By Laura Banks
A NSW government decision to pause a new GP tax ruling for 12 months is only “kicking the can down the road”, doctors say, and does little to alleviate a change that could see clinics close, fees soar and bulk billing come under threat.
The Herald last week revealed the NSW state revenue office had published a new ruling that meant, for the first time, independent GPs working in medical centres would be subject to payroll tax.
“Ultimately just kicking the can down the road”: Mathew Simpson and Dr Tonya Coren at their clinic in Byron Bay.Credit: Natalie Grono
But in an about-face, Finance Minister Courtney Houssos announced on Thursday that the state government would pause GP audits for 12 months, and halt any tax penalties and interest accrued on outstanding payroll tax debts incurred before the 12-month period.
The state opposition unsuccessfully moved an amendment in parliament on Thursday afternoon for a five-year amnesty against payroll back tax for GPs.
Practices do pay payroll tax for their employees, such as doctors-in-training, reception staff, nurses and employee doctors. However, it had been widely accepted across the industry that independent GPs, who lease rooms from a practice owner and comprise about 90 per cent of the GP workforce, were not subject to payroll tax.
Mathew Simpson and his wife Dr Tonya Coren run First Light Healthcare in Byron Bay and Ballina, and were last week handed a $450,000 retrospective tax bill and given 21 days to pay it. And while the 12-month pause brings “some space to breathe”, Simpson said it did not solve the issue.
The couple’s Ballina practice was severely damaged in last year’s floods and, like many clinics, they are also still recovering from COVID. The tax bill was just another blow.
“That … took the wind out of our practitioners’ sails and our team. And then of course, the floods at a local level that we’ve had to contend with, have impacted us, our business and our community heavily,” he said.
“So while today’s announcement is great for the sector in that it’s at least allowed primary care to breathe to some extent, it’s ultimately just kicking the can down the road, and it’s not been dealt with.”
Only three per cent of practices across the state would have the money available to pay a backdated tax bill, should they be enforced, according to the Royal Australian College of General Practitioners.
Annette Pham, a practice nurse, and her husband Dr Hao Pham run four clinics on the NSW South Coast.Credit: Peter Izzard/SMH
It warned the cost of seeing a doctor could rise $20 per appointment as a consequence of the tax ruling.
Practice nurse Annette Pham, who with her husband Dr Hao Pham runs four GP clinics on the NSW South Coast, told the Herald a longer pause of five years would have enabled practices to “get their house in order” before tax bills were issued.
“We have no objections about paying tax – if we employ the doctors, that is standard practice,” she said. “However, the traditional arrangements of general practice have been a doctor/contractor relationship, we pay GST on that, the doctors don’t act like employees, they don’t request annual leave, they come and go as they please.”
She said many clinics would close, and bulk billing would be a thing of the past, if no resolution was reached.
Doctors warn the new tax ruling threatens bulk billing.Credit: Fairfax Media
Dr Michael Bonning, AMA NSW president and a practicing GP, said the 12-month pause provided only a short reprieve.
“It’s not giving the certainty that general practice needs to address the future and current crisis in general practice,” he said.
Bonning said if a permanent solution was not found within the 12 months, clinic closures would further burden a bulging healthcare system as even more patients are pushed into emergency departments.
South Australia and Queensland state governments have previously announced an amnesty against payroll tax, with Western Australia also declining to change the way it collects GP payroll tax. Victoria announced last week they would enforce the tax.
Federal Health Minister Mark Butler last week raised concern over the new tax ruling, saying it would undo any positive impact the rollout of the new Medicare incentive would have. The average out-of-pocket cost to see a GP is $41.06, according to online healthcare directory Cleanbill.
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