Skip to main navigation Skip to main content

Understand payroll tax changes: Attend the RACGP's expert panel - 1

Welcome everybody, my name is Nicole Higgins, I am the RACGP President.  I am also a practice owner, so payroll tax has been a pertinent issue for me for a while but certainly recently like many of you our understanding has increased and the questions that we have asked, hopefully, we are going to be able to give you some of the answers that you are seeking and tonight I wish to welcome our special guest we have Belinda Hudson who is here from William Buck, welcome, Bruce Willett who is the Queensland Chair and RACGP VP who has worked really hard in Queensland with Payroll Tax and the CEO of RACGP, Paul Wappett.  I just wish to acknowledge the traditional owners of the lands where each of us are joining today, I am on Yuwi country.  I wish to pay my respects to elders past, present and emerging and I also wish to acknowledge our Aboriginal and Torres Strait Islander colleagues that are in the room tonight.

So, payroll tax has become a big media issue.  We have made sure at RACGP that this issue is on the table.  On behalf of membership we have been speaking with government with members of parliament with the media to assist them to understand about the impact that these changes have on our practices, the way we work, the impact that this will have on patients and to the federal government the impact it will have on Medicare reforms. So I’m going to throw over and introduce Belinda, welcome. Belinda is from William Buck and she has been living and breathing payroll tax for a long time, and she will step us through, so welcome Belinda.
Thank you, thanks Nicole.  I will just start off briefly.  My name is Belinda Hudson, I am one of the directors at William Buck, I am based in Melbourne, so in Victoria but we have offices in each of the states and we are across the payroll tax issue in each state so I have only got a short period of time here to talk about payroll tax so I am just going to briefly run through some of things that we have noticed and some of the common misconceptions around payroll tax.  So payroll tax is a state tax it is not a commonwealth tax.  That means, it is not administered by the ATO.  It seems to be a common misconception that people think it is the ATO that are dealing with payroll tax but they really have pretty much no interest in it at all.  It is administered on the payroll of employers and it includes salary, wages, payments, superannuation and payments to eligible contractors and really defining what is an eligible contractor is the main area of contention for medical practice owners.  Now one of the important things to know is that payroll tax actually operates on a self-assessment basis which means that as an employer you lodge your information with the SRO or the OSR depending on your state and then you can be subject to an audit later on.  So just because you lodge something it does not mean that it is automatically accepted and okay, it can still be subject to audit later on and this is what has caused some of the issues.  So, as I mentioned it is a state based tax which unfortunately means that each state runs their own legislation, has their own rates of tax and their own threshold.  There is somewhat of harmonisation across the states so some other things do line up but there are some little quirks in each state as well and each state can implement an audit in their own way as well.  So, there has been a renewed focus on payroll tax.  I think for as long as I have been in practice, payroll tax has been an issue and we have seen audits on many businesses throughout this time and if you recall back quite some time ago a lot of medical practices were paying their doctors as contractors and then this sort of moved across to what we now know as the service fee model and a lot of that was basically around payroll tax and also to a lesser extent super, but mostly to do with payroll tax.  Fast forward 20 odd years and we are still dealing with payroll tax for medical practices.  During the COVID pandemic, the offices of state revenue scaled back their audit activity completely, but they seemed to have come back with a bit more of a focus in this area and it is just because there has been a lot of information around, I think they are sort of jumping on board with this.  As we all know people love to share information online, doctors love to share information online.  We know a lot of numerous groups on Facebook and online communities and information can be really readily shared and we have seen this really as a trending issue for some time and for those of you who would be watching things the Thomas and Naaz case was the one that had the large assessment and the devastating impact on the owners and I think that is what has really solidified this for everyone.  So unless you have been living under a rock you would have heard about the two major cases to do with payroll tax being the Optical Superstore’s case and then Thomas and Naaz case.  The Optical Superstores was a Victorian case.  As accountants it was interesting, as lawyers it was interesting but for general practice it probably was not that interesting because it did not look and feel like what your businesses look like so when the Thomas and Naaz case came out on the surface it looked like a typical service fee arrangement that applied to most medical practices and I think for years a lot of people have felt that they were safe from attack that the state revenue officers were not going to come after them because of their service fee arrangements and now seeing this case, that sort of brought that forward. But if you look closer at the Thomas and Naaz case that practice was a little bit more vulnerable in the review and there were some little quirks in there as well, that do not necessarily apply to everyone.  I am not going to go through the whole, how payroll tax works tonight I literally do not have time but what you would also know if you have been reading the media is that Queensland State Revenue Office issued a rule late in December as a Christmas present to everyone. A ruling around how they saw the implementation of payroll tax for medical practices and again it has gone that step further and it has put a lot of stuff in writing that we probably wish they did not do, but I will let the guys talk about that from a RACGP point of view.  One of the other things I will mention is that with that Queensland case, there has been some further reactions from that and I believe on Friday there was a further moratorium for two years or two and a half years, where they are allowing people to restructure things like that, now that is actually only a Queensland ruling. As we are at the moment the other states have not gone down that path and they have not released a ruling and they have not done the same time period as well.  