New state taxes on GPs set to ramp up the cost of doctors’ fees

A new tax on GPs in Victoria and NSW will drive up the price of doctors’ appointments and may saddle clinics with hundreds of thousands of dollars in backpay.

A new tax on GPs in Victoria and NSW will drive up the price of doctors’ appointments.

The NSW tax office is refusing to follow the lead of other states and institute a GP payroll tax amnesty, amid warnings plans to impose the tax in the nation’s two biggest states will drive up the price of doctors’ appointments and saddle clinics with hundreds of thousands of dollars in back pay.

The revenue offices of NSW and Victoria recently ruled that independent GP contractors, known as tenant GPs, would be hit with payroll taxes after previously being considered exempt.

While South Australia and Queensland have similar laws, they have given GPs an amnesty from retrospective taxes.

Nicole Higgins, president of the Royal Australian College of General Practitioners, estimated this would add $15 to $20 to every appointment for affected clinics.

“General practice held up our nation during Covid … and a lot of our profession is tired and burnt out,” Dr Higgins said. “It’s not just an urban problem, this is happening throughout Australia.”

The stipulation has already saddled some GPs in other states with tax invoices as high as $450,000 – with just three weeks to pay the liability – when not supported by the amnesty.

NSW government confirmed to The Australian that no payroll tax amnesty would be offered to general practices or any medical businesses.

“Revenue NSW is not providing payroll tax amnesties to general practices or other participants in the medical industry nor any other sector,” a spokesperson for the state tax office said.

“There has been no change in the law or policy relating to payroll tax obligations for medical centres or any other sector including banks and supermarkets. The contractor provisions in the Payroll Tax Act have existed since the Act’s passage in 2007.”

Despite there being “no change” in payroll tax policy, GP clinics have not been subject to the tax and now following the revenue ruling which clarified the law, which follows similar rulings in other states, they will be.

The RACGP, the Australian Medical Association and the Australian GP Alliance are protesting against the new taxes that come as the sector is under unprecedented pressure amid rapidly declining rates of bulk-billing. A study by the Australian Patients Association found that 42 per cent of Australians already defer GP check-ups due to high costs of treatment.

“This is the most obvious example of federal-state cost-shifting that we have seen in a long time in Australia,” said Dr Nick Coatsworth, the association’s health reform ambassador.

“The multibillion-dollar boost to general practice and bulk-billing in this year’s budget will find its way into state coffers through this payroll tax.

“It amounts to a failure of the national cabinet.”

Health Minister Mark Butler said he was concerned about the state taxes and the implications for the erosion of bulk-billing incentives, but the federal government was unable to intervene.

“I’m concerned that the impact of our record $6.1bn investment in strengthening Medicare could be impacted by new payroll tax obligations being imposed by state governments on GPs at the same time,” he said.

One of those affected is a GP in Newcastle where there is already the lowest bulk- billing coverage in Australia

He and the 24 other GPs in his practice have also seen significant rises in electricity bills, rent spikes and wage increases this year.

“There are not enough doctors … our emergency system is failing,” the GP said. “If they want five years of retrospective taxes, we would be insolvent.”

A rise in appointment costs would push more potential GP patients into emergency departments because of their inability to pay gap fees.

As well, delays in seeing a GP often results in the condition of the patient growing so severe that emergency care is necessary.

In the district of the Newcastle GP’s clinic, emergency wait times have reached as high as 12 hours, with 25 resignations in the emergency department so far this year.

It’s estimated that each GP check-up at the current pricing costs taxpayers $75, while each emergency consultancy is closer to $700.

“We will have emergency departments which are already stretched under even more pressure, increased ramping and long waiting lists,” Dr Higgins said.