“ATO Turns its Sights on GPs” – Should I be concerned?

In recent weeks the media has been abuzz with articles concerning payments made by a corporate health services provider to doctors working with the company.

Newspapers, magazines and medical journals have published titles such as “More doctors in the Tax Office’s sights.” and “ATO confirms GPs to be targeted over tax”.   These articles are somewhat alarmist, suggesting that GPs should be expecting a knock at the door any moment from the Tax Office.

This is simply not the case.

The Australian Taxation Office (ATO) is looking at a very specific issue regarding a series of payments made to a number of doctors, reportedly no more than 200 in total. These doctors received a payment from the corporate before commencing work with the organisation. The issue in question, is the tax treatment of this payment.

Medical practitioners, both specialists and general practitioners, should however see this as a wake up call to ensure that their financial and taxation affairs are in order and are compliant with ATO legislation, rulings and guidelines in relation to Personal Services Income, service fee levels, and reporting requirements.

As specialist advisors to the medical industry, we often see arrangements which accountants have allowed to occur which are simply not compliant. In many cases, the medical practitioner is not aware of this. Importantly, should the ATO challenge these arrangements, it is the individual practitioner who is liable for any interest and penalties which may be imposed.

Should you wish to have a second opinion on the operation of your financial arrangements and business structures to ensure you are compliant with the ATO’s requirements, please contact your local William Buck office.

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