The other thing I will note is data matching and data matching is really important from a payroll tax point of view.  Most of the activity that we have seen to date has come about because of data matching and basically that is the sharing of information between different government departments.  So when you lodge your tax return there will be certain things that you put in your tax return about salary and wages, super, payments to contractors, that information is shared with the state revenue office and they will get that and if that does not match up with what they have got on their records they will come knocking on your door and say we might like to audit you.  The bad thing about that is when they audit you they do go back and look at five years historically that is the way when you first register for payroll tax, you do go back five years, so that is how the five years has come into it, so it is important when you are doing your tax return that the correct information is put in there and that that matches up with what you are lodging for WorkCover, payroll tax and salary and wages so that is all shared.  My final point is that each entity is that each entity is actually assessed on a case-by-case basis.  You cannot pick up a template from somewhere and then just apply that to your practice.  It is really important that you ensure that the documentation is actually suited to your practice and fits in with everything that you have got. And it is also really important to make sure that once you have got that documentation in place that you are actually complying with that in your practice, so this is the substance over form argument that you need to make sure that basically, what is in your contracts is what you are actually doing within your practice because they will look at that and if they come and look at you they look at the documentation and then how you are actually implementing it.  So one of the things we have been doing is what we call a process review so we are looking at how you actually, whether the things that are in your contract or what you are actually doing in practice.  That is a really really quick overview of payroll tax.  I think I am handing back now to Nicole and Bruce and I am happy to answer questions as we go and at the end so if people want to pop questions in there on technical things I can answer those as well.
Yeah, thank you Belinda, so what is going to happen now the Q&A bubble, which is down at the bottom of your screen.  If you have got any questions, please use that.  We are monitoring it and we will answer it and Belinda is available to help our system and it is really important that we keep these you know very general questions versus very specific that might apply to your practice.  What will happen now is Bruce and I will touch base about what is happening the payroll taxing in Queensland and also nationally and then call with what we are doing within RACGP, so we really managed to put payroll tax on the radar.  We have listened to what the members want and expect and we have really got some fantastic traction within government and media.  What people need to realise this is not just a Queensland issue and I think Bruce will talk about cane toads, but this is a national issue and it is really important as we are politically moving forward with the NSW election, with calls from these state premiers to look at Medicare reform and general practice reform that payroll tax needs to be addressed as part of all of that.  So Bruce, you have been incredibly busy in Queensland and probably you know put in a huge amount of effort, but also have managed to start getting some results so can you let everyone know where Queensland is at and where we are nationally.
So I am Bruce Willett, I am the vice president in the Queensland chair, you can call me Bruce Wallet, since we are taking about payroll tax, so if I can just pick up on a few things that Belinda said so one is that she said that it is synchronised across states, so that is a really important thing, that has come up in my discussion with the Queensland Revenue Office over and over again and with the treasurer’s office. So all various state revenue officers meet regularly and speak regularly and have a coordinated approach to this.  Why is that important, it is important because I think that for people in other states they can look at the Queensland Revenue Office, the ruling and I think the assumption that we all would have to make is that it will be largely reflected of the general approach of the other state revenue offices and the Queensland QRO ruling is a very strict interpretation of when payroll tax is leviable on the service agreements and it actually makes it quite difficult to not be captured by the payroll tax.  The other thing is that payroll tax has this kind of, what amounts to a reverse burden of proof. So the act says that essentially if someone works for you, or in a house or at practice then that is what they call a relevant contract and that payroll tax is leviable unless you meet certain criteria and there is whole lot of criteria, like not working for more than 90 days in the one place, so that really causes practices a lot of problems.  The other issue that also Belinda mentioned is that the back payment which by convention is five years, but my understanding is that it can actually be longer which is particularly scary.  I think another thing that is worth pointing out just quickly is that the terminology is important, so the state revenue, again as Belinda pointed out the payroll tax at state is quite independent from what Fair Work and the ATO do largely and so if something is deemed a relevant contract that does not necessarily mean that it is an employee, employer relationship so it does not automatically flow onto to super and all of these other entitlements, which is some of the commentary that I have seen on social media, so I think that is a really important thing to get out of the way early. So getting back quickly to the history so this sort of blew up in Queensland last year and as Belinda said, very much as a result of data matching between the ATO and the QRO Queensland Revenue Office, and a whole lot of practices around Queensland were pinged and they approached me. And I think one of the key things was that a couple of practices came forward and went public in the media said what this additional tax would mean and particularly the back payroll taxes. Basically