Medical and healthcare practices are currently facing significant challenges due to recent payroll tax rulings, notably the Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue case. This decision has far-reaching implications, making it crucial for practices to reassess their contractor agreements and payment arrangements to ensure compliance and avoid hefty payroll tax liabilities. Diagnode, a state-of-the-art Practice Management System (PMS) add-on application, offers an effective solution to help practices navigate these complex tax issues seamlessly.

Understanding the payroll tax challenge

The recent ruling highlighted that payments to contractor doctors can be classified as relevant contracts subject to payroll tax. This interpretation poses a risk of substantial financial and administrative burdens for medical practices, particularly those with multiple contractors. Practices must now meticulously track and manage how they pay their doctors to avoid unexpected payroll tax liabilities that could stretch back several years.

How Diagnode can help

Diagnode is designed to integrate with existing Practice Management Systems, providing advanced features specifically tailored to address the payroll tax compliance issues highlighted in the Thomas case. Here’s how Diagnode can help your practice:

Split payment system

One of the primary features of Diagnode is its split payment functionality. This allows practices to pay contracted doctors as contractors, rather than full-time employees. For example, if a patient books an appointment with Dr. julie for $200, the system automatically splits the payment, directing $100 to the practice and $100 to Dr. Julie. This method ensures that doctors are paid their commissions directly, which helps to clearly delineate them as independent contractors. This reduces the likelihood of them being classified as employees, which would otherwise subject the practice to higher payroll tax obligations.

Automated payment processing

Diagnode automates the payment process, ensuring that contracted doctors receive their agreed-upon commissions as soon as online payments are received from patients. This eliminates the need for practices to manually process payments, reducing administrative workload and ensuring timely and accurate disbursements. For instance, if a contracted doctor has a 50% commission rate, Diagnode will automatically calculate and disburse the correct amount to both the doctor and the practice.

Customisable commission settings

The system allows health providers to set specific commission rates for each doctor based on their agreements. This flexibility ensures that each doctor’s payment arrangement is accurately reflected and managed within the system, providing clear and transparent financial records that support compliance with payroll tax regulations.

Enhanced compliance and record-keeping

Diagnode maintains a clear, auditable trail of all payments made to contractors. This feature is critical for ensuring compliance with tax regulations and preparing for potential audits. By having detailed records of all transactions, practices can demonstrate their adherence to payroll tax laws and mitigate the risk of costly penalties.

Mitigating risks and ensuring compliance

By leveraging Diagnode, medical practices can significantly mitigate the risks associated with the recent payroll tax ruling. The application’s advanced features ensure that all aspects of contractor payment and compliance are managed efficiently, allowing practices to focus on providing quality healthcare services without the constant worry of payroll tax liabilities.

Conclusion

In the wake of the Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue decision, it is more important than ever for medical practices to reassess their contractor agreements and payment systems to ensure compliance with payroll tax regulations. Diagnode offers a comprehensive solution that addresses these challenges head-on, providing automated tracking, customisable agreements, real-time alerts, integrated financial management, and expert support. By implementing Diagnode, practices can navigate the complexities of payroll tax compliance with confidence and focus on their core mission of delivering exceptional healthcare.

Discover how Diagnode can transform your practice’s approach to payroll tax compliance. Contact us today to learn more and schedule a demonstration.