Payroll tax pressure ratchets up in NSW and Vic

5 minute read

The NSW Finance Minister has thrown the former government under the bus, while south of the border GP clinics are ‘guaranteed’ to shut or raise fees.

As state-based payroll tax amnesties hit the halfway mark, time is running out to find a solution to the tax crisis hitting general practice.  

While GPs in NSW have just six months left on the clock, clinics in Victoria – the only major jurisdiction without an amnesty arrangement – are being forced to consider hiking fees or shutting their doors.  

NSW Finance Minister Courtney Houssos came out today to publicly blame the previous Liberal-National state government for the situation, but didn’t make any announcements concerning its plan for a resolution, saying only that her government was continuing to engage with GPs.  

While the Thomas and Naaz case was making its way through the legal system, Ms Houssos argued, the state’s former treasurers and finance ministers could have intervened to legislate a solution that would “give certainty” to medical centres. 

“This is yet another legacy issue from the former NSW Liberal-National government,” she said.  

“Their inaction on this issue dates back to 2018 and we have been left to clean up their mess.”  

The 12-month amnesty on payroll tax audits and tax penalties/interest on outstanding payroll tax audits will come to an end in August.  

Ms Houssos said she was committed to consulting with general practitioners to work toward a solution over the coming months.  

New RACGP NSW chair Dr Rebekah Hoffman told The Medical Republic that the college was after three key assurances from the government.  

These are: a commitment to no retrospective audits, a national approach following Queensland’s lead and for negotiations to start as soon as possible.  

“Unless we know how the state revenue officers are going to interpret payroll tax and what the liabilities will be, the businesses aren’t able to decide, firstly, whether they’re viable, and secondly, how they’re going to be passing on the [cost],” Dr Hoffman said.  

Although payroll tax itself only amounts to around 5% of gross wages paid to employees, booking engine HotDoc estimates that GPs will have to put their fees up by around $12, which is closer to 10%.  

“The people that will have to pick up the levy for the tax are the practice owners,” said HotDoc founder Dr Ben Hurst.  

“[Owners] take, on average, 35% of the overall bill. The 5% levy is effectively tripled because they only get [that 35%] and then they’re looking after all the overheads and the costs of the medical centre.  

“They’re the ones who will incur this tax, which means that they’ll have to increase their fees by that order.”  

The only other way around it, Dr Hurst said, would be for practices to renegotiate their contracts with GPs so that both the practice and the individual doctor absorbed the impact.  

“Given just the supply demand situation in Australia [right now], that’s a very, very hard conversation,” Dr Hurst said. 

HotDoc has recently conducted its own research into the potential impacts of GP payroll tax, which included a survey of 310 GP clinics and 1000 patients across Australia.  

So far, HotDoc has only released findings from its home state of Victoria, where it said up to 250 clinics are considering closing down due to the tax.  

“In places like Victoria, South Australia and New South Wales – even where there has been a pause – we saw across the board that clinics are guaranteed to either go out of business or increase their fees,” Dr Hurst said.  

“And as a result, patients are going to seek out less care.” 

Other findings from the probe were that emergency departments are overwhelmed and urgent care centres are still poorly understood by the public.  

Tax amnesty round-up  

The payroll tax amnesty period in Queensland lasts until June 2025, but practices had to opt in to be part of it. Expressions of interest in the initiative closed last year.  

South Australia’s amnesty program also required practices to opt in. It will be the first to end, with an expiry date of 30 June 2024. 

The ACT did offer amnesty until June 2025, but only for practices that are bulk billing 65% of patients and have registered for MyMedicare. Medical centres have until 29 February to apply.  

The NSW amnesty ends in August. It protected GP clinics from new audits, but also meant that any tax penalties or interest accrued on existing payroll tax debts were paused for one year. Medical centres did not have to apply.  

Negotiations to secure an amnesty in Victoria have repeatedly failed.  

Western Australia works off a different set of tax laws and has elected not to apply payroll tax to medical centres. 

Both Tasmania and the Northern Territory have largely stayed quiet on payroll tax. Neither one has released a public ruling on the matter – something which has been seen as a starting gun in other jurisdictions – but neither has announced an amnesty, either.  

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