In this podcast, Tax Consultant Vladimir Khokhlov from DPM Financial Services will be discussing payroll tax, including what payroll tax is, why there has been an increased interest in this area recently, the potential consequences of non-compliance and more.
This podcast is brought to you by DPM Financial Services, DPM is a specialist medical financial advice firm that aims to educate doctors of Australia to make the right financial decisions and achieve their financial goals. DPM Financial Services is all about you getting the right advice that suits your personal and professional needs and making sure you have confidence in your financial future. You can get in touch with DPM at firstname.lastname@example.org or by calling 1800 031 039
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*As always, all in this PODMD podcast is intended for health professionals and the comments are of a general nature. Information given is not intended as specific medical advice pertaining to any given patient. If you have a clinical issue with one of your patients please seek appropriate advice from a colleague with expertise in the area.
The financial journey of a doctor is unique and complex. DPM Financial Services is a specialist medical financial advice firm that aims to educate doctors of Australia to make the right financial decisions and achieve their financial goals.
DPM Financial Services is all about you getting the right advice that suits your personal and professional needs and making sure you have confidence in your financial future.
Today I’d like to welcome to the PodMd studio Vladimir Khokhlov from DPM.
Vladimir has a strong background in helping clients manage their financial and tax affairs at various stages of their entrepreneurial, professional and personal lives. Vladimir specialises in compliance and taxation issues in private practice, including income tax planning, GST and BAS, capital gains and income tax issues associated with investing in property and financial markets.
*We do hope you enjoy this podcast but please remember that the here is of a general nature and is not intended to serve as advice. The views and opinions expressed in this podcast are those of DPM and Fletcher Clarendon, not PodMD.
Legal services are offered by DPM in partnership with Fletcher Clarendon Lawyers. DPM Financial Services recommends you obtain medical financial advice or legal advice concerning specific matters before making a decision.
Vladimir, thanks for talking with us on PodMD today.
Vladimir: Pleasure. Thank you for having me.
The topic of today’s discussion is covering yourself on Payroll Tax.
To get us started, can you briefly explain what Payroll Tax is, why is it such a hot topic atm and what are the main areas of concern for private practitioners?
Vladimir: Payroll tax is not new in Australia. It has been around since 1941, what is important to note is that it’s not administered by the Australian Taxation Office, the ATO, but instead in each state and territory there is a local authority that administers payroll tax. What it is essentially about is there’s a certain threshold which is set in the rules, and if wages plus superannuation combined and exceed that threshold, then the business has to register for payroll tax and make the payments either monthly or annually.
Why this has become a concern recently. Is that sole practitioners who work in a business medical practise? Payments made to them under certain circumstances and conditions may be counted towards that threshold. So before when the business was did not have to register, for instance, wages plus superannuation were under the threshold, they didn’t even have to register. But now if payments made to the sole practitioners who operate from the practice have to be included. That will certainly put the business over the three. And then maybe also retrospective liability.
Why are state revenue authorities showing increased interest in this area?
Vladimir: It may be a combination of factors, but most common would be data matching from different sources, review programmes covering specific industries or legislative issues. Sometimes investigation may commence in one business, but then expect to the other related businesses due to information being collected in the process.
How do state revenue authorities select practices for compliance reviews or audits?
Vladimir: State revenue authorities have been showing increased interest in this area, mostly after the court cases in NSW and Victoria. They have been contacting various businesses, medical practices and also associated businesses to collect data and through that process identify any instances of non-compliance.
What information is typically requested in these reviews?
Vladimir: This may vary from case to case, but businesses may be requested to provide detailed information about the legal structure, number of employees, gross wages and superannuation. Information about payments they make to contractors and their details. The records may be required for up to five years retrospectively.
What are the potential consequences for practices that are found to be non-compliant with payroll tax obligations?
Vladimir: If it is determined that a business must have been registered for payroll tax. Or it has been paying the incorrect amount of payroll tax. It will have to comply. That means be the correct amount and anything that could be outstanding. In addition, there may be penalties and interest charges. This depends on each particular case and also severity of non-compliance. For example, if a review period covers five years. It altogether could add up to a very large sum.
How can practices mitigate the risks of payroll tax liability and what are some preventative actions they can take?
Vladimir: You should certainly take some proactive steps to help you assess whether your practise has any exposure to non-compliance risk. Here are some recommendations that could help you.
Firstly, review your business structure. And in particular, how you engage with the non-employee doctors? You view all supporting documents such as contracts and service agreements you have. Are they based on the most recent legal advice? Are they properly executed? Do they accurately cover their arrangements in place?
Review banking arrangements to ensure the floor fees is consistent with all the arrangements in place. Review your website and other marketing materials for consistency with your business structure and documents. Seek specialist legal advice. If your business is exposed to payroll tax, there may be exemptions that could help you reduce or minimise tax payable.
Thank you for your time here today in the PodMD studio. To sum up for us, could you please identify the three key take home messages from today’s podcast on Payroll Tax?
Vladimir: Be proactive and review your circumstances. Check and tidy up all the documents and seek specialist advice.
Thank you for your time and the insights you have provided