The new legislation exempts bulk-billing revenue from counting toward payroll tax bills.
GPs in Victoria will no longer pay payroll tax on consultations that are bulk billed, with the state’s omnibus tax bill squeaking through parliament on the last sitting day for the year.
The Amendment of the Payroll Tax Act 2007 adds new clause 19B, which exempts GP medical business wages paid or payable by a relevant person during a period, to the extent that the GP medical business wages are paid or payable for or in relation to the performance of fully funded items of GP work.
It will kick in following the end of Victoria’s payroll tax amnesty period in July 2025. The state has already agreed to waive retrospective payroll tax bills.
The Victorian revenue office told representatives of the Australian GP Alliance and the RACGP during discussions earlier this year that it considered every conceivable GP business structure to be liable for payroll tax.
The upshot is that the exemption applies to almost every single clinic; understanding it, then, is probably a good idea.
The dollar amount of exempt wages will be calculated by multiplying the total amount of GP wages payable by the total revenue from “fully funded” items divided by the total amount of payments for GP work.
“Fully funded” encompasses bulk billing, bulk-billing incentives, vaccine consumables and consultations covered by the DVA or WorkCover.
In English, this means that the total amount of payroll tax that each GP clinic owes will decrease by the proportion of total revenue that has been bulk billed or similar (i.e. covered by DVA or WorkCover).
If a practice makes 30% of its income from bulk billing, for instance, its total payroll tax liability will reduce by 30%.
In some cases, the amount of money that is made exempt will put some clinics below the minimum payroll tax threshold in Victoria, which is currently $900,000 per annum; this will increase to $1 million in mid-2025.
Clinics that do not make more than the threshold tax-free threshold are not required to pay payroll tax.
There is no clause requiring clinics to register with the state revenue office in order to be granted the amnesty.
Related
Prior to May this year, Victoria’s stance had been that GPs would not be affected by clarified payroll tax rules – to the point where some advocacy bodies had informed the state government that they would no longer be engaging.
RACGP Victoria chair Dr Anita Munoz welcomed the bill’s passing, but encouraged the state government to follow Queensland’s lead on moving to abolish payroll tax for GPs altogether.
“I encourage our government to take note, as this is the best solution to ensure affordable GP care and greater access to bulk billed services for patients,” she said.
