Another state hits pause on payroll tax audits

There will be no audits on NSW practices for 12 months, as the state government commits to working toward a permanent solution.

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General practices in NSW have been given a temporary reprieve, as the government calls off its payroll tax commissioners for a year.

Labor’s amendment to the Revenue, Fines and Other Legislation Amendment Bill 2023, which was set to be debated in the NSW Legislative Council today, includes an exception forbidding the state revenue office from conducting an audit of a GP or GP practice in relation to compliance with the Payroll Tax Act 2007.

These arrangements will last for 12 months, beginning the day the Act commences.

There will also be a pause on tax penalties and interest accrued on outstanding payroll tax debts incurred before and at the commencement of the pause period.

This gives a year’s breathing room to practices that might have already received sizeable payroll tax bills.

RACGP president Dr Nicole Higgins said she had heard from at least one practice that had been audited and was looking at having to shut down, which would now be able to stay open.

“There’ll be no penalties or interest accrued [on existing audits] and there will be no new audits as well,” she told The Medical Republic.

“The challenge is that if practices have already received a notice of liability, that will sit on their books and it will mean that those practices are still dealing with uncertainty, which will impact on their ability to grow and invest.”

The government’s amendment doesn’t contain any commitments regarding retrospectivity, meaning that if – worst-case scenario – negotiations fell apart, practices could still be on the hook for bills going back five years.

It’s this retrospectivity that Dr Higgins said poses the biggest threat to the viability of practices.

“Failure to ensure there’s no retrospective application will mean that hospital emergency departments will overflow, ramping will get even worse and that there is a false economy,” she said.

“We need to make sure that general practices are able to transition [to compliant payroll tax arrangements].”

AMA NSW chair Dr Michael Bonning said the association saw payroll tax as a “huge stick” being used by the government, and that its approach to the matter had been “limited”.

“It is not what we have been calling for, and it’s not giving the certainty that general practice needs to address the future and current crisis in general practice,” he said.

NSW Finance Minister Courtney Houssos said the government was committed to working with the AMA and RACGP during the 12-month pause to find an ongoing solution.

“This will take time but we are committed to doing this carefully and thoughtfully to achieve the best result we can,” she said.

Ms Houssos’ announcement that the government would move to pause audits comes two weeks after Revenue NSW released a ruling on payroll tax and just days after an opposition spokesman announced plans to introduce a motion that would pause new audits on GPs for two years.

Shadow Treasurer Damien Tudehope was set to introduce the LNP’s proposed amendment today but was pipped at the post by Labor’s amendment.

Key members of the crossbench had already indicated they would not support Mr Tudehope’s amendment, making it unlikely that the Coalition would have had the numbers required to pass it even if Labor hadn’t come up with its own plan.

As at time of writing, the amendment had not yet been introduced to the Legislative Council.