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29 August 2023

GPs will leave Victoria if Premier doesn’t stop tax grab

The future of general practice care is uncertain in Victoria if Premier Daniel Andrews doesn’t follow his counterparts in other states and stop a tax grab that has resulted in several practices facing closure.

The Royal Australian College of General Practitioners (RACGP) has again written to the Victorian Premier and urged him to recognise the devastating impacts of the current policy on essential general practice services and step in to avert a crisis.

There is evidence that Victorian practices are being targeted for retrospective tax collection due to a new application of payroll tax. Several practices are facing closure due to retrospective tax bills, including one for nearly $800,000.

Most states and territories have provided amnesties or concessions to prevent practices from being forced to close or increase fees while a long-term solution is found. This includes New South Wales, South Australia, Queensland, and the Australian Capital Territory. Western Australia has also confirmed it doesn’t intend to change its current payroll tax provisions to get more tax from GPs.

General practices already pay payroll tax on their 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. But there was a change in the application of payroll tax after court judgements in New South Wales considered GPs at certain medical practices as employees for payroll tax purposes.

A poll of practices across Australia found only 3% would be able to absorb the costs of extra payroll tax on independent GPs – 78% would be forced to raise fees.

RACGP President Dr Nicole Higgins urged the Premier to step in to avert a crisis.

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

“More practices have been coming forward that have received enormous retrospective payroll tax bills which are facing closure. We can’t afford to lose any practices due to this new application of payroll tax – this will be devastating for the patients and communities that lose their GPs.

“This new application of payroll tax is a tax on patients. Practices run on very thin margins, and the vast majority will be forced to pass the costs on to their patients. This will make it harder for people on low incomes to get the care they need and put even more pressure on hospitals and ambulances.

“The RACGP looks forward to working with the Victorian Government and other state and territory governments to find a permanent solution, because everyone in Australia needs access to timely and affordable GP care. It’s particularly critical that practices aren’t hit with these enormous retrospective payroll tax bills – we need a guarantee of no retrospectivity because it will result in practices being forced to close.”

RACGP Victoria Chair Dr Anita Munoz said the threat of extra payroll tax is causing significant anxiety and stress for GPs and practice owners in Victoria.

“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.

“Our Premier needs to step in urgently, or we will soon see GPs leaving Victoria for other states that have taken steps to address this issue with amnesties and other concessions to ensure no GP clinics are forced to close or increase fees.”

“General practice keeps people healthy and out of hospital, and it needs to be affordable and accessible for everyone. Victoria is a great state to live in, but it won’t be if GP care is increasingly unaffordable and hard to find.”


Media enquiries

Journalists and media outlets seeking comment and information from the RACGP can contact John Ronan, Ally Francis and Stuart Winthrope via: