Payroll tax for GPs scrapped in Victoria, SA
The RACGP says all states must follow suit and abolish the “disastrous” impost, while tax advisers have called for more certainty over the “complex” exemptions.
All governments must follow Victoria and South Australia’s move to exempt clinics from payroll tax on GPs, the peak industry body says, while tax advisers have called for more clarity over the “complex” exemptions.
Victoria Treasurer Tim Pallas announced on Wednesday the government would exempt clinics from payroll tax for contractor GPs and employee GPs for bulk-billed consultations.
“We’ve worked closely with the primary care sector on how we can best support them – and we’re making these long-term changes to provide certainty to general practice businesses and support more bulk-billing for Victorians,” Pallas said.
The decision, estimated to cost the state about $10 million a year, involved a payroll tax exemption on contractor GP payments until 30 June, with a further 12-month exemption available for practices that had not begun paying payroll tax on this basis.
An exemption for bulk-billed consultations would also apply from 1 July 2025.
South Australian Treasurer Stephen Mullighan also said his government would exempt bulk-billed GP wages as an incentive for practices to continue bulk-billing.
“The Malinauskas government understands the critical role GPs play at the heart of our health system and the pressures they have been under … the new tax cut will be welcome news for GPs who provide bulk-billing services,” he said.
Royal Australian College of General Practitioners (RACGP) president, Nicole Higgins, said the developments were “good news” but action was needed across all states and territories to ensure no patients missed out on healthcare.
“This tax hit threatens to kill off affordable patient care,” Higgins said.
“Unless urgent action is taken across the country, practices will be forced to hike patient fees or close their doors, and some patients will be left out in the cold with little choice but to turn up to an emergency department. So, we need action in every jurisdiction, no patients should miss out.”
The RACGP ramped up its lobbying against payroll tax in 2023 after rulings in NSW and Victoria expanded the application of the impost to GPs, previously exempt as independent practitioners under independent agreements.
The rulings also “harmonised” NSW and Victoria’s position on the issue, with previous rulings in Queensland and South Australia.
While some states and territories announced amnesties as temporary relief, the peak body for GPs said medical practices faced thousands in retrospective tax bills and were considering raising fees or closure.
RACGP vice president and rural chair, Michael Clements, said he still held “grave concerns” for remote patients in states that failed to scrap the tax.
“Outside of major cities, some communities are served by just one practice, and in more remote areas several small towns may share one practice in a regional centre,” Clements said.
“They are dependent on this care, so if the ‘Patient Tax’ forces practices to hike patient fees or even close their doors – patients, including older people with numerous chronic conditions that have to be carefully managed, will have nowhere to turn.”
Accounting firm William Buck agreed the changes provided “welcome relief” for GPs but said the “complex” exemption periods in Victoria needed further clarification.
Business advisory director Paul Copeland said the current measures failed to address the situation where a practitioner is paid money directly.
“The current measures do not address the critical issue of the imposition of payroll tax where funds are received directly by the practitioners as advanced in the payroll tax ruling issued by the Queensland State Revenue Office. The idea of payroll tax harmonisation really has gone out the window on this issue,” Copeland said.
“Understanding the practical application of the exemption is crucial, especially since the decision to bulk bill often lies with the individual doctor.”
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