it has threaten the viability of the practice and that really got the media started and has started us a whole series of meetings between me and the Queensland Revenue Office and the Treasury Department really to try and resolve this and I guess the points that I have made to them is that the payroll tax is actually more than the profit margin for most practices so practices simply cannot afford to absorb this, they have to pass it on to the patients and I have said that they will pass it on to the patients and they will tell them why they are paying more and that really focused the attention of the politicians particularly. And because of that the five year back payments meant that, you know most practices then went from being unprofitable to actually being insolvent and they would close practices down. So they pretty quickly had a moratorium on the five-year payments but we did manage to keep the pressure up on them and so last Thursday we had an urgent meeting with the treasurer and Friday morning I put a whole lot of these points to them. Friday morning the Queensland Government announced an amnesty for practices up until 30 June 2025 and for the five years beforehand. I am currently in negotiations with the treasury for practices who have outstanding orders and payments against them about having those waived and I am actually really quite hopeful that that will be the case.  The issue of course is that that does not apply to the other states and given that there is this synchronisation, it is really important that the other states actually become quite active in bringing this to the forefront for the reasons that I have mentioned.  I guess the other issue is that we have got the strengthening Medicare changes coming up and the possibility of blocked payments to practices which will necessarily need to be passed on to the doctors working in the practice which will make practices instantly liable for payroll tax, which means those strengthening Medicare changes could actually be well and truly stifled before they get off the block.
You know I was going to say Bruce.  I think that is really important with the strengthening Medicare and that messaging about this being a double tax.  The practices already pay payroll tax on our employees, our nurses, our GP registrars and what is really important to say is as I said we already pay tax on payroll tax, but this is a double tax, this is a tax on Medicare and what this will then mean is that as practices we pass that you know, we have to pass that on to our patients and we cannot bulk bill and pass on a fee at the same time so it will kill off bulk billing, which is the message to the federal government with the strengthening Medicare task force and that will undermine any reforms.  It will also then have that impact on state hospital systems and you will have heard her say that you know it is going to increase ramping, we are going to have overflowing emergency departments and very long waiting lists.  So the balance I think Bruce has been trying to get this up before National Cabinet last Friday and making this an issue, we also have a state election in NSW on 25 March 2023 so this is why it is so important for our membership to mobilise you know our patients who are also voters and I have had quite a lot of discussions with patients who are actually coming asking questions about it, so there is a great opportunity for us and Paul an opportunity to say what is happening within RACGP.
Can I just say something
Oh sorry Bruce yep
I did make all of those points with the treasurer and the other point I made is that there are models around with practices running extraordinarily dislocated distinct businesses within the practice down to the having 20 Eftpos machines at the front desk and point it out how that is really not a very practical solution and to be honest at the end of that discussion the treasurer said thanks very much it was an hour and half discussion, I really understand it a lot better and then the announcement came the next day.  The last thing I would say is that Nicole said this is about information but I actually also think it is about action. So we have this out in Queensland, we desperately need the other states to join in, we need the other states now to fall in line with Queensland. It is important to note that the amnesty finishes just after, perhaps purely by coincidence, but just after next Queensland election, so it is really important if this becomes an issue in the other states and you know this is only an amnesty, this is still a live issue. It takes the change in the way the tax is being applied, the practices cannot afford and then patients cannot afford we need to make that quite clear. So if we can get this to be as much an issue in all of the states it is possible I think that is really important, thanks Nicole, done.
Over to you.
So I am jumping in I think there are three things that I probably like to highlight that the colleague is doing on your behalf at the moment and the first relates to the advocacy side of things, second one relates to the media side of things and the public pressure then campaigns that will come as a result of that and then the third element really relates to what it is that we want to do to equip you as members to make sure that you have resources available to you and you have the information available to you and that you are in as best a position as possible to ensure that you do not invoke the payroll tax obligations where they are not warranted. And I think that is important, we have been making the case to politicians along the way that GP clinics already pay payroll tax.  They pay payroll tax on the wages of your practice managers and your receptionists and the practice nurses and the number of other of other things, so this is not an attempt by the general practice profession to be trying to escape the clutches of payroll tax, it is just saying where it should be properly applied and appropriately applied rather than to those earnings that should not attract the attention of payroll tax. So on the advocacy front there are a couple of ways that we are going about that and as Bruce has mentioned about his dealings with the Queensland Revenue Office and the treasurer that has been replicated around the country and we have our state faculty chairs and our state faculty managers along with our policy and advocacy team, our communications team have been heavily involved in making sure that we have a line of sight and a line of communication directly into the treasurers who are typically responsible for this, but also to the health ministers and the premiers, Because the argument that we need to be making on an advocacy level for state governments is that the amount of payroll tax that they would likely be able to derive from applying this to GP earnings is minuscule when it is compared to the amount of additional costs that is likely to come into the healthcare system and in particular to emergency department presentations and the like so there is a huge amount of political advocacy that we are doing on that part to ensure that governments are not looking to make short-sighted decisions that will shoot them in the foot themselves.  