What is a Tenant Doctor?
In the complex world of medical practice arrangements in Australia, the term "Tenant Doctor" refers to a specific model where a medical practitioner operates as an independent business within a medical centre.
Instead of being an employee or a contractor of the medical centre, the Tenant Doctor rents space and associated administrative support services from a service entity. This model is often structured around principles established in the 1978 Phillips case.
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Key Characteristics of a Tenant Doctor Arrangement
Understanding these elements is critical for payroll tax compliance
Operational Independence
The Tenant Doctor operates autonomously, managing their own patients, clinical decisions, and practice operations independently from the service entity.
Service Entity Relationship
A clear contractual arrangement with the service entity for premises rental and administrative support, not employment or contractor status.
Taxation Implications
Proper structuring can provide payroll tax exemptions and clear taxation obligations for both the practitioner and service entity.
Privacy Compliance
Clear delineation of data responsibilities and privacy obligations between the practitioner and service entity.
Why Tenant Doctor Arrangements Matter
The distinction between a Tenant Doctor and other engagement models is crucial for payroll tax compliance. Recent audits and cases have highlighted the importance of proper structuring.
Notably, each payroll tax office ruling refers to principles established in foundational case law. This may explain why many legal and accounting advisers miss the originating authority that sets these guidelines.
Medico-Legal Benefits
The Tenant Doctor model not only mitigates payroll tax risks but also clarifies medico-legal responsibilities, particularly in shielding service entities from liability for practitioners' clinical negligence. Recent case law underscores the importance of structuring arrangements to reflect genuine independence.
To Establish a Compliant Arrangement:
- Draft Clear Agreements: Service agreements must clearly establish the tenant relationship, not employment or contractor status.
- Separate Branding: The practitioner should maintain distinct professional identity and branding where appropriate.
- Fee Structures: Rental and service fees should reflect genuine arm's-length commercial arrangements.
- Operational Practices: Day-to-day operations must demonstrate genuine independence in clinical and business decisions.
Risks of Non-Compliance
Failure to structure agreements correctly exposes your practice to significant risks:
How Hamilton Bailey Can Help
The Tenant Doctor model offers autonomy for practitioners and payroll tax protection for service entities—when properly structured.
Service Agreement Drafting
Our Tenant-Doctor Service Agreements are carefully curated to meet commercial and compliance requirements.
Compliance Review
We review existing arrangements and provide advice on restructuring for compliance.
Ongoing Support
Annual subscription service with legal, accounting, and compliance updates.
Related Information
Learn more about payroll tax and medical practice law
Unsure About Your Compliance?
If you're unsure about compliance, seek expert advice. Contact Hamilton Bailey for streamlined support with your Tenant Doctor arrangements.