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Medical centres confront $600k payroll tax bills or closure

Tax

The RACGP says retrospective assessments already threaten practices in regional Victoria and NSW.

By Philip King 10 minute read

Payroll tax bills running into hundreds of thousands of dollars have already been sent to medical centres in NSW and Victoria after the state revenue offices last week confirmed that GPs count as employees.

The Royal Australian College of GPs said several regional practices had received retrospective payroll tax notices – including some for amounts over $600,000 – and with just 21 days to pay were now facing closure.

The head of health at accountant William Buck, Paul Copeland, said the firm’s medical centre clients had yet to receive payroll tax demands but “we’ve heard of large assessments being issued”.

“These large assessments by their nature tend to create a lot of angst, stress and noise which could be disproportionate,” he said.

The RACGP has been lobbying for contracted GPs to be exempt from payroll tax after two recent legal cases clarified how the fee-for-service model, widely used by medical centres, should be defined.

It said the government needed to urgently confirm that general practices were not being targeted for retrospective tax collection after assurances earlier this year from NSW Treasurer Daniel Mookhey.

RACGP NSW/ACT chair Professor Charlotte Hespe urged NSW Premier Chris Minns to step in.

“Today we are calling on the NSW Premier to do what his Health Minister and Treasurer have so far refused to do – make sure NSW communities have access to timely and affordable general practice care, so they don’t have to wait for hours for care in overrun emergency departments,” she said.

“Our Premier needs to act because if we see the closure of any more practices in NSW due to this tax grab, it will be devastating for the patients and communities left without their GPs.

“We’ve heard of several practices that have been sent retrospective tax bills of hundreds of thousands of dollars. They’re now looking at folding because they simply can’t absorb the costs.

“Most practices operate on very thin margins and can’t absorb an extra payroll tax bill. A poll of practices across Australia found only 3 per cent would be able to absorb the costs if GPs were considered employees for payroll tax purposes.

“It’s absurdly contradictory that our government is offering up to $20,000 in incentives to get more healthcare workers in regional and rural NSW, while on the other hand its risking the closure of countless local practices with this tax grab – which is a tax on patients.”

RACGP president Dr Nicole Higgins said the new application of payroll tax was a state levy with national implications.

“The states’ moves to boost their payroll tax revenues by targeting practices will undermine the federal government’s investment and reforms to improve access to GP care – such as tripling bulk-billing incentives,” she said.

“This patients tax will kill off bulk-billing because practices will be forced to pass the costs on to patients, which will put more pressure on overstretched hospitals and ambulances.

“We need a national solution to this problem to ensure communities nationwide have ongoing access to essential GP care. General practice is what keeps people healthy, and out of hospital, are we can’t risk losing it.”

Last week both the NSW and Victorian state revenue offices issued two near identical rulings recognising the landmark court decisions last year that changed the game for medical centres.

Both South Australia and Queensland have announced amnesty periods while Western Australia has said it did not intend to change how its existing payroll tax provisions apply to general practice.

 

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Philip King

Philip King

AUTHOR

Philip King is editor of Accountants Daily and SMSF Adviser, the leading sources of news, insight, and educational content for professionals in the accounting and SMSF sectors.

Philip joined the titles in March 2022 and brings extensive experience from a variety of roles at The Australian national broadsheet daily, most recently as motoring editor. His background also takes in spells on diverse consumer and trade magazines.

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