On the second side of things, is the actual legislative change that we are seeking and so as Bruce mentioned in Queensland, we have the moratorium that has been announced.  We are hopeful that other states and territories will also announce a moratorium so we have the time to be able to develop this.  As Belinda mentioned in her presentation there is an attempt to have national uniformity, there is a protocol that each of the states and territories have signed up for to try and have legislation that is as far as possible uniform but also the administration of the act to be uniform. So we recognise that we need to be able to do some things to change the law in each of those states and territories and you would appreciate that this is a very different sort of scenario just trying to get a bit of federal legislation change when you have got seven states and territories all of whom are trying to keep things fairly uniform. But we are hopeful that the moratorium will give us time to be able to advocate on behalf of general practitioners to again make the case for why it is that the earning should be exempt or more importantly we want a declaration really that payroll tax does not apply the GP earnings as opposed to an exemption and I will not go into the specifics or the semantics of why it is important that we get that difference sorted out. But that is our focus at the moment, is to see if we can ensure that that is the case, there are a couple of industry groups that are exempt from payroll tax; so for example, public hospitals are exempt from payroll tax, but there are specific industries like the door-to-door salesman industry and the owner driver you know the lorry driver areas that are exempt from payroll tax and so we are trying to work out how we do these things. Just a word of warning about that though.  This is an area where state and territory governments have been losing a lot of revenue on payroll tax, because the gig economy has sort of started to impact that.  There has been a structuring of different types of arrangement to try and avoid payroll tax and given that it is one of their few sources of revenue outside of stamp duty and a few other things as well too and receipts from the federal government, they are very loath to give exemptions and particularly where there are sort of adjacent industries or similar types of structured industries around that so it is going to be a big bit work on the colleges’ behalf to be able to get the outcome that we are after. But I am really proud that we have achieved the moratorium already in Queensland and we think that we have got the agreement of at least one of the state treasurer and probably more to follow, so that we get some time to be able to do these things.  On the second front we have been mounting up quite a media campaign and you will have seen I imagine a fair bit of Nicole and Bruce and other spokespeople in the media at the moment.  We have had hundreds of media hits and syndicated stories relating to payroll tax in addition to what you are also seeing in terms of the strengthening of Medicare taskforce results, pharmacy prescribing and a whole range of other things that are there. I am pleased to say that actually the number of media hits that we are getting is dwarfing those of the AMA and other sort of institutions at this point in time and that is because of the concerted effort on our part to make sure that the RACGP is the go to organisation for media to come to for comment on matters relating to healthcare reform and the like. And so this is quite a big media campaign that we have been running that include for example if you did not see it, we can get a link in the chat box here to the full page ad that we took out in the Sydney papers ahead of the election, which was an open letter to the Premier and that is part of our advocacy approach that we are taking there.  Internally, when I say internally, in relation to members, we sent out an email on Friday evening that hopefully you will all have received and hopefully you will have opened as well and it has a series of resources, I am going to share my screen for a moment just to give you a bit of an idea of some of the things that we have in place.  It is just loading for the moment.
So Paul why is this important because it is really important that you know we have our GPs as our spokespeople and that we also mobilise our patients who are also voters and it is really important that we actually educate our patients but also educate our staff and our fellow GPs.
Thanks Nicole that is absolutely right and so all we are trying to do is make sure that there is political pressure to be had from patients here, now I have had a couple of messages from a couple of members today concerned that we are using patients as part of a political agenda.  My point of view is that this is what other organisations have done very successfully over a long period of time in order to create pressure on the government.  The Pharmacy Guild for example has done an extraordinary job of saying that community pharmacists are in the high streets of every sort of community in the country and that is an enormous amount of political capital where that gets spent on making sure that they are looking to hear the voice of somebody who is so connected in the community. 
I guess Paul what happens is that our patients are the ones who are going to be affected the most.  You know they are going to have a bigger gap fee when they see their GP and when we also look at this in combination with Medicare reform and you know the really poor Medicare rebate, it is the patients who suffer and if you do not have general practice we are already starting to see within the Northern Territory and central Australia what is happening when you lose GP clinics, so that is what sits behind this.
