Court confirms Payroll Tax applies for Medical Practitioners

A recent court case has confirmed that payroll tax was correctly imposed on a medical centre. All medical businesses and GPs are now urged to consider the impact of payroll tax on their practice. We have summarised the key takeaways below.


On 14 March 2023, the New South Wales (NSW) Supreme Court of Appeal (the Court) handed down its decision in Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40. The case concerned an appeal from the Appeal Panel of the NSW Civil and Appeal Tribunal (NCAT) which is the key NSW case that forms the basis of the new interpretation of payroll tax laws to entities running medical practice centres.


In bad news for such centres, the Supreme Court affirmed the decision of NCAT and held that the payroll tax was correctly imposed.

This decision will likely empower the various state revenue authorities to pursue these structures for payroll tax. For Queensland based centres, it provides support for the Queensland Revenue Office’s (QRO’s) position as espoused in payroll tax ruling PTAQ000.6.1 that medical centres who engage contractors to provide services to its customers will be liable to payroll tax on the payments made to such practitioners. More about this ruling can be read here in our webinar and article.

The Supreme Court did specifically make reference to three practitioners who received patient payments directly into their own bank accounts, rather than having such monies collected by the centre. The Court noted that no payroll tax had been assessed by the NSW Revenue Office in relation to these doctors and affirmed that they did not think a payment existed that could attract payroll tax in these circumstances.

This is a point on which the QRO’s ruling has been noticeably silent and lends comfort to the argument that such arrangements will not attract additional payroll tax.

We caution that the QRO ruling does however suggest that payroll tax can apply in relation to payments received directly by a practitioner who trades through their own private practice entity (such as a company or trust). Although this suggestion appears to be untested by the courts at this time.

So what now?

Operators of medical centres should be assessing the implications of the new interpretations on their businesses. Operators of general practice clinics in Queensland may be able to avail themselves of an amnesty from the new interpretation by choosing to do so before the deadline. More information about this amnesty and the deadline can be read here. This may delay the impact of the tax and provide historical protection as well.

As the amnesty is not available to non-general practice operators, they should be considering the impact of payroll tax on their practice now and responding accordingly.

Contact Pilot

If you would like more information on this issue, please contact Murray HowlettAngela StavropoulosKristy Baxter or your Pilot advisor on (07) 3023 1300.