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RACGP flags concerns around payroll tax ruling, pushes for exemptions


Matt Woodley


9/01/2023 5:46:00 PM

A newly released public ruling from the Queensland Revenue Office may impact practice viability and patient out-of-pocket costs, the college has warned.

GP doing tax.
The college has warned that some practices may need to close their doors if government pushes ahead with its current interpretation of payroll tax.

General practices may soon have increased payroll tax liability, following the release of a Queensland Revenue Office (QRO) public ruling that could end up having nationwide implications.
 
According to the ruling, which is essentially a new interpretation of existing legislation, practices may soon need to pay payroll tax for tenant doctors who provide general practice services on the premises once they meet certain criteria, such as practising more than 90 days per year or being on a weekend roster.
 
Example scenarios contained in the ruling also indicate that practices engaging the services of two or more full time equivalent tenant doctors at any one time would also subject to payroll tax.
 
RACGP Vice President and Queensland Chair Dr Bruce Willett told newsGP the college is concerned about the ruling’s potential implications and is seeking further clarification and expert advice – as well as exemptions for tenant doctors within general practices.
 
‘I spoke with the Treasurer’s adviser this morning and we’ve also got a meeting lined up with the QRO for Friday to try to negotiate a more reasonable approach to this issue,’ he said.
 
‘We’re also in the process of receiving additional advice from accountancy firms in relation to the ruling.
 
‘Members should know that negotiations between the RACGP and the QRO are still in progress, and while it’s difficult to say how long they will take, the [Queensland] Government is quite motivated to settle this quickly.’
 
Ongoing practice viability and the resultant impact on patient out-of-pocket costs, as well as access to general practice care, are high among the college’s concerns, he said.
 
The RACGP has been working behind the scenes for more than a year to seek concessions for general practices and tenant doctors in an effort to avoid the more serious implications associated with a stricter interpretation of payroll tax liability.
 
This advocacy has already resulted in an exemption for Queensland practices that were hit with backdated tax bills when the QRO initially changed its interpretation of payroll tax law following a New South Wales tribunal ruling, and Dr Willett said the college remains hopeful of a positive outcome.
 
‘We’ve got an ongoing commitment from QRO to continue to work with us to develop a meaningful solution, and we will continue to work with expert accountants and others to develop solutions that are workable for practices,’ he said.
 
However, RACGP President Dr Nicole Higgins has warned that should government push ahead with the new interpretation, the wider healthcare system – and patients – will ultimately be among those who suffer the most.
 
‘GPs usually work under service agreements with practices and if practices are suddenly slugged with payroll tax costs, which can be tens of thousands of dollars, they will be forced to pass the costs on to patients,’ she said.
 
‘If patients can’t afford the higher out-of-pocket costs, practices will be forced to close their doors.
 
‘This will have a devastating impact on communities across Queensland and will result in worsening health conditions, and more strain on our already overburdened hospital system and emergency departments.’
 
The new interpretation will also likely have implications outside of general practice, with medical industry specialist and Director of Business Advisory at William Buck, Paul Copeland, telling newsGP that the ruling applies to any entity that conducts a medical centre business.
 
‘The ruling clearly notes that the concept of a medical centre extends to dental clinics, physiotherapy practices, radiology centres and similar healthcare providers,’ he said.
 
‘Where a practice is providing services to a doctor under an agreement, the [QRO] is still likely to take the position that the arrangement is subject to payroll tax.
 
‘The onus will then be on the medical centre to dispute that payroll tax does not apply to the arrangement.
 
‘All practice owners operating within the medical industry need to be aware of this recent ruling and the highly detrimental impact this could have on the operation of their practices.’
 
Mr Copeland also pointed to the importance of paragraph 13 in the ruling, which states that payroll tax will likely apply if ‘a medical centre engages a practitioner to practice from its medical centre or holds out to the public that it provides patients with access to medical services of a practitioner’, unless they hold an exemption.
 
‘Of concern in this paragraph is the use of the word “or”,’ he said.
 
‘The [Commissioner of State Revenue] is making the assertion that where a medical centre holds out that it is providing patients with access to medical services that the agreements with the doctors working from the medical centre will be subject to payroll tax.
 
‘The only exclusion will be where an exemption applies. This is a significant departure from the current understanding on the application and operation of service agreements between doctors and medical centres.’   
 
However, he notes the QRO has said there is scope for a revised ruling, so the current interpretation ‘may not be the final position adopted’ in relation to the application of payroll tax to the medical industry.
 
With the prospect of higher out-of-pocket fees on the horizon, Dr Willett has encouraged members to explain to patients that fees may soon increase, and that bulk billing is likely to decrease ‘substantially’ due to the new state government interpretation.
 
‘Practices need to be transparent that this is the cause of the increase,’ he said.
 
‘Because I think that’s one of the only ways that we will get the attention of the state government – if their voters understand they’re paying these fees because of this additional tax.
 
‘At the end of the day, it’s likely that patients are going to be the real losers out of all this.’
 
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Dr Nicole Jayne Higgins   10/01/2023 6:34:02 AM

This ruling threatens the way we work.

The conditions in this ruling make it difficult to maintain a tenant doctor status.
Some people would prefer to work as employees and the benefits such as sick/holiday leave/superannuation etc. For the majority, losing the freedom and flexibility as a tenant doctor will be a challenge if we move to an employment model.
Practice owners are all too aware of the implications and cost of transitioning to a new model. This ruling could be the dealbreaker for many marginal practices.
The only option is to pass the cost onto patients.
This will only further accelerate the decline in bulk billing.
The risk with this ruling is that like the pharmacy prescribing , it will roll through to other states. NSW has an election coming up. I would think this could be a significant issue for GPs to mobilise their patients to push back against.


Dr Waldemar Andrzej Bogacki   10/01/2023 7:42:29 AM

"‘GPs usually work under service agreements with practices" it is very interesting statement. If it is true that GP provides "service" for practice then "practice " should pay GST for this "service" but in fact in every bigger "practice" GPs are paying "service fees" plus GST from this fees. Legally and financially looks like "practices" are providing" services" for GPs and payroll tax could be only relevant to practice staff on salary ( administration, management, nurses and others).Proper interpretation of this facts could greatly reduce problem of payroll tax and the same way change relation between GP s and "practices" providing "SERVICES" for GPs.


Dr Hercules Morkel Duvel   11/01/2023 7:58:39 AM

This is as bad as some guidelines - which in the end state -"using your clinical judgement"!
I would like to see a dot point list of: you have to do this, and you cannot have this. Nothing open for interpretation!
This sounds like the classic thing that "leaves it open to interpretation" for whoever gets the job at the QRO to make a good impression with their supervisor, and make it onto the news or A Current Affair!


Dr Tawhid Mohamed Sayed Hassanien   17/01/2023 8:18:49 PM

we need to define who is the service provider , the GP or the Practice owners ?. could partnership be the answer to this problem?