Thanks Nicole, so I have just put the link to this page into the chat box and so you can click on that and bookmark that for later. But there are a range of resources that we have that includes some posters, that include a QR code and what we are wanting to do is if those posters were to go up in your clinic for example, patients can click on that QR code and that will take them to a series of templates that they can write to their local MP.  You can add your logo to those posters and so on and so there is a link to those on the page there, just around there or thereabouts.  We have also got point of sale letters that you could distribute to patients at the time that they make a payment and their examples for you to be able to do if you are considering increasing your fees or actually stopping bulk billing altogether or if you have actually already put your fees up in relation to that then there are those letters that you are able to distribute to patients that explains those things, puts the pressure on and again invites them to get in touch with their local MP to express their concern about these types of matters. Then you will see there are letters to MPs, so templates that we have got for practice owners to write to MPs and then we have got the resources to be able find your details of where you can find your local MP.  We have got the series of upcoming webinars to make sure that people are well informed, and we will continue to add resources along the way as our advocacy efforts start to increase. So you can please rely on your college to look after your interests here and to make sure that what we are doing is advocating for a position in which GP earnings for independent contractor GPs that meets certain criteria are deemed not to have payroll tax applied to them.
I think now is the time and thanks Paul and the team at RACGP had been working really hard on behalf of members and I know Bruce and I have put in with the state chairs and faculties, a lot of hours trying to get this you know over the line and I think this is probably now an opportunity to answer some of the questions that are in the Q&A that people have been putting up and I think one of the places and this is where I think when we are trying to understand how payroll tax will be an impact.  Ivan asked is payroll tax levied on a percentage of 100% of gross billings or the take-home pay and I think it also reflects an understanding about how practices work, so Belinda is this something that you would feel comfortable answering and Paul and keeping in mind that Paul’s background was a lawyer so quite useful at this time.
Although 25 years sober, I am fond of telling everybody Nicole that is right. So, there is one there Nicole about how does the RACGP campaign compared to the AMAs on payroll tax and are both groups working together.
Absolutely, and we have actually been working incredibly closely with AMA in states and also nationally, not just on payroll tax, but also on Medicare reforms and I have to say for the last couple of years especially with transition of training as well, the medical organisations are actually working closely together.  This is about profession first and that pressure when both organisations work together has been particularly important at a national level but also at a state level. 
Thanks Nicole, Belinda one we might throw to you is it likely to only apply to sole trader GPs or also to GPs who trade as a company.  Why isn’t the tax on the number of employees rather than non-billings. 
Okay, so the question about whether it applies to sole, just to be clear because there has been a lot of questions in there about it applying to individuals.  Payroll tax does apply to the employer, to the clinic, not to the individuals but I think this question is really around whether if that person is operating through a company as opposed to a sole trader, it actually makes no difference from a payroll tax point of view.  They are looking more at the interaction between the different entities and what that looks like.  The tax is on the payments that are made so it is not necessarily on billings as such or the number of employees, it is basically on the payment so the first thing you need to determine is whether is a relevant contract in place and once they deem to be a relevant contract then they look at the payment that is made so if the payment that is made is the net amount, that is what it would be assessed on. 
Belinda could you actually explain a relevant contract, I am GP right, I am not an accountant nor a lawyer so … relevant contract for dummies.
Okay, so relevant contract is a term that exists in payroll tax land and essentially that is where they deem that the services are being provided … the service provider is contracting the individual rather than the other way around if you like, so what they are arguing is that the clinic is contracting the doctor and they are providing services to them essentially.
Yeah so it is talking about the relationship.
Yeah this is where it looks at things like, who is controlling the hours they work who controls when they work, where they work and that is why a lot of people have been talking about rosters, what is on the website, all these sorts of things about control and who decides what happens with the doctors.
So I guess the relevant contract just meets payroll tax for those of us who are simple minded and I guess the distinction I was making before is it is different to being an employee so that is an important distinction I think.  The issue with being a company or an individual, the QRO ruling actually addresses that in a fashion that it does not make a difference.  This does affect all the doctors working in the practice because although their payroll tax is not leviable against the contract of doctors, essentially 5% out of the earnings of the practice affects everyone in the practice and it gets back to that point that that is the more than the margins of most practices. So it means that that practice is potentially no longer profitable or even insolvent.  So, it is a big issue for everyone in the practice and ultimately, unless we can get a resolution to this it means that you know adjustments to what you know the service fees are for people or you know the percentages are in various other ways. So it is an issue for everyone.  I think that is really important to understand.
Stephen _____, your comment was that will it apply to all doctors, and I think what people sometimes struggle with is okay payroll tax and the practice, what does this mean for me as an individual GP contract or tenant doctor and their confusion between what happens at a state level and what happens at a federal level.  So Belinda or Paul.
Oh sorry was that me or
Sorry Belinda do you want to first crack that one, yeah.
What was the question sorry I missed the question.
Sorry Belinda I am just reading, I think people are getting a little bit confused between what this means at practice level and what it means for them as an individual GP and a doctor contractor.
