CALL US: (07) 3367 0999 | EMAIL US:

Lump sum payments received by healthcare practitioners

The ATO has provided further guidance for healthcare practitioners dealing with lump sum payments from healthcare centre operators.

The Tax Office is concerned with some practitioners who have received lump sum payments and have incorrectly treated the payments as a capital gain. These practitioners have then applied the small business CGT concessions to reduce the capital gain, in many instances reducing it to nil.

The ATO has clarified that a lump sum payment from a healthcare centre operator is more likely to be ordinary income of the practitioner for providing services to their patients from the healthcare centre rather than a capital gain. Practitioners are required to include the full amount of the lump sum payment in their assessable income.

Healthcare practitioners who are considering any arrangements that relate to a lump sum payment for commencing or providing ongoing healthcare services should note that the ATO is looking closely at these arrangements to determine if they are compliant with income tax laws and whether the anti-avoidance provisions may apply.

The Tax Office is aware that some practitioners are using a private ruling that was issued to another taxpayer, however, you can only rely on a private ruling if you applied for it.

Healthcare practitioners entering or planning to enter into an arrangement of this type are encouraged to seek independent professional advice, ask the ATO for a private ruling or make a voluntary disclosure to reduce any penalties. Please contact our office if you have any questions about these arrangements.

Business
advice

taxation
planning

compliance
services

News

Proactive consolidation with ILBAs

November 13, 2019

Inactive low-balance accounts (ILBAs) are a new category account that needs to be reported and paid to the ATO. This was introduced in the Treasury Law Amendment (Protect Your Superannuation Package) Bill 2019 that came into effect on 1 July 2019 after first being announced in the 2018-19 Federal Budget.

ILBAs are designed to protect accounts from fee erosion. Where possible, the ATO will proactively consolidate super on behalf of an individual.

A superannuation account is considered an ILBA if the following criteria are met:

Funds are required to identify ILBAs on 30 June and 31 December each year, then report and pay them to the ATO by the statement date.

Individuals that have an account that they do not want to be transferred to the ATO as an ILBA, can consolidate super accounts using ATO online services through myGov, contact their super fund for more information or authorise their super fund to provide a written declaration to the ATO.