Victoria lets GPs off payroll back-tax hook

The bombshell move relieves practices of the prospect of retrospective audits and exempts bulk-billed consults from next year.

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The Victorian government has relented and removed the threat of retrospective payroll tax on GP income, in a move long sought by the colleges, the AMA and practice owners.

Treasurer Tim Pallas will give all general practice businesses an ex gratia exemption from assessments on payments to contractor GPs up to 30 June 2024.

There will be a further 12-month exemption through to 30 June 2025 “for any general practice business that has not already received advice and begun paying payroll tax on payments to their contractor GPs on this basis”.

To encourage more bulk billing, contractor GPs and employee GPs will also be exempt from payroll tax on income from providing bulk-billed consultations from 1 July 2025.

RACGP president Dr Nicole Higgins told TMR it was a pragmatic response from the Allen government after “a drawn-out process” of lobbying from the peak bodies and practice owner groups.

She said there were still details to iron out, but that the relief from retrospective audits gave certainty and clarity to business owners.

“So we’ve got time to negotiate some of the details and get some clarity, but those general principles are what’s really important and the no retrospectivity – that is the one that would force businesses to the wall,” Dr Higgins said.

“We’ve worked closely with the primary care sector on how we can best support them – and we’re making these long-term changes to provide certainty to general practice businesses and support more bulk-billing for Victorians,” Mr Pallas said.

On top of campaigning from GP bodies, the states have also been under pressure from federal Health Minister Mark Butler to remove the threat of payroll tax, which he said undermined federal investments in Medicare designed to prop up bulk billing.

Drs Mukesh Haikerwal and Sarah Lewis from the Australian GP Alliance said: “We thank the Victorian government for its decision and commitment to the primary care sector as this outcome will support practices to remain viable into the future and help Victorians continue to have access to affordable services … GPs can now focus on caring for their patients and the health system.”