Healthcare business valuations in Sydney

New South Wales

New South Wales rules that change a healthcare valuation

• Payroll tax on contracted practitioners: Revenue NSW ruling PTA 041

  Revenue NSW ruling PTA 041, issued on 11 August 2023 and effective from 1 July 2018, explains how the relevant contract provisions in Division 7 of Part 3 of the Payroll Tax Act 2007 apply to entities conducting a medical centre business, expressly including dental clinics, physiotherapy practices and radiology centres. Where a contract is a relevant contract, the centre is deemed the employer, the practitioner a deemed employee and the payments wages. In Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 the Court of Appeal dismissed the summons seeking leave to appeal against assessments on payments to contracted doctors. Revenue NSW records that most of those doctors had Medicare benefits paid into an account in the operator's name, so how a practice collects and distributes assigned benefits is a valuation fact. See payroll tax, contractor arrangements and medical practice value.

• Bulk Billing Support Initiative: relief tied to billing mix

  Revenue NSW paused payroll tax audits of medical practices engaging general practitioners from 4 September 2023 and states that audits recommenced on 4 September 2024 with the Bulk Billing Support Initiative. Medical centres paying contractor general practitioners receive relief as a rebate if conditions are met: at least 80 per cent of the centre's general practitioner services in metropolitan Sydney, and at least 70 per cent elsewhere, must be bulk billed or provided under approved veterans arrangements, counted on services and tested at each location. Revenue NSW states that the rebate does not reach employed general practitioners, non-GP specialists, pathology or allied health, and that the Revenue Legislation Amendment Act 2024 exempts unpaid payroll tax on relevant general practitioner wages paid or payable before 4 September 2024. A buyer who intends to change the billing mix will price the relief it would lose.

• Pharmacy ownership: the Pharmacy Council of New South Wales

  The Pharmacy Council states that, with a few limited exceptions, you must be a registered pharmacist to hold a financial interest in a pharmacy, and that the permitted holders are sole pharmacist operators, a partnership of registered pharmacists or a pharmacists' body corporate. No one may hold an interest in more than five pharmacies in the state, and the Council must be told of relevant changes to the business and to financial interests. A deceased pharmacist's shares cannot simply pass to a family member, which constrains both a shareholders agreement and the field of buyers. See pharmacy valuations.

• Transfer duty and evidence of value

  Revenue NSW states that goodwill, intellectual property, statutory licences and debtor receivables are not dutiable on a business purchase, while land, an interest in land such as an assigned lease, and fixtures are, and that moveable goods become dutiable when sold in an agreement that also contains dutiable property. In Revenue Ruling DUT 012 version 4 it says brief market appraisals, estimates of value or other statements that do not indicate a full inspection has been undertaken will not be acceptable as evidence of value for land, and that other dutiable property must be valued by a person whose business it is to make valuations of that class of property. A valuation therefore allocates value across each class at one date, and your accountant or lawyer applies the duty rules. See tax and restructure valuations.

• Workers compensation approvals sit with the clinician

  In New South Wales, physiotherapists, chiropractors, osteopaths, psychologists and certain other allied health practitioners must be approved by the State Insurance Regulatory Authority (SIRA) before providing services in the workers compensation scheme. For the board-regulated professions approval takes general Ahpra registration and SIRA's introductory training program, and SIRA can decline, suspend or revoke it. A physiotherapist's approval number is unique to the practitioner, cannot be used by anyone else and is valid across each location they work. A buyer therefore acquires compensable revenue only to the extent the approved clinicians stay.