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RACGP takes payroll tax fight to Canberra


Anastasia Tsirtsakis


18/04/2023 4:35:45 PM

College leaders have urged politicians in the nation’s capital to intervene on a ‘sick tax’ they say threatens access to GP care – and are calling on members to join the cause.

Doctors and politicians pictured together.
L–R: RACGP Vice President Dr Bruce Willett, ACT Independent Senator David Pocock, Dr Felicity Donaghy and RACGP President Dr Nicole Higgins pictured at Garema Place Surgery. (Image: Supplied)

RACGP representatives have called on Australia’s lawmakers to protect the future of general practice, after a number of clinics across Canberra were contacted by the ACT Revenue office regarding potential payroll tax liabilities.
 
The new tax, which is the result of a recent re-interpretation of legislation, has been a point of contention for practices across the country.
 
While RACGP advocacy has resulted in the Queensland Government announcing an amnesty period for practices, up to 30 June 2025, saving practices hundreds of thousands, if not millions, of dollars, in other states and territories the tax is projected to take practice costs beyond profit margins for most clinics.
 
Should this occur, many have indicated that they will have no choice but to increase their patient fees – or close their doors.
 
To help raise awareness about the issue, RACGP President Dr Nicole Higgins and Vice President Dr Bruce Willett were joined by ACT Independent Senator David Pocock for a doorstop interview at Garema Place Surgery, along with the practice principal Dr Felicity Donaghy.
 
According to Dr Higgins, the threat of the new tax comes despite access to essential GP care already being at a ‘tipping point’ in the Australian capital.
 
‘Canberrans are mourning the loss of Hobart Place, which is one of many practices that have been forced to close across the country after successive governments stripped funding from general practice care and patients’ Medicare rebates,’ she said.
 
‘Now the ACT Revenue Office has started contacting practices across Canberra regarding payroll tax – this “sick tax” threatens the future of care in our capital.
 
‘General practices in Australia already pay payroll tax on our staff, including receptionists, nurses and GPs in training. But most GPs are not employees, they rent rooms from a practice owner and work under independent agreements.’
 
A newsGP poll of almost 1300 GPs across Australia found only 3% would be able to absorb costs associated with tenant doctors becoming liable for payroll tax. The overwhelming majority (78%) said they would be forced to raise their fees and 18% said they foresaw having to close their doors.
 
The college has projected that the tax will increase costs for patients by around $15 per consultation.
 
In the ACT, payroll tax is set at 6.85%.
 
RACGP Vice President Dr Bruce Willett said that if implemented, it will mean the majority of practices will become ‘unviable’.
 
‘And if the ACT continues to seek the five years’ retrospective payments, that will mean many practices will become insolvent and close,’ he told newsGP.
 
Just last month, Hobart Place, a practice that provides vital services to many disadvantaged groups, announced that it would be closing down on 30 April due to the erosion of Medicare rebates relied on by vulnerable patients to help cover medical bills. Come the end of the month, Garema Place Surgery will be one of only two general practices operating in Canberra’s city centre.
 
Dr Donaghy, who is the practice principal, says the practice will have no way of absorbing the extra cost.
 
‘Our only option would be to pass it on to patients,’ she said.
 
‘I am speaking out on behalf of our patients and the many people in Canberra who will struggle to afford increased costs for essential care – we need a solution because our state already has the lowest bulk billing rates in Australia, and if practices are forced to raise fees, it will be devastating for the community.’
 
ACT Independent Senator David Pocock told newsGP he is concerned about the impact the collection of payroll tax could have on practices and patients in the territory, and fears the cost burden could see more practices closing their doors.
 
‘This is something we just can’t afford in the ACT when we already have less GPs per capita than remote areas of NSW and Tasmania, as well as the highest gap fees in the country,’ he said.
 
‘We know general practices are finding it increasingly hard to stay afloat, particularly those practices that prioritise those in our community who cannot afford gap fees.’
 


The limited access to bulk billing in Australia was further unveiled this week with new data released by Cleanbill showing that just 35.1% of clinics taking on new patients offer bulk billing to adults for a standard item 23 consultation.
 
The ACT was found to have the fewest bulk bulling options available to new patients at just 5.5%, as well as the highest average out-of-pocket costs at $49.11 for a standard consultation.
 
