WA Government confirms GP practices won’t be chased over payroll tax, saving patients on consultations

GP practices in WA will not be pursued over payroll tax in a decision doctors say will spare patients from further hikes on medical consultations in the midst of a cost-of-living crisis. A ruling earlier this year by the NSW Court of Appeal cleared the way for GPs to be treated as employees of the practices they work out of, making those businesses liable for payroll tax on their remuneration. Previously, individual GPs in many practices were viewed as tenants who provide a service – an important distinction that spared clinics from including payments to doctors when calculating their payroll tax liability. The NSW case came about as the result of Revenue NSW deliberately seeking to chase GP practices over the tax, which was then challenged in court. The Queensland Revenue Office has since confirmed it also intends to treat GPs as employees for payroll tax purposes but has implemented a two-year “grace period” to allow practices to prepare for the change. The Royal Australian College of GPs has been lobbying other states not to follow suit – with WA chair Ramya Raman revealing the peak body had secured a commitment not to change the payroll tax treatment of clinics from the Cook Government. In a letter to the RACGP, Treasurer Rita Saffioti confirmed GPs working in medical practices under independent agreements were “considered contractors running an independent business”. “The $1 million tax free threshold means the majority are not subject to payroll tax,” Ms Saffioti wrote. “The Western Australian Government does not intend to change these provisions.” Dr Raman said the decision was a “huge relief for GPs across our State” – and would translate to savings for their patients. “Practices operate on thin margins, and if they are hit with an additional payroll tax bill, which can be hundreds of thousands of dollars, they will be forced to pass the costs on to patients,” she said. “If patients can’t afford the gap fees, practices will close. “This would put more pressure on WA’s already overstretched hospitals. It’s a nightmare scenario, and the WA government gets it.” In Queensland, the cost of forging ahead with plans to apply payroll tax to GPs was estimated to push up the price of consultations by as much as $15. One of the major drivers of activity in public hospital emergency departments is patients with relatively minor ailments avoiding GPs because they cannot afford the out of pocket fees. Similarly, patients worried about the cost of seeing a doctor are delaying seeking treatment until their condition deteriorates to a point that hospitalisation might be required. “General practice is the engine of our health system – it keeps people healthy and happy in the community for longer,” Dr Raman said. “Everyone needs and deserves access to high-quality and affordable GP care, and I look forward to continuing to work closely with our State Government to this end.”