‘Massive new tax’ will leave NSW GP clinics with fee rise or closure dilemma

An urgent meeting has been called after The Daily Telegraph revealed new data could see 95 per cent of GP clinics increase fees or face going out of business due.

The NSW government will urgently meet with doctors groups this week to discuss whether GPs will be forced to pay additional payroll tax charges.

NSW Finance Minister Courtney Houssos’ office set up urgent meetings on Friday with doctors from the Royal Australian College of General Practitioners after The Daily Telegraph revealed concerning new data from patient engagement provider HotDoc.

The new research indicated 95 per cent of GPs could be forced to increase their fees by $12 with 16 per cent of clinic owners worried they will not be able to keep their businesses running.

Ms Houssos will also meet with doctor groups to discuss the payroll tax in early March. The government and medical groups have been in ongoing consultation since last year.

This comes after Premier Chris Minns would not comment on Wednesday on whether clinics would be required to back pay tax bills when a 12-month freeze on the tax ruling ends in August.

NSW Finance Minister Courtney Houssos. Picture: NCA NewsWire

He also would not commit to bailing out GP clinics facing closures due to the impending payroll tax, saying he did not believe it would come to that.

“We’re having good conversations with those organisations and peak bodies and we’re going to make sure that bulk billing and GP access by the general community is available to the people of NSW,” he said.

“It is important to have a functioning primary healthcare sector in the state, it takes pressure off our public hospital system and that’s not going to be the case if we whack them with a massive new tax.

“We recognise it could have an impact on primary healthcare and we can’t allow that to stand.’

NSW Premier Chris Minn. Picture: NCA NewsWire

NSW RACGP chair Rebekah Hoffman said she was hopeful doctors and patients would get clarity on whether they would have to pay the additional tax bill when they meet with the Finance Minister in March.

“We need to know now what is going to happen because we need to put in plans that could take months – if our businesses need to be restructured and letting patients know why costs will go up,” she said.

Thousands of GP clinics now face payroll tax charges for the first time after a ruling from Revenue NSW in August last year changed how general practices pay the tax.

Previously, clinics have been liable for payroll tax on employees such as nurses, receptionists and trainees. However, around 90 per cent of GPs are independent contractors who lease rooms in clinics and therefore have not previously been subject to payroll tax.

Kirrawee GP Rebekah Hoffman is concerned about the effects of the GP Payroll Tax being introduced in six months. Picture: Max Mason-Hubers

Dr Rebekah Hoffman who runs a Kirrawee GP clinic in Sydney’s south said her business would be forced to pass on the additional costs of the payroll tax to her patients.

Dr Hoffman, the NSW chair of the Royal Australian College of General Practitioners, estimates she will be forced to charge an additional $15 per standard appointment.

“Most GP clinics are small businesses and we don’t have large business margins to buffer additional amounts,” she said. “We still don’t even know if we would retrospectively accrue payroll tax – if most clinics get a bill of five years back pay they would have to close.”

Dr Hoffman said the federal government’s bulk-billing incentives would amount to nothing if her clinic had to pay additional payroll taxes.

“With the extra costs we still wouldn’t be able to bulk-bill for any of our customers, even with the incentives,” she said.

The NSW government argues it has not imposed additional payroll tax obligations on GPs, saying GP clinics should have been paying the tax for decades as independent contractors should be subject to payroll tax.

Doctors groups disagree, saying the Revenue NSW ruling changed the interpretation.

Finance Minister Courtney Houssos said the former Coalition government had sat on the payroll tax ruling, having known about the issue since 2018. She said consultations with GP stakeholders were still ongoing and would not comment on whether GPs would be forced to back-pay tax.

“We understand families, households and businesses across NSW are feeling the pinch of a once-in-a-generation cost-of-living crisis,” Ms Houssos said.

GP Rebekkah Hoffman.

Families are likely to feel the pinch.

“Since August I have met with a number of GPs and their representatives to understand the challenges they’re facing.

“When we announced the pause in August 2023, we said we wanted to see the impact of the federal government’s changes to the bulk-billing incentive. It’s clear those effects are starting to flow through to practices to ease cost pressures on GP practices and patients.”

The Australian Medical Association is currently negotiating with the government on the tax obligations. AMA president Dr Michael Bonning said it was imperative a decision was made quickly so flow on effects and contracting arrangements for doctors could be put into place before the freeze ends.

“The ruling changed the interpretation (of payroll tax) and therefore doctors who have been operating in good faith should not be charged retrospectively,” he said.

In August last year, the state opposition unsuccessfully moved an amendment for a five-year amnesty against any retrospective payroll tax charges, with the government instead opting for the year-long moratorium.

Opposition Finance spokeswoman Eleni Petinos said forcing GP clinics to backpay payroll tax would have devastating effect on the healthcare in the state.

“The Minns Labor government should be supporting our doctors, not imposing a retrospective tax that will see a number of GP clinics wiped out and add pressure to our health system,” she said.

HotDoc founder Ben Hurst said their research findings were incredibly concerning, saying any additional payroll tax would create hardship for both GPs and patients. The company connects patients to healthcare providers and hosts more than 6500 NSW GPs on its platform, with over 3.2 million patients using the service.

“We know that one in six GP clinics are already facing significant financial hardship, so our concern is (the payroll tax) will cause some medical centres to go out of business,” Mr Hurst said.

“Patients are also in a particularly tough position especially with a cost of living crisis and what we will end up seeing is a number of patients ending up in emergency departments who could have otherwise gone to a GP.”

More than a quarter of patients said they would see their GPs less regularly if fees go up, a HotDoc patient survey has found. In a national survey of more than 1000 patients 28 per cent found that while many patients wouldn’t stop going to the GP altogether it would affect the frequency with which they go. More than seven per cent said they would stop seeing a GP altogether.

‘We won’t be able to go to the doctor as often’

James, 37, and Renee Perram, 31, from Gledswood Hills in southwest-Sydney said any increase in GP fees would dramatically affect the amount they go to the GP.

The couple, who already live paycheck to paycheck said a $12 increase to each appointment would hit the family hard.

James and Renee Perram with kids Anastasia, 4, and Theodore, 4 months, at their Gledswood Hills home. Picture: Sam Ruttyn

“It’s going to add extra strain on the hospital system as people are going to bypass going to the GP – it’s a lot of money to rake in an extra $12 on top of the cost of a doctor’s visit already,” Mr Perram said.

“We and a lot of other families are currently living paycheck to paycheck and need to find the cheapest alternatives to live so tf something is there and we feel we can get away with not spending the increased money for it, we will take it.”

Ms Perram said any fee increase would greatly affect the health of families with one sole provider.

“There is more pressure on my husband and all other partners who are sole providers – he will have more expenses coming in that he won’t be able to afford as everything is very expensive,” she said.

“It’s hard enough as it is choosing things to miss out on, because these are things we need to get by.”

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