Geelong medical clinics could be hit for up to five years of unexpected payroll taxes for their independently contracted GPs without intervention from the state government.
A recent ruling in NSW, which will affect clinics across the country, deemed GPs employees of medical centres, meaning clinics needed to pay a 4.85 per cent payroll tax on doctors’ income.
GPs argue they are not employees, but independent operators who lease the space from clinics.
State revenue offices are able to apply the tax retroactively, potentially for up to five years.
The Royal Australian College of GPs claimed one Victorian practice owner had received a bill for nearly $800,000, forcing them to close a clinic that serviced over 100,000 patients.
For the past two decades, general practitioners have been incentivised by federal government payments to move away from solo medical practices, where there would definitely be no payroll tax, to centralised medical clinics.
Geelong GP clinic owner Dr Bernard Shiu, who is also on the board of directors for the Australian GP Alliance (AGPA), said the ruling served to nullify that incentive.
“On the one hand the federal government’s pouring millions of dollars into primary care, and (now) the state government is taking that money back,” Dr Shiu said.
Since the ruling was issued, state governments in Queensland, South Australia and Western Australia have provided clinics with amnesties or guaranteed not to pursue retroactive taxes.
Dr Shiu said clinics would soon start closing in Geelong if the Victorian government didn’t intervene.
“We’re not surgeons, or neurologists; every single clinic is running a very, very thin profit margin,” he said.
“So who’s going to be affected? The patients. Bulk-billing clinics will start charging patients, those who have not been bulk-billing will increase their fees by 10 per cent. The other option is to close down.”
Greens MP Dr Sarah Mansfield said the Premier needed to step in.
“Right now, people are already struggling to access GPs and afford basic medical care, especially in rural and regional Victoria,” Dr Mansfield said.
“The Andrews Government needs to… make sure this won’t mean more costs for patients and fewer GPs down the line. Access to affordable healthcare must remain the priority.”
A Victorian government spokesperson said there had been no change to the law or the application of payroll tax to GPs or medical centres.