The RACGP has strongly been advocating against the proposed new payroll tax interpretation since the issue first emerged last year.
 
In addition to the amnesty achieved in Queensland, the college took out full page ads in both the Sydney Morning Herald and Daily Telegraph in February to publish an open letter addressed to former NSW Premier Dominic Perrottet – the state government leading the push – warning that the tax could end bulk billing and result in the closure of up to 20% of general practices in the state.
 
Dr Willett says the college is aiming to replicate the amnesty achieved in Queensland in every state and territory. He thanked Dr Donaghy for joining the fight in the ACT and called on all members to get involved.
 
‘In Queensland, the RACGP has successfully advocated for and achieved an amnesty for general practices, saving general practices hundreds of thousands, if not millions, of dollars across the five years up until 2025,’ he said.
 
‘We are continuing to advocate on behalf of patients and practices in all other states and territories. But because of the synchronised nature of the payroll tax … it’s really important for practices all around the country to come forward, talk to MPs and work with the college to actually stop this iniquitous tax that will close practices.
 
‘Every state faculty is working on this with their relative state governments and members should feel able and encouraged to contact their state faculties.’
 
And while supportive of GPs, Senator Pocock acknowledged that the decision on payroll tax currently lies with the ACT’s independent Revenue Commissioner.
 
‘I’d encourage the ACT Government to consider a pause on collection to conduct further consultations with GPs, and critically, to wait for any Commonwealth reforms to take effect,’ he said.
 
‘We should wait for these to be implemented before we add additional costs that will be passed on to patients.’
 
In addition to undermining the Federal Government’s Medicare reforms, Dr Higgins said any action to implement the new interpretation of payroll tax will only worsen the health system crisis and put more pressure on hospitals.
 
‘Australians urgently need our political leaders to get it together,’ she said.
 
‘We need serious reforms and funding to ensure everyone can get the care they need from a GP – no matter their income or postcode.
 
‘State and territory leaders need to stop the “sick tax” which threatens to undermine any efforts to improve access to care for Australians.’
 
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Canberra Garema Place Surgery Practice Hobart Place Medicare payroll tax sick tax


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Dr Bruce Lou Solomon   19/04/2023 7:23:41 AM

We are already overtaxed. Adding this unexpected burden will be extremely detrimental to practices, GPs and patients. Please fight this added tax.


Dr Sudeer Rajbally Mahadeo   19/04/2023 9:44:22 AM

Politicians have been unusually quiet regarding acute issues affecting GPs and ultimately the nations health especially in financially challenged areas.
Not impressed with the current leadership. We have started a petition. Pls sign it.
https://chng.it/y6n6D5Fz
Hope the RACGP and AMA are able to get through to them. For the first time in 20 years as a GP I feel despondent like so many of my colleges.
Dr M


Dr Paul Vernon Jenkinson   19/04/2023 10:40:21 AM

With Socialist government in Australia, this is an expected step in the dismantling of the middle class. Raise taxes to bludgeon the medical profession into submission as bulk billing has patiently done since its inception ?1976.
The chickens have come home to roost.(and they are very hungry)


Dr Richard Hill Stuckey   19/04/2023 1:45:46 PM

The only way a payroll tax can be introduced is for the doctors at the practice be deemed as employees rather than contactors.
Once deemed as employees they would likely be eligible for superannuation, holiday pay and sick pay.
Surely no clinics could afford this.
It would seem that the politicians have not thought through the ramifications of their short term money grab.


Dr Franklin William Butuyuyu   19/04/2023 5:57:55 PM

Dear colleagues each year the cost of living has increased and we keep accepting this at the supermarket, at the fuel stations and at all the other allied health professionals we attend without butting an eye lid. Only bulk billing without mixed billing is poor decision making. We should all get in this together and charge gap fees if anyone wants to keep medical practice sustainable! We shouldn’t wait for the government state or commonwealth to decide for us.


Dr Abdul Ahad Khan   19/04/2023 8:58:54 PM

The RACGP & ACRRM will continue to remain POWERLESS.
Only a Nationwide One Day ' Stethoscope Down Strike ' by all GPs organised by both Colleges & the AMA & with wide Newspaper & Media Coverage , is the only thing which will bring the Govt. to its Senses - Nurses Strike - Why should not GPs ?
Dr. Ahad Khan