ATO Interpretative Decision

ATO ID 2011/87 (Withdrawn)


Superannuation Guarantee Charge: employment status of a medical practitioner operating from a medical clinic
FOI status: may be released
  • This ATO ID is withdrawn because the position stated in this ATO ID is no longer current. It is inconsistent with the view expressed by the Full Federal Court in Dental Corporation Pty Ltd v Moffet [2020] FCAFC 118; (2020) 297 IR 183; (2020) 278 FCR 502 about the application of the extended definition of employee in subsection 12(3) of the Superannuation Guarantee (Administration) Act 1992 to a similar factual situation. The current ATO view can be found in Superannuation Guarantee Ruling SGR 2005/1 Superannuation guarantee: who is an employee?
    This document has changed over time. View its history.

Status of this decision: Decision withdrawn 23 August 2021.
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.


Is the medical practitioner an employee of the medical clinic according to section 12 of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?


No. The medical practitioner is not an 'employee' of the medical clinic under either the ordinary meaning of the term, or any expanded meanings within section 12 of the SGAA.


The medical practitioner entered into an arrangement with the medical clinic.

The practitioner provided a number of various medical services within the clinic.

The practitioner was required to complete the work personally and could not delegate.

The clinic provided the practitioner with furnished rooms in which to treat clients, necessary equipment and materials, and receptionist services.

Fees paid by the practitioner's clients were not paid directly to the practitioner, but were instead paid to the clinic and deposited into an account maintained by the clinic. The account was subject to a fee splitting agreement.

Upon the Practitioner providing a tax invoice to the clinic, the practitioner was distributed a set percentage of their client billings as per the agreement. No deductions were made from the amounts distributed to the practitioner.

The clinic effectively kept the remaining percentage in consideration for their supply of services, premises and equipment.

The arrangement between the practitioner and the clinic made no provision for annual leave or sick leave.

Reasons for Decision

[All legislative references are to the SGAA]

The question of whether medical practitioners are employees of a practice - or self-employed, with management services being leased from the practice - was discussed in obiter dicta in the Supreme Court of NSW case of Health Services for Men & Ors v. D'Souza & Ors [1999] NSWSC 969. The arrangement between the parties was similar to the current matter.

In the decision, Bryson J stated at [16] and [17]:

There is in my finding nothing in the nature of an employment relationship or employment discipline between the plaintiffs and the medical practitioners. Support given by the plaintiffs to the doctors in their work is very full indeed, even extending to paying their travelling and other expenses of attending at clinics, it may be interstate, to fulfil the rosters. There is no indication in evidence that doctors are ever constrained by the plaintiffs' direction to do anything otherwise than exactly as the doctors choose to act. There is no indication of any source for a right to control them in any such way.
My interpretation of what takes place accords with the view put forward by the defendants. The essence of what is taking place is that patients who need medical treatment are consulting medical practitioners and obtaining the opinion and advice of the medical practitioners; the patients are not interested in consulting persons who are not medical practitioners but conduct clinics through the agency of medical practitioners who form part of their organisation. It would be unlawful for persons who are not medical practitioners to give medical advice and prescribe treatment. The medical practitioners do not receive and prescribe to a standardised chain of patients with standardised conditions; patients and medical practice are just not like that, and the need for individual personal judgment on the medical practitioner's professional responsibility presents itself anew for each patient. It would not be possible for consultations to be bulk-billed to Medicare unless they were consultations with medical practitioners for which medical practitioners were entitled to charge the patients. In my interpretation it is the plaintiffs' business to provide services to medical practitioners to support their practising medicine and in so doing to enhance, I would think greatly, the medical practitioners' opportunity to receive and treat patients in numbers.

[Although an appeal was heard in the Supreme Court of NSW - Court of Appeal in Health Services for Men Pty Ltd & Ors v. D'souza & Ors [2000] NSWCA 56, the above observation was not compromised].

Paragraph 25 [in part] of Superannuation Guarantee Ruling SGR 2005/1 considers the totality aspect of a working relationship, explaining:

Whatever the facts of each particular case may be, there is no single feature which is determinative of the contractual relationship; the totality of the relationship between the parties must be considered to determine whether, on balance, the worker is an employee or independent contractor.

In the current matter, the clinic has no right of control over the manner in which the practitioner performs their services to their clients.

When considering the totality of the relationship within this case in a contractual and practical sense, it is not the view of the ATO that such a relationship is characteristic of an employer/employee relationship.

With regard to the expanded meanings within section 12, the only provision with potential to apply is subsection 12(3). Tests for subsection 12(3) can be found in SGR 2005/1 at paragraph 11, which reads:

For the purposes of subsection 12(3), where the terms of the contract in light of the subsequent conduct of the parties indicate that:

The individual is remunerated (either wholly or principally) for their personal labour and skills
The individual must perform the contractual work personally (there is no right of delegation); and
The individual is not paid to achieve a result,
The contract is considered to be wholly or principally for the labour of the individual engaged and he or she will be an employee under that subsection.

As it is considered that the practitioner is performing services for their clients, and paying the clinic for the services that the clinic provides, subsection 12(3) has no application in this matter.

Even if it were to be suggested that the practitioner is providing a service to the clinic, it would still need to be established that the practitioner is being paid wholly or principally for their labour in order for subsection 12(3) to apply.

A payment for labour is usually an hourly rate taking the form of salary or wages. The clinic is not paying either one to the practitioner in this case. Instead, the practitioner is receiving a set percentage of their clients' billings, and the distributions received are in respect of, and conditional to, the completion of each of their client consultations, making the agreement results based.

It is therefore the ATO view that the practitioner is neither a common law employee of the clinic, nor an employee of the clinic under any expanded meanings within section 12.

Amendment History

Date of Amendment Part Comment
1 October 2014 Related public rulings (including determinations) Added SGR 2005/1.

Date of decision:  20 September 2011

Year of income:  Year ended 30 June 2011

Legislative References:
Superannuation Guarantee (Administration) Act 1992
   section 12
   subsection 12(1)
   subsection 12(3)

Case References:
Health Services for Men & Ors v. D'Souza & Ors
   [1999] NSWSC 969

Related Public Rulings (including Determinations)
SGR 2005/1

Superannuation guarantee scheme

Siebel/TDMS Reference Number:  1-3HPLC9V; 1-5UEKBEC; 1-JT71BGC; 1-PQD2AJC

Business Line:  Superannuation

Date of publication:  28 October 2011
Date reviewed:  6 November 2019

ISSN: 1445-2782

  Date: Version:
  20 September 2011 Original statement
  1 October 2014 Original statement
You are here 23 August 2021 Withdrawn