Doctors warn bulk-billing ‘a thing of the past’ without tax exemptions

General practitioners warn the cost of appointments may rise and that medical clinics could be forced to close unless the Victorian government exempts doctors from payroll tax.

Private practices assumed payroll did not apply to GPs because they worked independently as contractors, the Royal Australian College of General Practitioners (RACGP) says, but the State Revenue Office has sought to recoup unpaid taxes from “several” clinics in Victoria.

Premier Daniel Andrews says the country’s healthcare system is “broken” and needs an overhaul.Credit: Scott McNaughton

Payroll tax specialist Peter Tobin, from Tobin Partners, said the tax already applied in most circumstances, whether the doctors were contractors or employees, even if the revenue office had only recently caught on.

“This is not something that’s just happened,” Tobin said. “It’s always been [in the Payroll Tax Act].”

Fearing widespread closures and higher patient bills as a result, the RACGP, the Victorian branch of the Australian Medical Association and the Australian GP Alliance have demanded an urgent meeting with Premier Daniel Andrews to seek exemptions for the industry.

Otherwise, Dr Anita Munoz, the chair of the Victorian RACGP, warned patients would end up paying about 15 per cent more for an appointment to see their GP.

Dr Anita Munoz, a Melbourne GP and the Victorian chair of the Royal Australian College of General Practitioners.

“It certainly means bulk-billing would become a thing of the past,” Munoz said. “We’re really on the precipice of seeing clinics just close.”

Ultimately, the Melbourne GP warned, fewer Victorians would visit their doctor because of the cost and more people would flood emergency departments in deteriorating conditions.

Andrews and NSW Premier Dominic Perrottet say the country’s healthcare system needs an overhaul and are pushing to reform to the “broken” Medicare system.

In Victoria, the wages a business pays its employees can be assessed for payroll tax, which is 4.85 per cent on Melbourne businesses. In limited circumstances, amounts paid to contractors can be exempt.

General practices already pay payroll tax on receptionists and nursing staff. Hospitals, public and community health services are exempt, while GP clinics are exempt from GST.

The NSW Civil and Administrative Tribunal last year determined payroll tax did apply. The Queensland Revenue Office has since committed to recouping the tax from GPs relating to the past 12 months of income.

A Victorian government spokesman said there had been no change to the law or the application of payroll tax for GPs or medical centres.

“Payroll tax is assessed in the same way across industries and professions,” he said.

Professor Lidia Xynas, the Dean of Law at Victoria University, said the rules might need clarification to make the circumstances for GPs clearer.

“It’s a lot of money, it can add up,” she said.

Munoz said the RACGP had a good relationship with the Victorian government and hoped to find a solution.

At Friday’s national cabinet meeting, Andrews will argue that bulk-billing GPs should receive boosted Medicare rebates to keep people who did not need to be in hospital from arriving at emergency departments.

“It’s never been harder to find a bulk-billing doctor,” Andrews said this week. “We’ve got to pay our GPs more.”

A Productivity Commission report on government services released on Thursday said 3 per cent of Victorians delayed seeing their GP because of the cost in 2021-22, up 2.2 per cent in the year.

The Victorian government has repeatedly said patients arriving at emergency departments could have avoided a trip to the hospital if they saw their GP sooner.

It costs taxpayers about $500 for every emergency department presentation.

Victoria is pressing federal Labor to fund public hospitals 50:50, an arrangement which was temporarily in place during the pandemic until it reverted to 45:55 at the end of last year.

The Andrews government has funded new priority primary care centres, in a joint trial with NSW, to address the lack of bulk-billing GPs.

The State Revenue Office declined to comment.

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