24 August 2023

RACGP thanks NSW Government for taking first steps to save GP practices at risk of closure

The RACGP welcomes the New South Wales Government taking the first steps to save general practices at risk of closure by announcing a pause on payroll tax audits, as well as a special inquiry into healthcare funding.

The NSW Government today announced their intention to pause payroll tax audits for general practitioners (GPs) and their practices for 12 months to allow for ongoing consultation with GP groups to find a long-term solution. The government also announced a new Special Commission of Inquiry into healthcare funding, which will examine the way NSW Health funds health services delivered in community settings, as well as public hospitals.

It comes after the RACGP called on NSW Premier Chris Minns to step in, after a new application of payroll tax saw general practices being targeted for retrospective tax collection, and several GP clinics were facing closure.

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.

RACGP President Dr Nicole Higgins welcomed the temporary reprieve as an important first step to ensure the future of GP care for people across NSW.

“I thank the NSW Government for taking this important first step to stop any forced closures of GP clinics due to the new application of payroll tax – I know GPs and their patients across NSW will be doing the same,” she said.

“I spoke to one practice owner who received a retrospective tax notice and was facing closure, and they are immensely relieved and grateful, knowing that they are now able to keep their doors open for their patients.

“The RACGP is looking forward to working constructively with the government to find a long-term solution to this and ensure that people across New South Wales have access to timely and affordable GP care into the future. What practices really need is certainty that they won’t receive retrospective payroll tax bills.

“General practice is the engine of our health system. It keeps people healthy at all stages of life and reduces pressure on hospitals. With our ageing populating and rising rates of chronic disease, it’s more important than ever that we keep this engine running strong, and everyone can get the care they need, no matter what they earn or where they live.”

RACGP NSW/ACT Chair Professor Charlotte Hespe also welcomed the news.

“This is a positive step in the right direction for the future of GP care in NSW,” she said.

“The new payroll tax application was threatening to make GP services more expensive and further disadvantage people on low incomes and put even more pressure on our hospitals and ambulances. Practice run on very thin margins, and we know that the vast majority would have to pass this extra payroll tax on to patients.

“The RACGP has told the NSW Premier that the best long-term solution to keep out-of-pocket fees from increasing is to make independently contracted GPs exempt from additional payroll tax. But this pause on payroll tax audits of general practice will ensure no practices are forced to close in the meantime.

“I also welcome the government’s plans for a special inquiry into health funding in our state, including for health services in the community such as general practice. General practice plays a critical role, keeping people healthy and reducing pressure on our emergency care system. There is so much more that GPs can and want to do for our patients – we just need to remove the barriers.”

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.

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