Payroll tax causing major stress

While much of our public advocacy in recent weeks has focused on general practitioners, because of the looming 30 September deadline for signing up to the amnesty for general practice, we have been working - here and across the country - to help members in private practice in other specialties understand their payroll tax responsibilities. As with our GP members, we are strongly advising that all private practitioners seek advice from legal and financial experts in tax law, to ascertain their status and obligations.

Meanwhile, I have questioned how it is that after years of urging - even begging - people to be logical and follow the evidence, the science, the facts during the pandemic, we are now confronted with another issue on which we are asking for an evidence-based way forward. But this time it is the state treasurers we are urging to be logical, sensible and even economically smart.

On one hand we have the Australian Government and Health Minister Mark Butler investing billions of dollars into health, much of it committed to strengthening Medicare. On the other, state treasurers are grabbing a huge proportion of that money back, by demanding doctors pay what is for us a new cost, a new financial burden, one we have not previously been asked to pay.

As former AMA(SA) President and AMA Vice President Dr Chris Moy told the media this week, it’s ‘like an episode of Utopia or Yes, Minister’.

Except it’s not funny. It will cripple private practice, it will lead to more ramping, and it will affect the health and wellbeing of our patients.

Mr Butler told assembled media on Monday, 25 September that he does ‘urge all state governments to take a measured approach to payroll tax arrangements’ because he wants ‘to see that go into general practices, not into state treasury’.

‘As you consider your payroll tax arrangements,’ he said, pointing his comments at treasurers and state governments, ‘consider the impact on the backbone of our healthcare system, which is general practice.’ continued from page 12

Medical clinics seeking certainty in relation to the payroll tax treatment of their contractor arrangements may also provide copies of their agreements with contracted GPs to RevenueSA.

Practical considerations

With the registration deadline fast approaching, a medical clinic should urgently consider their current contractor arrangements and eligibility for the amnesty so they can submit an expression of interest to participate in the amnesty by 30 September 2023 (if suitable).

It is clear from the position put forward by RevenueSA (both in the ruling and in direct engagement with professional bodies such as AMA(SA) and RACGP that the medical profession should

In saying this, Mr Butler was virtually repeating what AMA(SA) has been saying in meetings with South Australia’s Treasurer, Stephen Mullighan, and Health Minister, Chris Picton. We’ve reiterated what this tax will do to the health system. We’ve asked for an exemption for medical practices, and the Treasurer has said no. We’ve asked that he consider applying the Queensland ruling, which makes it clear that patient fees, including any out-of-pocket expenses, will not be subject to payroll tax when they are paid directly by a patient to a GP for that GP service, and he’s said no. And we’ve asked that whatever financial penalty he imposes retrospectively, he consider changing the interpretation from this point on, to avoid devastating impacts on a health system already in crisis.

We explained to Mr Mullighan in a face-to-face meeting on 20 September that implementation of the new tax burden will lead to:

• less bulk-billing

• more expensive GP appointments

• more patients attending EDs with non-urgent conditions

• a major effect on private pathology, radiology and other providers, as referral pathways disappear expect increased scrutiny and audit activity in relation to payroll tax obligations.

• longer essential surgery waiting lists, with flow-on effects for patients and the health system.

National calculations indicate a payroll tax on general practice would add as much as hundreds of thousands of dollars a year to operating costs. We have emphasised that it will wipe out the tiny profit margin most practices maintain, and that as many as 30% are considering shutting their doors.

As we have reminded the Treasurer and Health Minister in this state, and their Opposition counterparts, this government was elected on a platform of reducing ramping and fixing our health crisis. We understand – better than most – that there is no policy or quick solution to achieve that. But what won’t fix it is making it harder for general practice to play its critical role as the heart of the health system.

Our tax practitioners have had extensive involvement with AMA(SA) and other professional bodies in tackling these issues, and can help medical clinics with reviewing contractor arrangements, establishing sustainable operating models and navigating the effects of new payroll tax initiatives such as the amnesty.

Should you wish to obtain further guidance about your potential exposure, please contact Kale Rigano (Principal, 08 8210 1207 or krigano@normans.com.au), Marissa Mackie (Principal, 08 8217 1361 or mmackie@normans.com.au) or Alex Belperio (Solicitor, 08 8210 1230 or abelperio@normans.com.au).