23 May 2023

RACGP welcomes Victorian Budget and calls for action on “Sick Tax”

The Royal Australian College of General Practitioners (RACGP) has welcomed key measures in the Victorian Budget but reiterated calls for the Government to act on payroll tax obligations on tenant GPs.

Today’s Budget includes several promising elements including $32 million to encourage new trainee GPs into the general practice workforce and $29 million to keep operating Priority Primary Care Centres and GP Respiratory Clinics for urgent but non-emergency patient care.

RACGP Victoria Chair Dr Anita Munoz welcomed the measures.

“More must be done to boost the GP workforce, and this is a step in the right direction,” she said.

“We have enough medical students; the key is encouraging them to take up a career in general practice, particularly outside of major cities. I can tell you from personal experience that being a GP is an incredibly rewarding career and one that I would highly recommend to future doctors. You are valued by your community and see your patients through different stages of their life. The skills and expertise you develop make such a difference to so many people’s lives and no two days are the same.

“I hope that the $32 million investment announced today will encourage more future doctors into general practice. The college will keep working constructively with the Government to devise new measures to boost the GP workforce so that all patients, irrespective of where they live, have access to high-quality general practice care. That will ease pressure on the entire healthcare system and ensure that no communities are left behind.”

Dr Munoz once again called on the Government to not apply payroll tax on the medical services provided to Victorian patients by tenant GPs.

“The ‘Sick Tax’ could spell the end of accessible general practice care,” she said.

“Increasing the payroll tax threshold to $900,000 from 1 July 2024 is a welcome measure; however, when it comes to payroll tax on practices the Government must go much further. Practices across Victoria already pay payroll tax on employees such as nurses and receptionists. However, a sweeping extension of payroll tax following a New South Wales tribunal ruling in 2021 represents a huge increased tax burden that will send some practices to the wall. That ruling determined that what we call tenant GPs, who pay a percentage of their earnings to a clinic rather than being paid a fixed wage as an employee, count as employees for payroll tax purposes.

“Unless the Government exempts practices from this new interpretation of the existing tax obligation, clinics across Victoria will have little choice but to either pass the cost on to patients by charging more or face the prospect of shutting up shop. So, the RACGP will keep working with the Government to make this exemption a reality and secure the future of general practice care across the state.”

The RACGP has been advocating for a fair go for practices for more than a year after a new interpretation of payroll tax law in the NSW tribunal ruling. The ruling disrupts established business models for practices, which now face the unenviable choice of charging patients more or closing.

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