It seems that in their efforts to avoid paying rather large amounts of tax, doctors who’ve accepted payments from Primary Health Care may have unwittingly left themselves open to hefty tax bills – precisely what they’d hoped to avoid. Approximately 200 general practitioners did a deal with the corporation, accepting upfront payments, loosely described as ‘purchases of the practice’, when in actual fact they’re more like generous offers for the GP to practice in a building owned by Primary Health Care.
The trouble is, if they’re payments for service then they’re assessable income, and liable to incur tax payments (of up to $225,000, plus penalties). If they were for a sale of a business, then of course no tax is owing and the usual tax concessions apply.
The ATO is remaining tight lipped about the kerfuffle, only to say they’ll be contacting the GPs and undertaking ‘risk reviews’ concerning the nature of the payments, and deciding on a case-by-case basis where the GP stands. Primary Health Care, on the other hand, is suggesting they might be due for a substantial refund of $130 million because of the ‘purchases’ of the GP practices and how the ATO is treating said sales. If this is the case, surely the ATO can’t treat the transaction as a sale for Primary Health Care, but as a payment for services for the GPs involved?
So aside from semantics and too-ing and fro-ing, what does that mean for the average GP? If they’ve avoided the larger corporations, then they’ll remain largely unaffected. If they’ve made a deal with Primary Health Care (for example) then they’ll need to carefully consider the wording of any contracts signed and the potential financial ramifications of poorly worded agreements. Some GPs may think about raising their fees to cover any tax bills, putting patients in the unenviable position of deciding whether they’ll stick with their current GP or source a new one who may charge less (or, not at all). What does this mean for a new GP starting work in Australia? More opportunities for employment, either in their own practice or as part of a consortium.
If you’ve been thinking about moving to Australia, now might be the time to seek employment in the health care industry. Speak to one of our friendly staff, who’ll be happy to help you relocate and find work as a GP. Contact us today.