NSW issues payroll tax exemption tied to bulk billing

Chelsea Heaney

18/06/2024 3:48:07 PM

Contractor GPs at practices that reach certain bulk-billing thresholds will receive payroll tax rebates, while retrospective bills are also off the table.

Daniel Mookhey and Chris Minns
NSW Treasurer Daniel Mookhey and Premier Chris Minns ahead of the 2024–25 state budget. (Image: AAP)

The NSW Government has announced a payroll tax rebate for contractor GPs and a waiver for past unpaid payroll tax liability in an estimated $189 million spend targeted at bulk billing.
The Government confirmed the move as part of its 2024–25 state budget in an effort to ‘ensure the cost of seeing a GP remains accessible’, after estimating that a 1% decrease in bulk billing equates to approximately 3000 extra emergency presentations.
RACGP NSW&ACT Chair Dr Rebekah Hoffman was directly involved in negotiations and applauded the State Government for its commitment.
‘This gives GPs across NSW certainty that they can continue to operate and keep their doors open for patients, without fear of being hit with a huge tax bill that will shut them down,’ she said.
Payroll tax, and its potentially devastating impact on general practice, has been a hotly debated topic since a high-profile ruling left practice owners vulnerable to significant tax liabilities under previous legislation.
A survey by the medical appointment booking platform HotDoc, which went out to 310 clinic owners and managers nationally, found that around one in six (16.5%) reported concern about closures, including the viability of their own clinic. More than nine in 10 respondents to a 2023 newsGP poll also said they would be forced to raise their fees if they were hit with the tax. 
RACGP President Dr Nicole Higgins thanked Dr Hoffman, as well as AMA NSW President Dr Michael Bonning, for helping to negotiate the deal.
‘The NSW payroll tax outcome ensures the viability of general practice with no retrospective application of payroll tax,’ she told newsGP.
‘For those practices who were facing closure, this will be welcome news.’
Dr Bonning, who is also a member of the RACGP Expert Committee – Funding and Health System Reform, said NSW could be the first state to legislate a guarantee of no retrospective payroll tax liability for general practice.
‘Unfortunately, general practice continues to struggle with decades of underfunding,’ he said.
‘Legislating “no retrospectivity” will provide certainty for practices and will minimise the risk of more closures of general practices in NSW.’
Once the legislation is passed there will be an ongoing payroll tax rebate for contractor GPs in practices with bulk-billing rates above 80% in metropolitan Sydney, and above 70% in the rest of the state.
Dr Hoffman thanked Health Minister Ryan Park and Finance Minister Courtney Houssos for negotiating with the RACGP ‘in good faith’ and ‘understanding the devastating impact’ the tax would have had on GPs.
‘We appreciate the very tight budgetary constraints the NSW Government is under and know this decision was not taken lightly,’ she said.
‘The tax arrangements going forward will reduce future liabilities and will go a long way to ensuring NSW practices remain viable and open for patients, and those that are bulk billing may continue.’
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NSW GP   18/06/2024 5:08:17 PM

It might be time to dust off the Sherrin and pack some warm clothes.

I wonder how this would have gone down if we had effective representation like a union or the pharmacy guild

Dr Jacqueline Louise Wood   19/06/2024 6:41:03 AM

And the bureaucrats are still thinking a Practice can survive on 80% bulkbilling rates ( and provide quality of care medicine)??? Not to mention the long suffering individual GP’s. Where is the solution here? We need a Union like the CFMEU! And better Politicians, ha.

Dr John Christopher Meegan   19/06/2024 7:13:40 AM

What a joke. The NSW government who aggressively fought for payroll tax on GP contractors triggering a problem for GPs across Australia now “kindly” offer this concession only because it will cost them more in emergency visits if they don’t & not because they care at all about GPs or their patients. Sadly medicine and general practice remain political footballs.

Dr Bradley Arthur Olsen   19/06/2024 7:35:21 AM

Bulk bill or you will be taxed , what a great way to black mail us into bulk billing What's next bulk bill or your personal tax will go up .Bulk bill or we will .............. the list is endless There goes any thought of moving to NSW

Dr Paul Michael Coughlan   19/06/2024 7:55:41 AM

Ermmm........................but if practices start dictating the billing practices of their contractors , that would make them employees .

Dr Irene Rosul   19/06/2024 8:00:19 AM

That's the reason we pay nearly 1700$ for the college, which will be $2000, very soon!!!

Dr Bryan Joe Kim Buttery   19/06/2024 8:04:53 AM

Practice owners have little control over what their independent contractor doctors want to charge. In fact because payroll tax is not paid by contractors but by the practice owner, there is little incentive for the contractor doctors to bulk bill.
Furthermore if I was to impose bulk billing in my practice, my contractor doctors will simply leave and work elsewhere.

Dr Brendan Sean Chaston   19/06/2024 8:48:58 AM

Doesn’t this reform effectively wedge practices. Unable to privately charge beyond 20-30% to meet costs. If the practice is unviable under this fee structure they may as well close now and start again.

