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The Victorian government is facing renewed calls to address the “devastating patient tax” impacting clinics after the budget failed to deliver a solution.
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Victorian budget fails to save GP clinics from ‘payroll tax fiasco’
09 May 2024
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10 minute read
The $10 million in support provided to GPs in the Victorian budget will do little to alleviate the impact of the additional payroll taxes being imposed on medical practices in Victoria, general practice groups have warned.
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The payroll tax landscape for general practices changed substantially across numerous states last year after a final ruling by the NSW Court of Appeal in 2023 deemed independent practitioners as employees for payroll tax purposes.
The Queensland government announced a new Revenue Office Ruling in September last year clarifying that patients’ fees paid directly to a GP for their services would not be subject to payroll tax.
Other states have provided a pause in audits to prevent practices from having to close or increase fees due to a new interpretation of the law. There has been no amnesty or pause announced in Victoria.
The Royal Australian College of General Practitioners (RACGP), Primary Care Business Council (PCBC), and Australian GP Alliance (AGPA) said while the $10 million provided to support GPs through a co-designed grant program was welcomed, it will not address the state’s “GP payroll tax fiasco”.
RACGP, PCBC and AGPA are all urging the government to intervene, with the extra payroll taxes likely to cripple many practices.
A HotDoc survey from earlier in the year found that practices will have to raise fees by 30 per cent to cover the extra tax, and 4 per cent of patients will go to hospital rather than a GP if they have to pay more.
“This will blow out the State Budget and worsen the logjam in Victoria’s hospitals,” the general practice groups said.
RACGP, PCBC and AGPA are lobbying against the retrospective collection of payroll tax liabilities, which they’ve said will cause practice bankruptcies and closures.
They are also calling for Victoria to follow Queensland and provide a new tax ruling, clarifying that patients' fees paid directly to a GP for their services won’t be subject to payroll tax.
RACGP Victoria Chair Dr Anita Munoz said the state budget will worsen the cost-of-living crisis for Victorians and is a huge disappointment to GPs, practice teams and patients.
“The government knows practices can’t afford the state’s extra payroll tax, and neither can their patients,” said Munoz.
“General practice helps people stay healthy – everyone needs a GP. Victoria’s Patient Tax will be devastating for our health system. When people can’t afford care, they get sicker, and we'll see more Victorians forced into the state’s overflowing hospitals, which will rapidly blow out the State Budget.”
“This was a golden chance for the Victorian Government to send a message to the community that they were doing all they can to address cost of living pressures – instead they’ve ensured going to the doctor will get more expensive, if you can find a local GP with the doors still open,” said PCBC President Dr Ged Foley.
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