Yeah, so payroll tax applies to employers and I think one of the things Bruce mentioned earlier was this is going to be a big issue for all the other states.  As an example, in Victoria, the threshold of when payroll tax supply is only 700,000 so if you are a practice that is already paying employees and you have to add on top of that doctor payments as well, then you are very quickly going to be in payroll tax territory whereas some of the other states that have a higher threshold it might not apply, so basically from an employer point of view, you are liable for payroll tax.  An individual is not liable for payroll tax; however, if that cost is going to be incurred by the practice at some point, that is probably going to be reflected in some change to service fees or amounts that are paid.
There is another question here about, if we do not get an exemption the first option then what is the second or third best outcome. So thanks for that one. Plan A is really to make it clear and get rulings that payroll tax does not apply to GP payments that meet a certain set of criteria.  Plan B though is to say even if it is deemed that it does apply that we get an exemption for the sector.  As I said before that is slightly problematic but that is certainly Plan B.  Plan C is really to say to how can the RACGP help GPs and practices to better structure their contracts to minimise the risk of payroll tax.  Plan D but I really hope that we do not have to invoke plan D is that we might talk to the government about raising the threshold below which payroll tax is exempt.  So as Belinda said at the start, the tax is levied onto the practice, but only when their salaries and wages and deemed contractor costs exceed a certain threshold so we could always go to increasing the threshold, but as we say that is a Plan D option for us.
Okay Bruce this one is for you, the training practice how does this affect, from anonymous, will this affect registrars taken by practices they would be considered employees, now there are two questions in that one, so for you.
Yes and no, so yes because they are employees they will automatically be captured under this payroll tax regime and that has essentially not changed because they are already employees, they are already captured.  The difference is that if the other contracting doctors are also considered to be under relevant contracts, then that might make a practice get to the threshold much more quickly with the registrars and will add to the burden of the practice in terms of employing the registrars so essentially nothing is really changed for the registrars in one way, but of course if everything changes around the them and it is going to get to that point that if payroll tax is levied on the practice it affects everyone in the practice and it will exaggerate that effect.
So Bruce some of the things that have been brought up and Steve pointing this out is that this will impact, because a lot of GPs you know we might be mixed billing or private billing but will maybe bulk bill our aged care patients or our immunisations so our children after hours care working in a team based arrangement.  What does this look like, so how does this work at a practice level.
Who is that for.
Sorry, my dog is just sitting chewing up my computer charger, payroll tax will this affect the provision of after-hours care and is that one of things why it is important we are need exemption same as with our age care sector and nursing homes.
Yes, certainly this is one of the things I have pointed out the politicians, one of the things in the Thomas and Naaz case that particularly led to them getting pinged was that they had a roster system. So if you are doing after-hours you have to have a roster, you cannot do after-hours without a roster, so this essentially works out to be a tax on doing after-hours by default, similarly a little bit like I was saying with the registrars a lot of small or rural and particularly regional practices so those three to five doctor practices in Queensland but much less in Victoria where there is that lower threshold so even it could get down to one or two doctor practices in Victoria. If that is deemed to be a relevant contract those smaller practices will all of a sudden be up for payroll tax for not only the service fees of the GPs but all the reception staff, nurses, everyone in the practice, so smaller practices and one of the problems in rural Australia already is that Medicare has been bled to such an extent that it is very difficult now to run a viable practices without the economies of scale of the larger practice and that is really already hurting rural and regional practices. And to add this onto a rural and regional practices will potentially disproportionately affect rural and regional.  Again this is something that the treasurer appeared to understand at the end of our discussion but we need all of the other premieres and treasurers to understand this which I am not convinced that they do at the moment understand the full ramifications of this.
If I could just jump in on that one as well too and apologies the lights have just gone out in my office but I think it is still reasonably light.  I do not want to go into all of the factors that determine whether or not a contractor is a relevant contract or not, it is very complex and it keeps people like Belinda in gainful employment for a long period of time. But what Bruce mentioned there I think comes to the point around rostering is a very important one so Stephen just the notion about whether or not providing extended hours of care means that it will somehow make it more likely that payroll tax will apply. Not necessarily, although I am not sure whether you are asking whether or not we do that for political pressure which is a very different message but essentially it is more likely that the state revenue offices will deem a contract to be a relevant contract and seek to include the payments under those contracts as part of deemed wages.  The more control they can exert over the individual GP doctor.  That is essentially what they are getting at so to the extent that the clinic is determining rosters and saying you must work those hours, that is one of the factors that the state revenue office will look at to determine whether or not it is a relevant contract and out of we know that extended hours of care really rely on having rosters, so that is one of the things that is important and that is part of the political play that Bruce is describing their because it would be a terrible outcome for the community to have that be something that imposes payroll tax in circumstances where it is exactly providing an enormous benefit to the community, so it is part of our advocacy efforts.
