New payroll tax interpretation threatens future of after-hours care

Matt Woodley

11/01/2023 4:46:15 PM

Using weekend rosters as a marker for general practice payroll tax liability will inevitably place a huge additional burden on over-stretched hospitals, GPs say.

GP providing after-hours care to a patient.
Advice published by the Queensland Revenue Office will likely result in fewer general practices offering after-hours services, placing additional pressure on hospitals.

State governments risk kicking a healthcare own goal should they follow a Queensland approach to begin considering tenant doctors as employees for payroll tax purposes, RACGP leaders have said.
Advice published in late 2022 by the Queensland Revenue Office contains a number of scenarios that specialist medical accountants have indicated will see medical centres increasingly assessed for payroll tax in relation to independent practitioners providing services from their centres.
These include ‘typical’ service arrangements such as GPs who practise out of a clinic for more than 90 days per year or those who are placed on a weekend roster.
The move has been described by RACGP Queensland Chair Dr Bruce Willett as a ‘major departure’ from the way the legislation has been interpreted. He predicts that the specific reference to weekend rosters could have a devastating impact on the provision of general practice after-hours care.
‘This is a substantial reinterpretation of the law changes the way that business has been conducted for decades,’ Dr Willett told newsGP.
‘For practices to conduct after-hours care, they have to have a roster – you can’t just say to someone “cover this after-hours time if you’d like to”. But having a roster is one of the key themes captured under this new ruling.
‘This is essentially a tax on offering after-hours services. If they want GPs to cover after-hours, then they need to give us an exemption.’  
The new interpretation comes amid a push for Medicare reform from state premiers, alongside calls for a revamp of after-hours care to ease waiting times in overloaded emergency departments.
Nine Newspapers recently reported a concerted push within Victoria to support GPs to assess more patients after-hours amid unprecedented levels of hospital demand, with emergency physicians, paediatricians and GPs identifying a significant increase in Medicare rebates as the best solution.
However, RACGP President Dr Nicole Higgins told newsGP the apparent push to reinterpret decades’ old payroll legislation is at odds with recent commentary around the need to provide more support for general practice and will likely backfire on states who adopt a stricter approach.
‘This is an illogical tax grab which may generate some short-term revenue but will come at the expense of strained general practices and ultimately place further downward pressure on access to bulk billing for vulnerable patients,’ she said.
‘It’s essentially introducing a new tax on the general public by stealth, as practices will have no option but to pass these costs onto patients. Many will then have nowhere else to turn but hospital emergency departments that are already bursting at the seams.
‘And at a time of record hospital presentations and ambulance ramping, any additional revenue squeezed out of general practice by this tax will be quickly swallowed up by increased overall healthcare costs, rendering the entire exercise not only pointless, but counterproductive.’
Dr Higgins has called on state governments to consider the impact applying payroll tax on tenant doctors will have, not just on general practice, but their constituents.
‘General practice is the cost-efficient engine room of our healthcare system,’ she said. ‘The work it does is not noticed until it breaks down. Well, now it is broken.
‘There is an election coming up in NSW and we look forward to conversations with the Premier.’
State and Federal leaders are expected to consider general practice and primary care reform in depth at the next National Cabinet meeting – a discussion that will likely be informed by the Strengthening Medicare Taskforce report, which is due to be released this month.
The RACGP has consistently argued that higher Medicare rebates and support for longer consultations are two areas where increased resources would make a substantial difference, but other Taskforce stakeholders, such as the Grattan Institute, have presented reforms involving more structural change but less funding.
Federal Health and Aged Care Minister Mark Butler has also stopped short of committing to higher rebates or investing more than the $750 million that the Government has put aside to fund the reforms.
Nonetheless, Dr Higgins says the time for shortcut attempts at primary care and general practice reform is over, particularly as she believes there is ‘copious evidence’ showing it is the most efficient part of the healthcare system.
‘General practice is not only better at stopping people from getting sick in the first place, but it also provides more bang for buck in terms of healthcare expenditure,’ she said.
‘Governments need to start looking at general practice funding for what it is – an investment rather than an expense.
‘Ideally, outcomes from the Strengthening Medicare Taskforce will support this approach because the sooner it occurs, the healthier patients – and government treasury departments – will be.’
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Dr Milton Arthur Sales   12/01/2023 8:29:19 AM

This is another blow to general practice and the structures that have evolved over decades. Some practices will become non viable. Some will cease having a weekend roster. Some will charge more to cover the cost of the tax ( which is a regressive tax designed to punish employment). Some will charge a greater service fee to cover the cost - reducing the income of GPs further.
None of these possible outcomes are an advantage to the communities crying out for more GPs particularly in less economically viable areas.
It is an example of the splitting of state and federal tax grab. State revenue doesnt care about health services provision - not their department.
Closing Saturday mornings would be the cheapest option for our practice - we have to pay penalty rates for our staff. If we had to pay payroll tax on all the income earned by an associate doctor through the whole week it would not be worth opening as we would not cover that from charging our current facility service fee

Dr RS   12/01/2023 1:41:47 PM

This is going to be a massive problem for general practice I can foresee a number of corporates closing medical centers as their margins will Shrink and group practices disintegrating or being very expensive for patients. This crisis could be averted if state premiers simply exempted medical clinics from payroll tax( Like Hospitals are)
But there is a lot of hostility towards Gps in government circles…