file an appeal to challenge the Court’s decision. We will provide further updates if the Commissioner decides to appeal this decision and if so, what the outcome is.
Thirdly, this case was about a particular set of circumstances in respect of a ride-share app and driving service. The application of the payroll tax legislation to modern-day business models can be complex. In all cases, whether payroll tax is payable comes down to the relevant business operations, the contract between the relevant parties and the particular circumstances regarding how payments are made.
Finally, based on previous cases and rulings in many States relating to medical practices,[1] arguably most contracts between medical practices and practitioners will be ‘relevant contracts’ under payroll tax legislation. It would then come down to whether payments made are ‘wages’ for the purpose of payroll tax legislation which will depend on the contractual relationship between the parties and particular circumstances.
For medical practices outside of NSW, while this case may provide guidance on interstate transactions, it is not binding on Courts outside of NSW. Further, the most recent rulings on payroll tax clearly articulate how these States intend to interpret the payroll tax legislation in the relevant State.
If your medical practice is yet to review or update its services agreements with doctors or would like further information regarding the applicability of payroll tax, now is the opportune time to reach out.
The commercial team at Mahoneys is experienced in payroll tax legislation within the medical practice industry in all States and Territories. If you would like to speak with us, please contact Mahoneys commercial Partner, Antony Harrison, or lawyer Sabrina Austin on (07) 3007 3777 or aharrison@mahoneys.com.au or saustin@mahoneys.com.au.
[1] See for example, Qld Public Ruling PTAQ000.6.3; NSW Ruling, PTA 041 Payroll Tax Act – Relevant Contracts – Medical Centres; Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2021] NSWCATAD 259; Commissioner of State Revenue (Vic) v The Optical Superstore Pty Ltd [2019] VSCA 197.
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