I think it is really important to recognise because Minister Butler certainly does not want his Medicare reform undermined by the state premiers who are on one hand calling for Medicare and general practice support and yet on the other hand taking away, so there are two parts to this.  As we get to the end of the webinar and I thank you for all of your questions, I thought it might be a really good opportunity just to go round to each of our speakers and just sum up where things are and also about … the RACGP has sought a lot of advice from multiple sources and it is important that each practice seeks their own advice.  It is a complex area and how this applies to each individual practice is unique and the one size fits all certainly does not apply, so Belinda, what would your message be to practices and GPs.
I think my message would be as you say to get good advice and good advice that relates to your practice and your individual circumstances, conduct a review of everything within your practice and look at your processes, the flow of income and how it works through your practice making sure that you have got contracts in place regardless of whether we end up with an exemption or what that looks like, it is still going to be really important to have these contracts in place and ensure that they are in the correct way they should be so I would just be saying, have the discussion with your advisors who know this area and understands the issues and be as prepared as you can be to see what comes next.
Bruce, what is your message to members.
Actually I might just answer that question there about the plan C and I guess that is a question for Paul and Belinda particularly so that is about you know how to best structure things and how to most efficiently structure things and that goes back to Belinda’s point earlier so one of the things that SROs made really clear is that it is not just about the contract, Belinda said that, but really they super emphasized that, the contract is really important but then it is about how you actually run the practice. So it does get quite complicated and Belinda said this early as well, there will be no one that fits all solution to that so it really is going to be about some guidelines and then some specific solutions for practices and you know whether or not it goes from C to D or D to C I think it is going to be quite a difficult issue to resolve.  So to answer your question, I think particularly this needs to be more of an issue in all of the states particularly NSW with the election coming up.  Because of that synchronisation and harmonisation across states, we need all of the states to be motivated because the treasurers made very, I have to be careful about how I say this, sympathetic noises about providing some relief for GPs in Queensland but kept saying I have to deal with my colleagues in other states, so we need all other states to be motivated. So I do think this will affect your patients so I think asking your patients to advocate on their behalf to prevent the additional costs is really important.
Thanks Bruce and thank you for the work that you have done in this space, it has been huge, Paul.
Thanks Nicole I think my message to you all is that the college is going to fight really hard for you, and we believe that we are going to be able to get a political solution for you.  In the absence of that we will make sure that we are providing you with as many templates and resources and sort of model agreements and those sorts of things, all of which we are trying to work on at this point in time to minimise the risk that payroll tax might apply to GP earnings.  It is really complex, I wish it was less though but I suppose in the same way that I as an ex-lawyer sort of commercial dude gets really confused by a lot of the clinical and medical things that you are dealing with and I place my trust in you as experts as GPs for My Health so know that you can rely on the expertise of our advisors and the people inside the RACGP to be fighting a good fight for you.
Thanks Paul and I guess to you all, this is very personal and very real for all us particularly for Bruce and I as practice owners and as GPs and it is also incredibly important for our patients because we need to ensure that general practice advise. We are under one of the biggest challenges I think that we have faced as a profession it is not just payroll tax.  It is the Medicare and restructure and reform, it is about workforce, the thing is I love what I do as a GP and you know I have been very fortunate to be able to create a practice which is a wonderful place to work that provides great care.  What now needs to happen is it needs all of us and you know, we can operate at one level but what needs to happen is we need you to be able to share the message about why this is so important.  We need you to contact your local MPs, contact your state premiers about how this will impact you and your patients and your businesses. So we are working very hard to make sure that your voice is heard and it is also that your voice is heard in the right places, so thank you everybody and can I say well done.  We are going to end in time.
Nicole do you mind if I just interrupt for one minute.  All of the Q&As that you have asked here today, some of which we have answered, some of which we have not quite gotten to tonight, we will be capturing all of those and putting them into an FAQ document that we will be putting on our website so that you have got all that available as well as the recording of all of the three webinars.
Yes, so, Paul there is a webinar tonight, Wednesday and Friday and we will be opening
Thursday I think, Wednesday and Thursday.
On Thursday, sorry apologies and this is part of you know RACGP and my commitment to being transparent about what is happening and how we are working on your behalf and advocating for you, so for those who are practice owners who are here or who would be practice owners I just wish to highlight that we have got the practice owners national conference, which will be held in Adelaide on the 20 and 21 May.  I can tell you this is actually a really dynamic and busy conference so we would love to have you there.  Thanks everyone for your time.  I know you are probably tired at the end of the day, thank you for your support.  Thank you to Belinda and also for William Buck for tonight, this is still a moving feast and we really need your support to keep moving forward and we will continue to inform you with any changes that happen so thank you cheers.

