Plea to Premier Minns as NSW and Victoria ‘exposed’ by payroll ruling

Jolyon Attwooll

15/08/2023 4:00:00 PM

Both states issued a ruling for medical centres last Friday, a move one tax expert has described as ‘a real risk’ to practices.

NSW Premier Chris Minns
Premier Minns has been urged to make sure NSW communities have access to timely and affordable general practice care. Image: AAP Photos/ BIANCA DE MARCHI

Rulings from the NSW and Victorian Governments have confirmed their stance on payroll tax, with neither jurisdiction offering an amnesty for general practices – a move that has prompted a plea to the NSW Premier Chris Minns.
Both state governments confirmed last Friday that their approach would align with Queensland and South Australia, where general practices with revenues over a certain threshold will potentially be liable to pay payroll tax for tenant GPs.
RACGP NSW&ACT Chair Professor Charlotte Hespe notes while the impact of payroll tax on practices will depend on their respective business models, many have little capacity to absorb extra costs – a point she made in a letter sent to Premier Minns on Tuesday.
She describes many practices as being in ‘an insidiously difficult position’.
‘An awful lot of practices are right on the edge of being able to function,’ she told newsGP.
‘Today we are calling on the NSW Premier to do what his Health Minister and Treasurer have so far refused to do – make sure NSW communities have access to timely and affordable general practice care, so they don’t have to wait for hours for care in overrun emergency departments.’
Professor Hespe said one practice in NSW has been issued a retrospective bill of $450,000, and she described it as ‘ridiculous’ to have incentives designed to help general practices undermined.
‘It’s absurdly contradictory that our government is offering up to $20,000 in incentives to get more healthcare workers in regional and rural NSW, while on the other hand its risking the closure of countless local practices with this tax grab – which is a tax on patients,’ she said.
Only 3% of newsGP readers said they will be able to absorb costs linked to tenant GPs becoming liable for payroll tax, according to a survey run earlier this year.
Almost four in every five respondents (78%) said they will be forced to increase patient fees.
‘We do need different methods of payment to enable us to be economically viable, remembering that whatever funding that is put into general practices, it is still considerably cheaper than any funding they would need to pour into other parts of their health system,’ Professor Hespe said.
She also thanked practices who have come forward with details of recent audits and encouraged others to follow suit.
‘The more that we have, the stronger the case we have,’ she said.
The Victorian State Revenue Office said its ruling is designed to give clarity to medical centre businesses and reflects a ‘longstanding position’ of determining payroll tax liability ‘on a case-by-case basis’.
‘This ruling does not represent a change in practise or interpretation,’ they wrote on their website.
However, they said the ruling incorporates decisions in the Thomas and Naaz case, which interpreted tenant doctors as ‘relevant contracts’, and made the practice liable for their payroll tax when previously they had been exempt.
In a similarly worded dispatch, the NSW Revenue department said the ruling was not a re-interpretation of the existing legislation but again cited the same decisions.
Belinda Hudson, Director, Business Advisory and Health Specialist at William Buck accountants, said the rulings should act as a call to action for general practices.
‘This effectively leaves practices in Victoria and NSW exposed,’ she said in a media release following the ruling.  
‘Add that to the recent announcement in Queensland about the amount of expected payroll tax to be collected over the next few years and it is a real risk that practice owners cannot ignore.’
Another William Buck director, Gil Abras, said the ruling should be a ‘call to action’, particularly as audit activity is taking place across the states.
‘Whatever the next steps are for practices, we are concerned this may ultimately lead to an increased cost of healthcare in Australia as practices deal with the impact of increased payroll tax,’ he said.
Neither the Victorian nor the NSW governments offered any amnesty, in contrast to Queensland and South Australia, which offered respite until the end of June 2025 and end of June 2024 respectively.
The Queensland State Treasurer Cameron Dick suggested in a recent Estimates hearing that revenue from payroll tax on practices could be around $100 million per year once the amnesty is lifted.
Victoria practice owner Dr Mukesh Haikerwal believe the ruling in his state is an example of overreach.
We have been dictated to as a profession by the [State Revenue Office] about what you can do in a practice, which is over and above the remit of a Treasury Department,’ he told newsGP.
‘I would say the payroll tax is a critical situation [for general practice] now.
‘All of the mealy-mouthed words of reassurance have been proven to be just that.’
Dr Haikerwal said practices will be unable to bulk bill given the ruling, and estimated patients are likely to face increases of more than $10 in out-of-pocket fees.
‘The Commonwealth has tried making all these attempts to shore up general practice to improve access, understanding that it is the most efficient part of the healthcare system – and their efforts have been completely scotched,’ he said.
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Dr Sriram Gopathy   16/08/2023 8:06:36 AM

The country is entering a phase, I believe, by design to create a period of of instability , and eventual annihilation of GP practices so to create a big pool of unemployed GPs , to facilitate the eventual transition to a US model of Corporate type of healthcare where they can be absorbed as cheap labour.

Rural GP   16/08/2023 8:21:55 AM

Truly terrifying : my first instinct: how can I get OUT of practice ownership? .
I am doing everything I can, but I dont feel safe
NSW GOVT : a mercenary and dishonest approach.
Get me outta here .
Thankyou to practices sharing their information.

A.Prof Christopher David Hogan   16/08/2023 10:47:57 AM

This is terrible news & puts the whole sector of General Practice in even more peril than it already is.
Through wilful ignorance too many politicians consider the contribution of General Practice to be minor & GPs as rich , greedy doctors ; cash cows who can be milked & milked indefinitely.
If this continues there will not be enough GPs to do preventive care, not enough GPs to deal with minor issues that become major illnesses, not enough GPs to answer queries. The ambulance service will overload, EDs will overload & there will be bed block
Oh oops, it has already happened

Dr Patrick Denis Byrnes   17/08/2023 5:26:51 PM

The elephant in the room has been missed!
If the ATO says contractors are really employees via the payroll tax ruling it also means practice owners will potentially be up for
1. Back pay for all the holiday and sick day pay
2. Liable for long service leave
3. Liable for not paying the super guarantee as employers are obligated to do
This scenario is much more expensive than some payroll tax problems
If you think it can't happen just look at some of the commercial hire companies who were using the contractor status argument
Pat Byrnes

Dr Elaine April Joy Owen   18/08/2023 5:47:04 PM

A high profile advertising campaign calling out the Premiers is the only thing which will stop this. Otherwise those Premiers and their media departments will blame "greedy doctors" for the practice closures and higher consultation charges which will result.

A.Prof Christopher David Hogan   19/08/2023 9:54:53 AM

What is happening to the groups of other professions who use independent contractors?