$450k payroll tax bill for disaster-hit practice

In an area still recovering from a devastating flood, Revenue NSW is turning the screws.

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A large GP clinic in the NSW Northern Rivers region may be forced to close its doors after receiving a retrospective payroll tax bill of $450,000, as the RACGP vows to bring its fight to the national level.

While the clinic itself has remained anonymous, The Medical Republic understands that it is located in or around the Ballina region and was caught up in the floods that completely wiped out the neighbouring town of Lismore last year.

The practice, which has a patient base of 20,000, has been given 21 days to pay the bill.

RACGP president Dr Nicole Higgins said there were multiple other practices in the area that were also undergoing tax compliance audits.

“This demonstrates that the NSW government is actively pursuing general practice,” she told TMR.

It’s an area that, even more so than other parts of the country, needs continuity of primary healthcare.

The Northern Rivers has the lowest vaccination rate in Australia, with just 47% of five-year-olds fully immunised.

Residents are also still presenting with ongoing symptoms – some physical, some mental – related to the flood.

Earlier this year Ballina-based surgeon Dr Susan Velovski treated multiple patients who had developed lead poisoning from coming into contact with old paint while cleaning out their houses.

The chronic disease burden in the area was also exacerbated by interruptions to healthcare immediately following the disaster.

“When a 60-year-old who previously just had an irregular heartbeat doesn’t get his blood pressure tablets from his GP and ends up with a massive stroke at Lismore Base Hospital, that’s 20 years of good life lost,” Dr Velovski told TMR earlier this year.

According to Dr Higgins, the practice with the $450k payroll tax bill is facing little other choice but to shut down.

“Practice owners have a responsibility not to trade insolvent,” she said.

“That’s a fiduciary duty that they have, and that’s the position that this practice has now been put in.”

Across most jurisdictions, payroll tax is about 5% of business turnover.

GP clinics have historically operated under the assumption that, as private contractors, most doctors are tenants of a practice, not employees.

All that changed last year, with a court ruling that clarified the meaning of a ‘relevant contract’ as it applies to medical practices.

Given the thin margins that most practices operate on, the wide application of this clarified meaning poses an existential threat to general practice.

RACGP and AMA representatives have been meeting with state and territory revenue offices around the country over the last few months in an attempt to gain control over the situation.

So far, Queensland and South Australia have instituted amnesty programs and pledged not to perform retrospective tax audits.

WA does not have the harmonised contractor provisions that affect the rest of the country.

It generally considers GPs to be private contractors rather than practice employees.

This week, the ACT has come to the negotiating table.

While the details are still under discussion, Dr Higgins revealed during a press conference on Thursday that the territory government had agreed not to do retrospective audits.

“On top of the work that we’ve been doing at individual state levels, at a federal level this has been raised with Minister Butler and he’s acutely aware that the impact that state payroll tax will have on healthcare reforms,” she said.

“Payroll tax will kill bulk billing overnight.”

Dr Higgins said she had advised the Health Minister that the payroll tax issues needed to be resolved by the end of October.

“Due to the uncertainty around payroll tax, many practices are holding off making decisions about how they implement the Medicare reforms, including the tripling bulk billing incentive, on the first of November,” she said.

With around two and a half months to go until then, Mr Butler is fast running out of time.