Call for ‘urgent intervention’ after practice receives $800k tax bill

The RACGP is calling for urgent government intervention after a Victorian practice owner was hit with an $800,000 payroll tax bill, leaving them teetering on the brink of closure.
 
The owner, who has two clinics and 107,000 patients, now fears the tax grab could wipe out more than half of all medical centres unless an exemption is immediately rolled out.
 
‘I have no choice. I have to close down,’ they said. ‘It’s going to happen not only to me.’
 
In response, the RACGP has teamed up with the Australian Medical Association (AMA) and the Australian GP Alliance (AGPA) to urge Victorian Premier Daniel Andrews to save the state’s practices from ‘catastrophic closure’.
 
In a letter addressed to Premier Andrews, the coalition of doctors is calling for a full exemption for independently contracted GPs in general practice.
 
It also wants the Government to urgently confirm no retrospective application of payroll tax obligations for independent GP contractors.
 
If that’s not possible, the letter instead asks for a three-year amnesty from payroll tax obligations for tenant GPs.
 
‘We are writing today to seek your urgent intervention,’ the letter said.
 
‘We have recently become aware of several Victorian general practices who are currently at risk of closure due to the application of this tax.
 
‘General practices will close due to new interpretation of the legislation. The shrinking general practice sector will create a significant burden on the already stretched Victorian healthcare system.’
 
The plea for change comes after the Victorian Government confirmed last week it would not be offering a payroll tax amnesty for general practices.
 
RACGP Victoria Co-Deputy Chair and Melbourne practice owner Dr Aadhil Aziz told newsGP the tax is ‘extremely concerning’ for already struggling practices.
 
‘The scary thing is a lot of practices are already on the brink of potential collapse,’ Dr Aziz said.
 
‘On top of that we’re having GPs retiring … and medical students are no longer choosing to become general practitioners because of the wage gaps.
 
‘General practice is literally in crisis and payroll tax could be the straw that breaks the camel’s back.’
 
Last week, Victoria and New South Wales announced they plan on following aspects of the approach adopted in Queensland and South Australia, in which practices earning a revenue over a certain threshold could be made to pay the tax for tenant GPs.

RACGP President Dr Nicole Higgins said the approach is undermining broader attempts to bolster general practice care in Australia.
 
“The Federal Government is making major investments and reforms to make GP care more accessible and affordable – such as tripling bulk-billing incentives,’ she said.
 
‘But at the same time, state governments are ripping funding from general practice to boost their own tax revenues.
 
‘GPs and their patients are caught in the middle, and it is the patients who will be hurt most when they lose their local GPs and access to essential care.’
 
General practices already pay payroll tax on their employees, including receptionists and nurses, but the new ruling has added GPs to that tax category.
 
Previously, it did not apply to GPs as most doctors are not employees, they simply lease rooms from a practice owner.
 
The rulings from the NSW and Victorian state revenue offices both referenced the Thomas and Naaz case, which interpreted tenant doctors as ‘relevant contracts’, making the practice liable for payroll tax when previously they had been exempt.
 
Earlier this year, the RACGP and the AMA successfully negotiated amnesty periods from the South Australia and Queensland governments, holding off the changes for at least a year.
 
But no such amnesty has been announced in NSW or Victoria.
 
Meanwhile, Western Australia has confirmed it has no intention of making payroll tax changes.
 
The letter to Premier Andrews said the strain on general practices will be felt most in rural and remote areas.
 
‘The consequences for the Victorian health system will be increased costs and disruption to service access and delivery,’ it said.  
 
‘This would be a complete disaster for Victoria. Increasing costs to see a GP affects people on low incomes the most and puts pressure on the states’ already overburdened hospitals.
 
‘This impact will cost the State Government much more in the long run – any payroll tax revenue will be absorbed by spending on hospital services, which is much more expensive and less efficient than general practice care.’
 
Dr Aziz said ultimately, he is most worried about the impact on patients.
 
‘They will be forced to go to doctor A, versus having the option of choosing between doctor A, B, or C, and that’s not fair to the patient,’ he said.
 
‘If you have an already struggling system and then you start trying to get tax from businesses that are teetering on the edge of bankruptcy, or collapse, or shutting down, that may just the last straw.
 
‘GPs are at the coalface. GPs are getting squeezed from doctors retiring early, we’re getting squeezed from doctors not becoming GPs, we obviously got squeezed by COVID, and now we’re getting squeezed by the Government.’
 
The situation remains dire across the country, with a newsGP poll finding just 3% of general practices could absorb the costs associated with the changes in payroll tax.
 
Around 20% of respondents said their practice would be forced to close, and 78% said they would need to increase their patient fees.
 
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