To address the impact of payroll tax on general practice (GP) medical centres, the ACT Government will waive payroll tax liabilities until June 2023; extend time for compliance until 2025; and introduce two-year exemptions for bulk billing, Chief Minister Andrew Barr and health minister Rachel Stephen-Smith announced this morning. This complements recently announced Commonwealth Government bulk billing incentives, they state.

A new interpretation of payroll tax considers GPs as employees rather than as contractors, following a NSW court decision. The Royal Australian College of General Practitioners (RACGP) and the AMA ACT are concerned that Canberra doctors could be forced to charge patients more (perhaps by up to $20 a consultation) or close their clinics if the ACT Government introduces such a payroll tax. The Canberra Liberals announced yesterday that they would introduce a bill to exempt clinics from payroll tax.

The ACT already has the highest payroll tax-free threshold in Australia at $2 million per annum, the government said.  Most small and medium-sized businesses, including most GP healthcare centres, fall below this threshold, and are not liable for any payroll tax.

The ACT Government has talked to GPs and their representative organisations to assess how payroll tax would affect the handful (fewer than 10) of general practices in the ACT that are above the $2m tax free threshold. As a result, the government will take the following steps:

Waiving payroll tax liabilities: Waiving payroll tax liabilities until 30 June 2023 for medical practices that have not previously paid payroll tax on GP payments. This waiver will ensure general practice businesses are not subject to retrospective assessments. Given almost all practices fall well below the $2 million threshold, this measure is confined to a very small number. 

Extended time for compliance: To provide further time for general practices that support the community with reasonable levels of bulk billing to review their taxation arrangements, seek advice, and implement necessary changes to ensure future compliance with their payroll tax obligations through [until 2025].

Two-year exemptions for bulk billing: A payroll tax exemption on GP payments until 30 June 2025 for healthcare businesses making payments to GPs that bulk bill 65 per cent of all patients; have registered for MyMedicare; and register with the ACT Revenue Office by 29 February 2024.

“The GP Payroll Tax Exemption Proposal offers certainty to medical practices while ensuring equitable treatment across industries and businesses,” the government said. 

“By supporting GP practices who bulk bill, and maintaining fair tax treatment, the ACT Government is enhancing healthcare access and alleviating financial burdens for Canberrans seeking primary health care.”

Canberra Liberals: Government has not listened

Canberra Liberals Leader and Shadow Treasurer Elizabeth Lee hit out against Andrew Barr’s decision to enforce payroll tax on GPs in the ACT, which she said would lead to Canberrans paying more to see a doctor.

Ms Lee said it was clear Mr Barr had not listened to GPs; stakeholders like the Royal Australian College of General Practitioners (RACGP) and the Australian Medical Association had warned the Chief Minister that his policy would either bankrupt general practices in the ACT or make visiting a GP more expensive for Canberrans.

“This Labor-Greens government has an appalling track record when it comes to consultation, and they were warned that demanding clinics to bulk bill 65 per cent of patients was not realistic or achievable,” Ms Lee said.

“The reality is that GPs will now be faced with a grim choice. They will either be forced to pass the cost on to patients which will see Canberrans paying up to $20 more per consultation during a cost-of-living crisis that is impacting on so many already. Or they will be forced to cut services and perhaps even shut their doors.

“This is why I will be putting forward a bill next week in the Legislative Assembly to exempt clinics from the tax on GPs engaged as contractors and also reverse any retrospective application of the tax.

“If Andrew Barr is serious about ensuring all Canberrans have access to essential health care; if he is serious about addressing the cost of living pressures for Canberrans, he must support my bill,” Ms Lee concluded.

Shadow Minister for Health Leanne Castley said enforcing this tax on GP clinics would have repercussions on an already failing health system in the ACT.

“GP clinics play such an important role and are the hub of primary healthcare here in the ACT where we already have one of the lowest number of GPs per capita in the country,” Ms Castley said.

“We need to be doing all we can to attract more GPs to Canberra, and this policy will make it even harder to achieve that.

“With our health system already failing, this Labor-Greens government should be doing all it can to keep people out of the emergency department in which GPs play such an important role.”