The Royal Australian College of General Practitioners (RACGP) is warning that unless the New South Wales Government acts on new payroll tax obligations for general practice, patients across Sydney will face higher fees to see their GP and some practices may be forced to close.
The RACGP has been advocating for a fair go for practices for more than a year after a new interpretation of payroll tax law in a NSW tribunal ruling. The tribunal found that tenant GPs, who pay a percentage of their earnings to a clinic rather than being paid a wage, count as employees for payroll tax purposes. This disrupts established business models for practices, which now face the unenviable choice of charging patients more or shutting up shop.
A recent survey of almost 1,300 GPs and practice staff found that:
- just 3% of practices are in a position to absorb the costs associated with GPs becoming liable for the tax
- almost one in five respondents said that their practice would close should state and territory governments change the current payroll tax interpretation and start considering tenant doctors as employees
- a staggering 78% said they would be forced to raise fees, meaning patients would be paying more for every GP consult.
RACGP President Dr Nicole Higgins said the NSW Government needed to act decisively to save general practice care.
“This Sick Tax could cripple general practice care across Sydney,” she said.
“While practices around the country, including in Sydney, already pay payroll tax on employees such as receptionists and administrative workers, a sweeping extension of payroll tax following the New South Wales tribunal ruling will represent a huge increased tax burden beyond the margins of most practices.
“Practices in Sydney will have little choice but to either pass the cost on to patients by charging more or face the prospect of shutting up shop. Some patients won’t be able to afford increased out-of-pocket costs, so they will delay or avoid the care they need and end up in a hospital bed with a far more serious condition. As a result, the entire health system will suffer for years to come. I believe that patients in Sydney deserve better, everyone should be able to access high-quality general practice care regardless of their postcode.”
RACGP NSW Chair Professor Charlotte Hespe said that the NSW Government should pay close attention to what GPs and practice teams are saying.
“Patient care must come first,” she said.
“I’m not surprised that respondents to the survey are so alarmed and that more than three quarters of those surveyed said that they would be forced to raise patient fees if new payroll tax obligations are imposed on them. That includes some practices ending bulk billing and moving to a private billing model and others substantially increasing their private billing fees. It is also no shock to learn that so many practices would have to shut up shop at a time when we face a GP shortage in many communities.
“The ruling potentially has many impacts, including the ability to share complex chronic care of patients, being able to teach, as well having an after-hours roster. State and territory leaders have been on the record as saying that our health system is broken, and Mr Perrottet said fixing it is ‘our most urgent national priority‘. The very least the NSW Government can do is take steps to protect patient care by exempting practices from this new tax burden.
“I will say it until I am blue in the face – practices should not be slugged with this additional tax on top of everything else we are dealing with. Medicare rebates have not kept pace with the costs of providing high-quality care and the Medicare freeze has taken $2 billion from general practice care.
“We are urgently repeating our calls for an exemption in every state and territory, including NSW. The NSW Government must act to ensure people in Sydney can access high-quality affordable general practice care when they need it.”