Payroll tax pushing Victorian GPs to ‘breaking point,’ RACGP says

“The growing tax burden on general practice, especially payroll tax, is making it harder for practices to keep their doors open, employ staff and deliver care to their communities. That directly undermines the viability of general practice and impacts patients,” she said.

“General practice in Victoria is already under severe pressure. Rising costs, workforce shortages and inadequate Medicare funding are pushing many practices to breaking point.”

The RACGP called on the Victorian government to introduce a payroll tax exemption for GPs, akin to arrangements in Queensland. From December 2024, GPs in Queensland were exempt from payroll tax under the Revenue Legislation Amendment Bill 2024.

“Queensland has recognised that taxing general practices out of existence makes no sense from a health or economic perspective,” Muñoz said.

“Victoria should follow suit. Exempting GPs from payroll tax is a practical and immediate step the state can take to protect patient access to care and support the frontline of the health system.”

According to Victoria’s budget papers, payroll tax was expected to account for around a quarter of its collected tax revenue in 2026–27, or $10 billion of a total $43 billion tax take. It also accounted for just under a tenth of Victoria’s $115.6 billion total revenue.

The state is also facing acute spending pressures, with its net debt expected to climb from $165 billion in 2026 to over $199 billion in 2030.

From July 2025, Victorian GPs were exempt from payroll tax for bulk-billed items of work. Some relief was also available for contractor GPs for the 2024–25 financial year.

However, Muñoz warned that if the Victorian government failed to address the payroll tax burden on GPs, it would increase pressure on state hospitals and emergency departments.

“When general practices become financially unviable, patients don’t disappear, they end up in emergency departments and hospitals, which are far more expensive parts of the system,” she said.

“If the Government is serious about delivering more care closer to home, it must ensure general practices are financially viable to provide that care.”