Dr KP   19/06/2024 9:02:48 AM

Wow , this is being celebrated and the minister is being thanked- For what is coercion and Blackmail - If you don’t bulkbill we will tax you more! How is this a win?
Add to this the scam that is my medicare- designed to increase Bureaucratic control over GPs , again Naive GPs don’t realise that that is another instrument of Coercion- if you don’t sign up , you won’t get rebates for Mental Health care plans, possibly for other CDM items as well! General Practice has truly been trashed and has a dismal future
Hopefully new Graduates can see all this and will Choose their careers wisely I can see a Looming Scarcity of GPs as a result of all this nonsense- GPs will then Charge what they are worth and patients will pay the price

Dr Tom Owen Morley   19/06/2024 9:08:36 AM

This is so problematic.

1) It is outright bullying.

2) it is inappropriate for states to be bargaining using a federal metric.

3) It is inappropriate to impose requirements on individual contractor GPs as payroll tax is a clinic obligation.

4) It will undermine the financial viability of clinics as bulk-billing rebates simply cannot sustain primary care.

5) It will encourage clinics to increase fees by 14% to cover the tax (assuming tax rate of 5.45% and the clinic getting 40% of practitioner billings).

6) It will result in clinics having more control over GP billings, further blurring the individual contractor distinction and leading to the need for clinics to provide employee entitlements.

7) It will lead to further tensions between clinic and GP as it reduces Dr autonomy.

8) It will increase clinic losses as they can no longer privately bill for costly extras such as dressings, STI treatments, procedure fees etc due to bulk-billing legislation.

I could go on…

Dr John Martin Wild   19/06/2024 9:49:55 AM

I can not see that convincing the NSW Government to waive retrospective taxes is a big win. The real problem will be when Practice owners have to commence paying payroll tax, which I think is in September.
What the Government does not understand is that most corporate clinics the GP is free to charge their own fees. Why would the Sydney GPs want to cut their income by increasing the number of patients they bulk bill? The tax bill goes to the practice owner, not to the GP. The practice owner who takes say 35% of the Doctors billings will lose money if the GP lowers his fees. The GPs contract will likely be renegotiated
with the service charge to the GP being increased . Which will see a fall in bulk billing rates to protect their income.

Dr Judith Virag   19/06/2024 10:02:31 AM

Our friends, the RACGP, are rejoicing that practices will be ‘protected’ from retroactive and future payroll tax if they BB >80% of consultations. Who needs enemies again?

NSW GP   19/06/2024 10:02:44 AM

Pardon my ignorance, but how do real specialists get around this?

I assume they pay payroll tax?

Dr RM   19/06/2024 10:27:57 AM

How did the NSW govt arrive at that policy?
What process did they use to decide the BB rate and how will they collect the practice data ?
Why is it that RACGP are not more active in consulting governments?
Do the government advisers not seek information prior to providing their advice. Should RACGP have other pathways to advocate?
Other workplaces have strong unions and never get held to ransom like this eg ANF, pharmacy guild

Rural GP   19/06/2024 1:07:33 PM

Dr Hoffman is thanking the government on my behalf for a new tax! . Dr Higgins' line is that the labor government is paying its dues to the nurses and pharmacists, so we cannot hope for better . They were grateful for the "deal breaking BB incentives"
Practices closing , graduates avoiding the profession in droves . I dont feel the College represents grass roots GP and GP Practice owners, at all.

Dr Christopher St John Kear   19/06/2024 4:32:43 PM

If we had a union willing to represent us, then they would have met with the NSW Government and told them that Medicare was never intended to pay the full cost of GP services. It has a (stupidly low) schedule fee, of which it pays between 75 and 85% depending on who is providing the service. There were always supposed to be gap fees. No wonder newly qualified Doctors are shunning General Practice. I'm glad to be nearing retirement age.

Dr RM   19/06/2024 6:49:34 PM

Re-reading this article…..
So essentially the RACGP was actually involved in negotiations of this deal.
This is a horrible deal for both GP contractors and practices.
I don’t know how this was possibly negotiated in our names.
It also sets a precedent that other states will use as it is an ‘RACGP approved deal’
It hamstrings practices to accepting high BB rates (dropping overall clinic revenue) and also GP’s forced to take a salary drop to BB rates (or seeing higher volumes of patients).

The whole point of all the talk in the last year by our members on all these forums and surveys is that BB is not viable for either practice or GP’s and the real cost of a consult is around $100 yet here we are with this deal as well as the ‘triple BB incentive’ as what our college had managed to negotiate in our behalf.

I can’t see this ending well for either GPs or practice owners and it further erodes the value of the GP in healthcare.

Rural GP   20/06/2024 12:55:08 PM

Dr RM :: here, here well said

Dr Joseph Dinesh Rodriguge Fernando   22/06/2024 10:38:13 AM

WHAT A SHAME . How can you change the law according to the billing system? IS RACGP SLEEPING AGAIN ? This is kind of blackmailing GPS

Dr Kyla Margaret Bremner   22/06/2024 1:33:37 PM

So our politicians are either deliberately ignoring reality or so stupid they don’t understand the basics of the systems they’re meant to be running. All of this is so disingenuous, manipulative and impossible it makes my head explode.