In the last couple of years, various State Governments around Australia have been developing and enforcing provisions around payroll tax and legislating its application to contractors. NSW is the last state in the east to reveal how this will affect various professions, in particular medical and healthcare practices.

“The Royal Australian College of GPs said several regional practices had received retrospective payroll tax notices – including some for amounts over $600,000 – and with just 21 days to pay were now facing closure,” Accountants Daily has reported in regards to this issue late last year.

“Primary care patients and general practice in NSW will be worse off than the rest of Australia if a proposed payroll tax on GPs is enforced,” the Primary Care Business Council (PCBC) has warned. 

Tasmania, South Australia, Queensland and only two weeks ago, the Victorian state governments brought in various stringencies to conform to the Payroll Tax, but the need for retroactive payments, for the most part, has been negated. In NSW, health practitioners are awaiting the decision by our state government.

PCBC spokesperson Dr Hamish Meldrum called on the NSW Government to provide a retrospective amnesty to payroll tax to ensure GPs aren’t forced to pay years in back taxes, which would bankrupt some operators.

Local Lismore health practitioner Kate Egan from Hinterland Osteopathics and Allied Health Services says, “Clinics cost a lot of money to run. That money is spent and gone. They're business owners that don't have a huge amount of excess money - they wouldn't be in that business if they did. To have to pay that money back retrospectively, that's cruel.”

The decision could come through at any time, but Dr Meldrum believes they will announce it in the NSW State budget on June 18th.

Dr Melrdum said, “The NSW Government needs to act now to ensure general practices are not unfairly burdened by a payroll tax which could threaten their very existence and result in more pressure on the public health system.”

The PCBC expresses grave concern over the costs being passed onto patients and gives the example: “If the GP payroll tax is applied to all distributions to contract doctors, it could result in fee increases of between $10 - $20 per appointment.”

“The Federal Government has supported primary care with an increased bulk billing incentive to assist GPs to bulk bill vulnerable patients. But payroll tax has the potential to reverse any gains,” Dr Meldrum said.

“It would also have the added cost of pushing more patients towards hospital emergency departments, which are already overstretched.”

Kate says, “I see it from the perspective of the diversity of clients that I have. When you look at the stress that's placed on someone financially, this is people's lives. And this tax would apply to many health services - radiology, physiotherapists - many health practitioners are set up in the same way (with contractors).”

PCBC modelling indicates that NSW could see more than 1,000,000 more patients present to NSW emergency departments instead of visiting a GP because of increased fees. This would result in an additional annual cost of more than $680 million, which would far outweigh the revenue from payroll tax of around $130 million.

“General Practice has been poorly funded for some decades, and it makes no sense to impose a fiscally destructive tax on a primary care system that is already under strain. Doctors won’t be able to cope, and ultimately it will be patients who suffer the most,” Dr Meldrum said.

“If you get sick once a year and see your GP, you pay the tax once, and if you are sick ten times a year and have ten GP visits, then you pay the tax ten times. This is a very regressive tax.

“It is disappointing that the NSW Government has not engaged with GP operators, particularly when practice viability is at risk – in the last 12 months, 184 practices in 17 Public Health Network sites closed their doors – many more will close if this tax is imposed.

“I urge the NSW Government to step back from the edge and engage with the sector to ensure we have a viable General Practice sector going forward.”