Practice owner facing $5 million bill amid tax grab

Michelle Wisbey

11/10/2023 3:41:23 PM

It has been described as the ‘biggest existential threat to general practice’, and now a new GP-led petition is pleading for an end to Victoria’s payroll tax crisis.

A group of GPs hold 'stop the tax grab' signs.
GPs and practice managers at the Sia Burwood Medical Centre in Melbourne launching a new petition to scrap payroll tax.

From humble beginnings, Dr Martin Sia has worked 365 days a year to get where he is today, a GP and owner of eight medical centres across Melbourne.
But after three decades of hard work, his livelihood is now at risk.
Dr Sia is facing a retrospective bill totalling up to $5 million, as the Victoria Government ploughs ahead with its controversial payroll tax changes.
‘I should be celebrating, but after 30 years of hard work I’m very sad to be here to defend my business because of this new payroll tax,’ he said.
‘A month ago, we actually received an email from State Revenue Office demanding all these kinds of pay details going back 10 years, which is really a lot of work for us.
‘The timeframe we have [been] given is only two weeks to produce all this kind of information, and I must say with deep sadness that we have to now spend a lot of money, resources, and time trying to get a solicitor to try to get all this under control.’
As it stands, Dr Sia has been left with two options: consider closing or increase patient fees.
It is also why on Wednesday he was among a group of prominent GPs who had gathered at his Burwood practice to launch a new campaign, calling for an end to the additional payroll tax in Victoria.
The ‘Stop the patient tax grab and keep GP clinics open! petition is now live and open for signatures.
As part of the campaign, Victoria’s 1500 clinics have been armed with posters and brochures for patients, calling on communities to get on board and sign the petition.
‘The RACGP has been advocating to all levels of government to stop payroll tax, but it is falling on deaf ears. But you can help,’ the petition says.
RACGP Victoria Chair Dr Anita Muñoz described the payroll tax changes as an ‘absolute catastrophe’ for general practice, patients, and the health system at large.
‘We know that more than 30% of practices that have to meet that taxation bill are likely to become instantly insolvent,’ she said.
‘If that tax is applied, we know that every single service that is rendered by a GP in the state is likely to cost a minimum of $20 per service more.
‘We expect that many patients who are already struggling to see their GPs will now no longer be able to afford to see their practitioners.’
Pressure has been building on the Victoria Government to scrap the tax, but it is yet to announce any amnesties.
Queensland backed away from its rollout last month, while Western Australia has ruled it out completely.
New South WalesSouth Australia, and the Australian Capital Territory have all introduced amnesties or concessions, giving GPs more time to chart a way forward accommodating the tax burden.
But in Victoria, it is hoped the departure of former Premier Daniel Andrews could mean change is on the horizon.
Australian GP Alliance Deputy Chair Dr Mukesh Haikerwal said if nothing changes, it will not just be the doctors at risk.
‘Unfortunately, patients are being asked to pay a lot more and this is not going to be sustainable,’ he said.
‘What we’re seeing with these processes is the destruction of the healthcare system as we know it and lack of access to GPs who are the backbone of the healthcare system, and unfortunately, people’s health will suffer.
‘This is a big problem emerging that’s going to go beyond general practice, and it’s going to affect the entire society.’
Previous newsGP polls have revealed just 3% of practices would be able to absorb the costs of extra payroll tax, and more than half of respondents said they would have to increase out-of-pocket fees by more than $20.
A separate newsGP poll found more than one third of respondents would consider moving interstate if that region offered more favourable payroll tax requirements.
Dr Muñoz said if nothing changes, Victoria will face a mass clinic closure on a scale never seen before.
‘This really is the biggest existential threat to general practice and the health system, certainly in my entire career, but also in the last three decades,’ she said.
‘If we don’t get this right, and if we fail in this opportunity, then we will not have GPs to train, we won’t have GPs to teach, and we won’t have the practices available to see patients who need care.’
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Dr Christine Colson   11/10/2023 5:57:27 PM

I work as a GP contractor. I pay for the use of the premises and admin support. I work independently with no involvement in my mode of practice by any other doctor.

If GP practices are not exempt from payroll tax (even those who do not employ doctors) does it mean the owners of the practices in which GPs work will have to pay for:

Super contributions
Sick leave entitlements
Recreation leave entitlements
Carer’s leave entitlements
Maternity leave entitlements
Compassionate leave entitlements
Provision of clinical tools…

Dr Sanjeevan Nagulendran   12/10/2023 9:27:58 AM

Medicare was designed for patients to get affordable accessible healthcare and improve the productivity of the nation by improving its health. Given we have a budget surplus do we really need to get into such matters when we should be all focussing on clinical matters at the coal face. Drs need to be drs not wasting time on tax. The government need to sort this out and decorporatise Medicare as a select few individuals have made huge profits from the cookie cutter model of medical centres. We need to all work together in small collegial teams to deliver great clinical outcomes for the community- that should be the focus. Over the last few years I personally have been shocked by the lack of clinical acumen of some ‘senior’ drs - medicine is evolving at a rapid pace as well as having an aging population - to keep up we can’t waste time on tax. Mark butler needs to address these issues now.

Dr Than Tun   12/10/2023 9:32:27 AM

Dr Christine Colson,
you can add PAYG withholding, group certificate, etc
I think federal government should step in with the definition of employee.

Dr Richard Newton   12/10/2023 12:05:47 PM

That is terrible for you and I feel for you. One works hard and does one's best, to get hijacked and attacked by incompetent governments that had grossly overspent and look at GP as a soft target. I imagine all you can do is to immediately start charging a "payroll tax co-payment", a separate fee that is separate from GP collections (none is paid to the contractor GP), retained by the practice and specifically used to cover this liability. $15 or whatever per consult.

Dr Marc Houghton Heyning   12/10/2023 12:38:19 PM

In reply to Dr Colson, she is 100% correct. The appeal of the contracted (new term = "hosted") doctor is that they end up with more take home income from their GP work and they can then decide how much to put away into superannuation, into their holiday savings account or just pay off their mortgage faster. The downside is that there is NO/'Nada' sick leave, annual leave, carers leave, accrued longservice leave, no parental leave, no workers compensation coverage for workplace injury, and no employer-paid guaranteed superannuation income plus you are also responsible for submiting your regular BAS statements and payments.

If you are an employed doctor, for the practice to remain solvent given all the benefits you are entitled to, your take home pay as a percentage of total receipts is lower BUT you are guaranteed 4 weeks PAID annual leave plus PAID sick leave, carers leave , etc and the administration tax burden is on the practice.

Dr RS   14/10/2023 10:50:21 AM

There is also another consideration here, one that has been overlooked by the Federal and State Governments. The payroll tax is designed for big businesses who pay tax at the company tax rate. Medical practitioners cannot pay this lower rate of tax , so by asking them to pay payroll tax you are asking them to potentially pay tax at 55 percent , which no one in Australia does. I think this needs to be pointed out and if state Governments want to pursue payroll tax then medical practices should be taxed federally like other businesses and companies That would be Fair