Andrews government warned it must act on GP tax grab or make health crisis worse

Daniel Andrews has been asked to step in urgently over tax grabs on GPs amid warnings doctors will leave Victoria to work interstate and the health crisis will get worse.

Victoria’s health crisis will worsen and doctors will leave to work interstate unless the government ends its “enormous” tax grabs on GPs.

The Royal Australasian College of General Practitioners this week wrote to Premier Daniel Andrews urging him to step in and follow other states by scrapping tax audits.

General practices already pay payroll tax on employees, including receptionists, GPs in training and nurses.

But it hasn’t applied to GPs because most doctors are not employees – they lease rooms from a practice owner and work under independent agreements.

RACGP president Nicole Higgins said there was evidence that Victorian practices were being hit for retrospective tax collection due to a new application of payroll tax.

“Victoria is one of the last states to address this issue and it is fast becoming a crisis,” she said.

RACGP president Nicole Higgins. Picture: Martin Ollman

Several practices are now facing closure due to the huge bills, including in one case where a business owner was hit with a fee of almost $800,000 for three practices.

That owner, who spoke to the Herald Sun on condition of anonymity, had to sell one of the businesses but is in legal discussions on paying the retrospective bill.

The two practices serve 115,000 patients but they may have to go into liquidation or be sold if they can’t reach a solution. The owner also warned the reality would be that patients pay more for a consultation if the tax continued.

“Bulk billing is going to completely die,” they said.

The NSW government said it would pause tax audits for a year, and halt penalties and interest on outstanding debt.

But the Victorian government insisted it had been practice for the State Revenue Office to assess payroll tax on a case-by-case basis across all sectors and professions.

“There has been no change to the law or the application of the tax in relation to GPs or medical centres,” a government spokesman said.

Health Minister Mary-Anne Thomas has consulted with the health sector about the issue of payroll tax for GPs.

The spokesman said Treasurer Tim Pallas and Health Minister Mary-Anne Thomas had consulted the sector on this issue.

Dr Higgins said payroll tax was a “tax on patients” and would lead to more pressure on hospitals and ambulances as people forgo primary care.

“Practices run on very thin margins and the vast majority would be forced to pass the costs on to their patients,” she said.

RACGP Victoria chair Anita Munoz called on Mr Andrews to “step in urgently” or risk GPs leaving to work in other states.

“Victoria’s GPs have been through so much during the pandemic and now we have the threat of enormous, backdated payroll tax bills hanging over our heads,” she said.

Opposition health spokeswoman Georgie Crozier said the Andrews government must not target GPs.

“This is a desperate cash grab by a government that it is broke and it will have huge ramifications for Victoria’s beleaguered health system,” she said.