22 June 2022

No payroll tax exemption for NSW, Qld clinics

Government Tax

The unpopular tax continues to loom after yesterday’s budget announcements, with some small relief for the northern state.


While yesterday’s Queensland and NSW state budgets offered little for GPs – despite broader support for the public health sector – the lack of a payroll tax exemption is especially disappointing for practice owners. 

NSW Treasurer Matt Kean’s high-spend budget included a $4.5 billion funding package for the health sector, with several key measures announced last week and earlier. 

A sum of $883 million has been earmarked to attract and retain healthcare workers in rural and remote areas over the next four years. Those able to take on critical but hard-to-fill roles in the bush could be eligible for an up to $10,000 boost for each year of service. 

Frontline health workers – not including GPs under the state’s definition – will also get a $3000 payment for their work during the covid-19 pandemic. 

While the NSW branch of the AMA welcomed what it called a “strong commitment” to healthcare and a recognition that health costs were outstripping inflation, the association said the budget remained “a missed opportunity to support general practice”. 

“We have been calling on the NSW government to provide a payroll tax exemption for general practices and it is disappointing that NSW failed to utilise the one mechanism at its disposal to address this punitive tax,” AMA NSW president Dr Michael Bonning said. 

“Considering the state is projected to return to surplus in 2024-25, it is mind-boggling that the state would risk the financial stability of general practices for what amounts to such a relatively small amount of revenue to NSW. 

“A payroll tax bill of thousands of dollars – particularly if applied retrospectively – could force some practices to close their doors permanently. Given the GP shortage and the crisis we’re facing in regional healthcare access, failure to address this tax is disconcerting,” Dr Bonning said. 

The AMA had called on government to address workforce shortages, medical salaries, and health expenditure for non-covid care ahead of the budget release, he added. 

North of the border, Queensland Treasurer Cameron Dick offered a small measure of payroll tax relief by increasing payroll tax deductions for small and medium-sized businesses with payrolls of up to $10.4 million. 

“This will provide benefits of up to $26,000 per year for over 12,000 small and medium-sized businesses,” Mr Dick said. 

RACGP Queensland chair Dr Bruce Willett said there was “not a lot there in the budget for GPs”.  

“I guess the only really good news that I could find for practice owners was some relief in that payroll tax for small businesses – which most general practices are, so that that’s potentially good news,” Dr Willett said.  

The Treasurer also responded to a Queensland mental health select committee recommendations to create a dedicated funding source for mental health, alcohol and other drug services. 

The budget includes a measure to create a mental health levy on large businesses with national payrolls of more than $10 million. 

“It will inject $1.64 billion into the state over five years to improve mental health and wellbeing and combat substance abuse,” Mr Dick said. 

“New mental health, alcohol and drug services will be supported by up to $425 million per year.” 

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