15 August 2023

NSW Premier must save GP practices at risk of closure due to tax on patients

The RACGP is calling on New South Wales Premier Chris Minns to step in to save local GP practices at risk of closure in rural and regional News South Wales due to a new application of payroll tax.

If New South Wales Premier Chris Minns doesn’t intervene numerous GP practices will close, and others will have to raise fees. This will lead to clogged emergency departments and spiralling state spending on hospital services.

The RACGP has written to the NSW Premier calling for independently contracted GPs to be exempt from additional payroll tax and for the government to urgently confirm that general practices are not being targeted for retrospective tax collection.

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.

In a letter to the RACGP earlier this year, NSW Treasurer Daniel Mookhey said the state would not be targeting practices for extra payroll tax on GPs. However, evidence now shows NSW practices are being targeted. Several practices in regional NSW have received retrospective payroll tax notices, including one for $450,000. With just 21 days to pay, they are now facing closure.

RACGP NSW/ACT Chair Professor Charlotte Hespe urged the Premier to intervene.

“Today we are calling on the NSW Premier to do what his Health Minister and Treasurer have so far refused to do – make sure NSW communities have access to timely and affordable general practice care, so they don’t have to wait for hours for care in overrun emergency departments,” she said.

“Our Premier needs to act because if we see the closure of any more practices in NSW due to this tax grab, it will be devastating for the patients and communities left without their GPs.

“We’ve heard of several practices that have been sent retrospective tax bills of hundreds of thousands of dollars. They’re now looking at folding because they simply can’t absorb the costs.

“Most practices operate on very thin margins and can’t absorb an extra payroll tax bill. A poll of practices across Australia found only 3% would be able to absorb the costs if GPs were considered employees for payroll tax purposes.

“It’s absurdly contradictory that our government is offering up to $20,000 in incentives to get more healthcare workers in regional and rural NSW, while on the other hand its risking the closure of countless local practices with this tax grab – which is a tax on patients.

“This is threatening access to essential care for communities across NSW. It will also cost our state government a lot more in the long run – because any extra payroll tax revenue will be rapidly eaten up by higher spending on hospital services, which is much more expensive than GP care.

“I’m calling on our Premier to intervene before it’s too late and we see any more practices close in NSW.”

RACGP President Dr Nicole Higgins said the new application of payroll tax threatens to undermine the Federal Government’s investment and reforms to make GP care more accessible and affordable.

“While payroll tax is a state tax, this problem has national implications,” she said.

“The states moves to boost their payroll tax revenues by targeting practices will undermine the Federal Government’s investment and reforms to improve access to GP care – such as tripling bulk-billing incentives.

“This patients’ tax will kill off bulk billing because practices will be forced to pass the costs on to patients, which will put more pressure on overstretched hospitals and ambulances.

“We need a national solution to this problem to ensure communities nationwide have ongoing access to essential GP care. General practice is what keeps people healthy, and out of hospital, are we can’t risk losing it.”

The threat of extra payroll tax became a concern for GPs after court judgements in New South Wales considered GPs at certain medical practices as employees for payroll tax purposes. South Australia and Queensland announced amnesty periods after the RACGP and AMA pointed out that any extra tax burden on general practices would force them to raise fees or close. Western Australia has also confirmed that it does not intend to change the way its existing payroll tax provisions apply to general practice.

A poll of practices across Australia found only 3% would be able to absorb the costs associated if GPs were considered employees for payroll tax purposes – 78% would be forced to raise fees.

Media enquiries

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