Doctors decry payroll tax and warn of trainee exodus

The country’s peak medical body has warned the number of trainee GPs will plummet if NSW follows through on a controversial draft proposal to change payroll tax.

The AMA says the proposed changes to payroll tax would lead to the closure of GP clinics.

The country’s peak medical body says trainee GP numbers will plummet in NSW if the state government enforces a draft practice notice compelling GPs and medical practices to foot their payroll tax.

The Australian Medical Association said if the government enforced its draft practice notice — sent to the peak body in August 2021 — it would lead to the closure of GP clinics, compromise the via­bility of bulk-billing and force trainee doctors to reject a career as a general practitioner because of financial uncertainty.

Under the rule, medical practices are liable for payroll tax on tenant doctors who provide GP services on the premises once they meet certain criteria, including practising more than 90 days a year.

Jorg Ziegieberl, who owns and manages medical practices in Moruya, said the revised law would drive trainee doctors away from the profession, putting further strain on a system “already impacted by severe shortages”.

“We’re already dealing with diminishing numbers [of trainees] coming out of university; addition of a payroll tax would certainly contribute to a further decline,” said Dr Ziegieberl, who runs clinics in an area with one of the oldest populations in Australia.

“I love my job and what I do, but you’d have to wonder whether it was a wise career move if you were looking into it now, especially if you were considering regional areas.”

He said the prospect of back-paying five years of payroll tax would be “too much for many regional practices to remain open”.

Last week, the Queensland government announced an amnesty on payroll tax until mid-2025, allowing a 2½-year grace period to GP clinics unaware they were liable.

Queensland clinics will be required to back-pay one year’s tax. NSW doctors say a similar amnesty would not change circumstances and would force clinics to spike patient costs.

Ian Kamerman, who owns a medical practice in Tamworth, said a revised payroll tax would likely compel clinics to pay the previous five years of unpaid bills and result in him paying about $500,000 to Revenue NSW.

“It’s obvious most practices won’t have half a million in cash lying around. Consequently, it’s highly likely a number will go to the wall,” he said.

The AMA said there were “too many variables” to estimate how much five years of back pay would cost the average medical clinic. Under the Taxation Administration Act 1996, licensees must keep records for no fewer than five years and are liable to pay for that period. In a draft note from Revenue NSW, commissioner Cullen Smythe says the department would enforce this time frame.

A NSW government spokesman said there had been no change to payroll taxation arrangements in regard to GPs and other medical practices. “Since 1986, payments to contractors have been liable for payroll tax under the relevant contract provisions,” he said.

“I wouldn’t like it to be thought GP clinics are trying to avoid payroll tax. That’s not the case. We’re very happy to pay our fair share,” Dr Kamerman said, adding that it already applied to office staff, registrars and other employees.

Aziz Iboyan, who owns a medical centre in North Sydney, said he would be forced to close his practice if a payroll tax was introduced. “We already have patients coming to our bulk-billed clinic with missed diagnoses because they can’t see a doctor,” he said. “Isn’t this going to cost the government more money in the long run?”