General practices unable to absorb payroll tax cost: Poll

Matt Woodley

17/01/2023 5:08:45 PM

Clinics will be forced to either raise fees or shut their doors should GPs become subject to payroll tax, a newsGP poll suggests.

Stressed GP at laptop
Nearly one in five respondents to the poll said their practice would close should state governments begin considering tenant doctors as employees.

Only 3% of general practices are in a position to absorb the costs associated with GPs becoming liable for payroll tax, the results of a recent newsGP poll indicate.
Nearly one in five respondents to the poll, which attracted 1297 votes, said their practice would close should state governments change the current interpretation and begin considering tenant doctors as employees, while 78% said they would be forced to raise fees.
RACGP President Dr Nicole Higgins told newsGP her practice in Mackay would fall into the latter category, beginning with the difficult decision to end bulk billing for all but her most vulnerable patients.
‘I’ve discussed with all the GPs about what they want to do, because nobody feels comfortable just continuing as usual with our fingers crossed – least of all me,’ she said.
‘Just before Christmas I was already being warned by our accountants about the ongoing unsustainability of continuing to bulk bill our under-12 patients, but we made the decision to continue.
‘If this new interpretation comes to bear, it just won’t be feasible – and patients will suffer.’
The decisions have been made especially difficult, Dr Higgins says, as the people affected will be more than just names on a sheet of paper to the GPs having to explain the new fee structure.
‘These are people we know. And especially for children, bulk billing was something that was really important,’ she said.
‘We’ve had to ask ourselves, how do you do it? Who do you do it to and what’s the impact on that patient demographic going to be?’
‘What happens if I don’t do this? And is having a service that people pay for better than having none? Because I don’t think you can absorb the cost and be viable.’
The situation has also prompted broader questions around the future sustainability of her practice – questions she said would be getting asked by GPs all across the country in the wake of the new Queensland Revenue Office payroll tax interpretation.
‘I’ve had many discussions with a number of practice owners … about what this means for us and whether we can comply with the conditions in the ruling – and it’s incredibly difficult,’ she said.
‘For example, we will lose the bulk billing incentive if we stop bulk billing our children, so we need to be able to compensate for that and then add the equivalent of probably 5% on top of our fee to account for the payroll tax.
‘We also run on 20-minute appointments as the standard … as it gives us the time with patients that we need. But we’ll now need to adjust our billing to reflect the time spent and communicate that message.’
Dr Higgins said a host of other factors also need to be considered, with the changes required to not fall foul of the tax office likely creating a flow-on effect that will impact many other parts of her practice.
‘Eight out of 10 GPs at our practice are women working part-time, who appreciate the flexibility of working the way that we do and don’t have the time or capacity to basically operate a business that complies with the ruling,’ she said.
‘The other thing is, as a teaching practice, while GPs are contracted to supply medical services to patients, they’re also supplying services to the practice by teaching or supervising registrars [which has payroll tax implications].
‘So the ruling potentially impacts multiple levels ... the ability to share complex chronic care of patients, being able to teach, the after-hours roster – for many practices, where everyone shares the load, it’s going to stop all of that.’
Likewise, if practices adjust their structure so that GPs are considered employees, that could have implications for practitioners who filed years of personal tax returns under the belief that they were sole traders.
‘We have to look at the state laws, but we actually also have to then look at the federal laws,’ Dr Higgins said.
‘If they’re then deemed to be an employee, they’ll potentially have to back pay tax as well. It’s a huge impost.’
However, with negotiations continuing between the RACGP and the QRO, and other states yet to indicate whether they will follow Queensland’s lead, Dr Higgins is hopeful lawmakers will realise the full implications of such a ‘drastic’ change in interpretation.
‘All the QRO is doing is looking at how the law is applied to medical practices – they’re not involved in policy, they’re not involved in any of the decisions, their remit is purely how the law is applied,’ she said.
‘So ensuring politicians are able to grasp the full picture requires the application of significant political will from members.
‘Because otherwise the state health system will fall over, ramping will increase, emergency departments will overflow and waiting lists will explode.’
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Dr Clement Lo   18/01/2023 6:22:42 AM

At the end of the day, GPs have business to run. Government can not expect GPs to be charity organisations. Even charity organisations, religious organisations like St Vincent under Catholic, Epworth under Methodist get a lot of tax exemption from government. This is unfair. Charity and religious organisations should get tax like other companies.