New momentum on payroll tax reform

Queensland GPs are one step closer to waking from a payroll tax nightmare.

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With Queensland starting the process of legislating a payroll tax exemption for GPs, there is renewed hope for something similar in other states.

The Sunshine State’s new treasurer David Janetzki confirmed today that he has instructed Treasury to begin work on a permanent exemption for general practice, a move that was welcomed by the AMA Queensland.

South of the border, there’s less appetite for change on the political end.

Responding to questions around practices raising fees for patients to cover tax liabilities, a spokesman for NSW Minister for Finances Courtney Houssos told The Medical Republic that three years has elapsed since the GP relevant contract question was brought up in court.

Claims that there was a new state government tax, the spokesman said, were “false and misleading”. 

A survey run by booking engine HotDoc in February found that around 95% of practices – in Victoria, at least – would have no choice but to raise patient fees in the face of clarified payroll tax rules that meant many contractor doctors were now considered employees in the eyes of state revenue offices.

Circumstances have changed since then: South Australia, Victoria, the ACT and New South Wales all came out with proposals that will refund a certain amount of payroll tax dependent on bulk billing, while both parties in Queensland recently committed to nixing it entirely.

South Australia’s Liberal Party has pledged to follow Queensland’s lead should it win power in the next election, which won’t roll around until March 2026.

The concessions in most jurisdictions apply only to appointments that are bulk billed or, as is the case in NSW, rely on the practice meeting a minimum bulk-billing threshold.

“The Bulk-Billing Support Initiative provides direct tax relief to support primary healthcare,” Ms Houssos’s spokesman said.

“We encourage GP clinics to make use of the new tax rebate and encourage them to pass on the benefits to their patients.”

While the effect of the concessions may be such that some practices end up beneath the payroll tax threshold entirely, there remains some clinics which will have to pay payroll tax.

TMR is aware of at least one clinic in inner city Sydney that has hung signs warning patients of a $7 fee increase come 1 December, asking them to “contact [their] local member of State Parliament to complain”. 

“By tripling the bulk-billing incentive, the Federal Labor Government is doing its bit to keep primary healthcare affordable,” the spokesman for Ms Houssos said.

“With the Bulk-Billing Support Initiative, the Minns Labor Government is doing ours. Now we expect practice owners to do the right thing by their patients.”

One option pursued by some clinics is asking privately billed patients to “double tap”, or pay one fee for their appointment and a second fee, typically $10 or less, to cover payroll tax.

There was initially some question as to whether the practice was above board; these concerns do not appear to bear out, so long as it is only being levied against privately billed patients.

Under section 20A(1) of the Health Insurance Act 1973, practices are prohibited from charging any additional fee when bulk billing a patient.

In NSW, payroll tax is calculated as 5.45% of the amount of money paid to contractors and employees above the $1.2 million threshold.  

There are situations when raising the fee for patients in a bid to cover costs associated with payroll tax will also increase the practice’s payroll tax bill.