Victoria’s State Revenue Office is trying to recover $800,000 in payroll taxes from some clinics, while one practice in regional NSW was recently given 21 days to pay a $450,000 retrospective tax bill. RACGP says this practice should most likely be shut down.
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It comes at a time when doctors are already reporting that patients are delaying or avoiding doctor appointments because of a cost-of-living crisis. The average out-of-pocket cost is $40.10 in Victoria and $41.06 in NSW, according to data from online healthcare directory Cleanbill.
Federal Secretary of Health Mark Butler raised concerns that “the record $6.1 billion investment in strengthening Medicare could be impacted by new payroll tax obligations imposed by state governments on general practice at the same time”.
“Payroll taxes are ultimately a matter for the state to administer, and I encourage them to consider feedback from GPs,” he said.
Professor Charlotte Hespe, who runs a practice at Glebe in Sydney’s inner west and is chair of the NSW RACGP, said the practice had started paying payroll taxes for GP contractors. It has increased its fees by $20 to cover these costs, along with increased wages and utility bills.
“This is the nail in the coffin,” he said. “This will make access to primary care inaccessible to many people on a standard wage, let alone those who are really poor.”
“This will kill mass billing,” warned Melbourne GP Dr Rodney Aziz.Credit: Tamara Voninsky
Dr Rodney Aziz, a general practitioner from the middle east of Melbourne who has practices across Victoria, said most clinics had to raise their out-of-pocket costs between $15 and $20 to cover taxes.
“This is a serious blow to the entire industry,” he said.
He said no clinic could absorb the payroll tax for general practitioners – which is 4.85 per cent for Melbourne businesses and 5.45 per cent for Sydney businesses – without increasing their fees.
“This will turn off bulk billing. This is a huge cost for a clinic that is operating on very thin margins.”
The top agency has asked the government to approve no retrospective payroll tax liability for GP contractors, and a three-year amnesty of payroll tax liability for GP contractors, to allow the federal government to complete its healthcare funding reform. The ACT, South Australian and Queensland governments have approved this allowance, in whole or in part. The Western Australian government says general practitioners are exempt from payroll tax.
A spokesperson for the NSW government said it was aware of the concerns raised within the medical industry and would continue to liaise with top agencies, but that Revenue NSW “does not engage in targeted audit campaigns directed at general practice”.
“Revenue NSW does not offer a payroll tax amnesty to public practices or other participants in the medical industry and there can therefore be no guarantee that a particular practice will not be subject to compliance activity in the next two years,” they said.
“The revenue decision was released by Revenue NSW on Friday 11th August. This is not a policy change, but provides practical guidance on applying payroll tax to health centres.”
A spokesperson for the Victorian government said payroll taxes are assessed the same way across industries and professions. “There has been no change in law or application of taxes in relation to general practitioners or health centres,” he said.
President of the Australian Medical Association Victoria Dr Jill Tomlinson.Credit: Penny Stephens
Australian Medical Association Victoria President Dr Jill Tomlinson said the state tax would “completely eliminate” the federal government’s triple billing incentive, which is due to take effect in November for doctors who do not out-of-charge for children. , concession card holders and retirees.
“It is a tax on Medicare that will increase the cost of seeing GPs and threaten the continuity of going to GPs.”
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Belinda Hudson, a director at accounting firm William Buck, said it was common for clinics to charge patients on behalf of doctors, withhold components for administrative costs and then leave the remainder to doctors.
“It is generally accepted that these payments are outside payroll taxes, but now we know that is often not the case,” he said.
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