The state of play for payroll tax and general practice

Payroll tax liability continues to be a major concern for practice owners and GPs alike, with its impact on business sustainability threatening to undermine recent gains aimed at safeguarding the future of the profession.
 
The RACGP has been at the forefront of advocacy efforts in this space and has managed to strike various agreements with governments around Australia.
 
However, the nature of payroll tax interpretations and the varying thresholds can it differ depending on the jurisdiction in which GPs and practices are operating. With that in mind, newsGP has collated the most recent developments in each state and territory to provide a broader picture of the overall payroll tax state of play.
 
Australian Capital Territory
In April, the RACGP was informed that the ACT Revenue office had started contacting general practices in Canberra regarding payroll tax and released a statement urging politicians in the nation’s capital to intervene.  
 
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.  
  
Advocacy conducted by RACGP NSW&ACT contributed to the territory opposition party’s motion to Parliament that called on the Government to exempt practices. 
 
A subsequent meeting was held involving the ACT Chief Minister Andrew Barr, RACGP President Dr Nicole Higgins and RACGP Vice President Dr Bruce Willett. The college remains hopeful that the territory’s revenue office will maintain its $2 million threshold and not seek retrospective tax payments.
 
New South Wales
Last month, RACGP NSW&ACT Chair Professor Charlotte Hespe arranged for college representatives to meet with Health Minister Ryan Park, Finance Minister Damien Francis, and Revenue Commissioner Scott Johnston to discuss payroll tax.
 
Alongside Professor Hespe, RACGP Expert Committee – Funding and Health System Reform members Dr Michael Wright and Dr Michael Bonning attended the meeting, as did NSW&ACT Deputy Chair Dr Rebekah Hoffman.
 
Attendees agreed to work towards a Federal solution to payroll tax, as well as disseminate further information aimed at educating GPs and practice owners, with the aim of alleviating fears about payroll tax liability – past, present and future.
 
NSW Revenue is not expected to increase its audit activity in relation to general practice for at least the next two years.
  
The meeting came months after the RACGP published an open letter addressed to the then NSW Premier Dominic Perrottet urging his government to not impose additional payroll tax on general practices.   
 
Northern Territory
According to the new RACGP NT Faculty, payroll tax has not arisen as a topic for concern. However, the college has indicated that it is arranging meetings with relevant territory members as a ‘proactive motion’. 
 
Queensland
The State Government has administered a temporary payroll tax amnesty on payments made to tenanted GPs until 30 June 2025.
 
Practices in Queensland have until 29 September to lodge their expressions of interest in terms of the amnesty and then have until 30 June 2025 to lodge their application for the amnesty.
 
However, the RACGP still holds some concerns as practices provide voluntary annual wage disclosures when applying for amnesty.   
 
RACGP Queensland Chair Dr Bruce Willett told newsGP practices need to take their own advice regarding the amnesty, but noted that it also includes a reprieve against retrospective payroll tax bills of up to five years.
 
‘Because of the harmonisation of payroll tax legislation among all the states, except WA, payroll tax requires strong advocacy on a state-by-state basis,’ he said. 
 
‘A moratorium is an important first step to give practices time to make sure they have the contracts and working procedures in the best possible position in the future. 
 
‘The RACGP is also still campaigning strongly to reverse this new interpretation of the law as it applies to general practices and our patients.’
 
South Australia
In a move hailed a ‘very positive news’ by RACGP SA Chair Dr Siân Goodson, the State Government has agreed to pause the application of reinterpreted payroll tax rules until the end of June 2024.
 
As part of the amnesty, any changes will also not be retrospectively applied to practices that register with RevenueSA by 30 September 2023. 
 
‘We are working to lock in dates for webinars for SA members with RevenueSA to provide clarity and education,’ Dr Goodson told newsGP.
 
‘We hope to have the first webinar before the end of July and are collaborating with AMA SA on this issue as well.’
 
More information regarding practice registration is available on the RevenueSA website.
 
Tasmania
Unlike other states, neither the Tasmanian Government nor its revenue office have indicated that there will be a change in payroll tax interpretation with regard to tenant doctors in general practice at this time.
 
Nonetheless, RACGP Tasmania has indicated that it is monitoring the situation closely and will be ready to advocate for general practice in this space, should it be required.
 
Victoria
The Victorian Government has not categorically ruled out the broadening of payroll tax to general practices.   
  
However, the 2023–24 state budget did include a $200,000 increase to the payroll tax-free threshold, raising it to $900,000. The new threshold will be in place from 1 July 2024 and will further increase to $1 million the following year, which brings it closer to being in line with the other states and territories.
 
Prior to the Budget and following a meeting with RACGP Victoria, Opposition Health Minister Georgie Crozier said she would seek a parliamentary inquiry on payroll tax.
 
A joint letter from the RACGP, AMA, Primary Care Business Council, and Australian GP Alliance was subsequently sent to Treasurer Tim Pallas to follow up on the issue. RACGP Victoria has also indicated that it will continue to engage with the state’s Treasury Department regarding payroll tax.  
 
Western Australia 
In a letter to the RACGP, Treasurer and Deputy Premier Rita Saffioti recently confirmed that the WA Government does not intend to change its payroll tax provisions on the basis of tribunal decisions in other states, such as Thomas and Naaz.
 
Under existing contractor provisions, most GPs working in medical practices are considered contractors running an independent business. Given WA has a $1 million tax free threshold, businesses may still be liable for payroll tax if they have practices operating in other jurisdictions.   
 
While WA is not part of the Harmonisation protocol, the college has indicated it will nonetheless continue to advocate in all states and territories consistently.  
 
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