The Victorian government has once again walked away from the payroll tax negotiation table, but not without offering a flimsy olive branch.
The Victorian government will not be providing a payroll tax amnesty arrangement for GP practices, but the treasurer has promised to reduce or waive tax bills that will practices out of business.
It’s been a long road to any sort of compromise from the state government, which maintains even now that there has been no change in the way tax law is interpreted in relation to medical practices.
RACGP president Dr Nicole Higgins told a webinar back in August that negotiations between industry and government had stalled after the Dan Andrews government refused to rule out retrospective payroll tax audits.
The change in premier in early October raised hope that the situation could be salvaged, with GP leaders finally able to score a meeting with the tax commissioner on 12 October.
But in a letter addressed to AMA, RACGP, Australian GP Alliance and Primary Care Business Council leadership dated Friday 27 October, Victorian Treasurer Tim Pallas seemingly dismissed the possibility of a forthcoming amnesty arrangement.
The letter said the government did not believe that there were any changes to payroll tax application, that it did not believe any practices had been affected thus far and that the SRO has not been deliberately targeting medical practices for tax audits and compliance activities.
“Since the Andrews/Allan government was first elected in 2014, there have been an average of less than nine investigations of general practice medical services per year,” it said.
“This represents on average around 0.5% of SRO payroll tax investigations. In the current financial year, up to 11 October – the day before the Commissioner’s presentation – there had been 5 investigations.”
The SRO had not been involved in any cases where a medical practice has gone insolvent in the process of paying a tax bill, it said.
Mr Pallas did, however, offer an olive branch.
“As Treasurer I have previously used my ‘ex gratia’ powers to reduce or waive tax liabilities for organisations facing insolvency, where it is in the public interest to do so,” he wrote.
“This government has no interest in any GP clinic closing their doors, and I would be inclined to use my ‘ex gratia’ power to prevent that happening were any GP clinic to become insolvent as a result of a payroll tax liability (and the clinic had engaged with the SRO in good faith to try and reach a settlement).”
The offer – which has all the legal weight of a pinkie promise – is cold comfort for the RACGP.
“It doesn’t provide us with any certainty for the future,” Victoria chair Dr Anita Munoz told The Medical Republic.
“And I would suggest that by the time a clinic gets to the point where they are basically insolvent and they are going on their knees to the treasurer for a reprieve, there’s nothing really salvageable from a business point of view.
“That business will not be able to provide any certainty to its staff and certainly not to its patients, so I don’t see that the contents of this letter provides any meaningful hope.”
What would provide certainty, Dr Munoz said, would be the government following Queensland’s lead in providing clear examples of situations where practices are not liable for payroll tax.
Deputy chair Dr Aadhil Aziz told TMR that the lack of certainty over payroll tax had left him scared for both his practice and his patients.
“We’ve just transitioned from a fully bulk billing practice to a mixed billing practice, after a year or two of heartbreaking consultations where we were explaining to patients why we have had to do this,” he told TMR.
“Now I’ve had to start to talk about why we might have to increase our fees [to account for] payroll tax, and my patients are in tears.”
