GPs across Victoria have today started campaigning, urging the Victorian Government to follow Queensland and stop a tax grab from driving up out-of-pocket patient fees and causing practices to close.
The campaign is supported by the Royal Australian College of General Practitioners (RACGP), Australian GP Alliance (AGPA), and Primary Care Business Council.
It will see practices put up posters informing patients about the tax grab, which started after a new interpretation of payroll tax law deemed GPs working under independent agreements as employees for the first time. Patients will be asked to sign a petition calling on the government to stop the tax grab because ‘healthcare needs to be affordable for everyone’.
The campaign launched at a practice in Burwood in Melbourne’s east, which is part of a group of eight practices serving over 200,000 patients across Victoria. This clinic has been served with a notice to provide 10 years’ worth of records for audit. All eight practices are facing closure, leaving these patients without a GP, if a retrospective bill is applied across the group.
General practices already pay payroll tax on their employees, including receptionists, GPs in training and nurses. But it has never applied to GPs because most doctors are not employees, they work under independent agreements.
Most states and territories have provided a “pause” in audits to prevent practices having to close or increase fees due to the new interpretation of the law. In September 2023, the Queensland Government announced a new Revenue Office ruling clarifying that patients fees paid directly to a GP for their services will not be subject to payroll tax.
RACGP surveys found only 3% of practices would be able to absorb the costs of extra payroll tax on independent GPs, 78% would have to raise fees; more than half of respondents said they would have to increase out-of-pocket fees by more than $20; and 35% would consider moving interstate for favourable payroll tax settings.
RACGP Victoria Chair Dr Anita Munoz: “GPs know Victorians are doing it tough and the last thing they want to do is increase out-of-pocket fees due to a government tax grab. But our hands are tied – practices can’t absorb this extra tax. The RACGP has sent numerous letters and requested meetings with the government to find a solution but to no avail. We know of 16 practices in Victoria serving hundreds of thousands of patients that have been targeted for retrospective tax collection, and there will be many more to come. So, we are calling on our patients to help, and please urge the government to stop this tax grab – and stop practices from having to close or increase fees.”
RACGP President Dr Nicole Higgins said: “As a practice owner, I know the stress and anxiety that this issue has caused practice owners across Australia. It’s not just a problem in Victoria, but the Victorian government is the only one that hasn’t come to the table with GPs to find a solution. Instead, the Treasurer keeps claiming ‘nothing has changed’, while we know practice owners are copping this huge retrospective tax bills, plus interest. This state tax grab is undermining the Federal Government’s major investment in general practice care, and it will result in state budgets blowing out due to higher spending on hospital services. We really need a national solution, because everyone needs access to high-quality general practice care, no matter where they live in Australia, or how much they earn.”
AGPA Deputy Chair Dr Mukesh Haikerwal said: “This imposition is unjust, unfair, retrograde, and draconian. Its imposition has led to genuine fear in the GP community that should extend across the whole health sector and indeed all sectors that work with independent contractors. Its unilateral implementation with no opportunity to understand the backwards steps in health care planning and delivery will decimate the sector with fewer practices remaining open and viable and those that are open having to impose unwelcome and significant price hikes on their patients. We want the state to recover from the calamity of COVID-19, which we were all on the frontline of, and address the cost blowouts we are enduring, but we cannot do that if we are put out of business and our patients are unable to obtain healthcare and stay well.”
PCBC Chair Dr Ged Foley said: “I urge Victoria to step back from the edge, and ensure general practices are not unfairly burdened by a payroll tax which could threaten their very existence and result in more pressure on the public health system. We need assurance that there won’t be retrospective application, and greater effort is needed so that GPs can take part in the assisted compliance period. Quite simply, State Revenue Officers seeking to levy payroll tax on payments to doctors are putting primary care under threat. It’s a significant financial impost on medical centre operators, which are by and large are owned by doctors. The impacts of this could be devastating to the general practice system and do irreparable damage to state health budgets and operations.”