Other RACGP online events

Originally recorded:

6 February 2023

Hear an expert RACGP panel discuss the impacts of the new interpretation of payroll tax, how it could affect your practice and what the RACGP is doing to fight it.  
Our host, RACGP CEO Paul Wappett, will guide the conversation with RACGP President and practice owner Dr Nicole Higgins; RACGP Vice-President and RACGP Queensland Chair Dr Bruce Willett; and other experts.  
We’ll hold three sessions to accommodate members in different time zones. Register for one of the following dates:  

  • Monday 6 February 2023 
  • Wednesday 8 February 2023 (repeat)
  • Thursday 9 February 2023 (repeat)
Non-members will be able to access the webinar on-demand from Wednesday 8 February.

Learning outcomes

  1. Discuss why payroll tax is an emerging issue for general practice
  2. Describe the impact of applying payroll tax to tenant GPs.
  3. Identify areas of risk and action for practice owners and independent contractors

This event is part of Payroll tax changes. Events in this series are:


Paul Wappett
Chief Executive Officer

Paul was appointed Chief Executive Officer of the RACGP in October 2021 after an extensive national search. A lawyer by profession, Paul's previous positions have included CEO of the Australian Institute of Business from 2018–21 and Open Universities Australia from 2012–18, and legal and commercial roles at CPA Australia, the Western Bulldogs Football Club, Mobil Oil Australia and law firm Clayton Utz. Paul was the Chairman of Berry Street, the largest child-protection agency in Victoria, between 2010 and 2018, and of corporate training company e3 Learning from 2013–16. Paul is a sport tragic, a milkshake addict, an enthusiastic but ordinary guitarist, and – quite sadly, really – he is not quite ready to accept he will never open the batting for the Australian test cricket team. Paul’s primary focus as RACGP CEO is ensuring general practice is positioned at the heart of healthcare in Australia.


Dr Nicole Higgins
RACGP President and Practice owner

Dr Bruce Willett
RACGP Vice President and Chair, RACGP Queensland



© 2023 The Royal Australian College of General Practitioners (RACGP) ABN 34 000 223 807