ATO releases guidelines for dentists with service trust arrangements

29 January 2010 Topics: Tax and revenue

For some time now the ATO has provided guidance in a public ruling and booklet as to what it views as an acceptable level of service fees for medical practitioners.

On 22 December 2009 the ATO released a factsheet that deals specifically with dental practice arrangements and which will supplement the booklet.

This factsheet indicates that, provided the dental practitioner’s service entity provides a comprehensive suite of services to the practitioner, the ATO will accept that service fees between 40% and 60% of gross fees reflect a commercial arrangement.

The factsheet also comments on the treatment of laboratory fees and locum dentists.

Dental practitioners (and other specialist and general practitioners) should continue to keep in mind that limiting service fees to those accepted by the ATO will not necessarily be sufficient to support the commerciality of their service entity arrangements if they are audited.

The ATO have indicated that service entity arrangements must be commercial and will only be accepted where there is a business being operated in relation to the provision of services, which is separate from that of the health practitioner.

Therefore, the documentation and implementation of the arrangements must be consistent with two separate businesses being operated.

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