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Treasurer promises ruling next week to confirm patient-to-GP payments will avoid the levy.
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Qld retreats from payroll tax on medical centre GPs
15 September 2023
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Queensland will retreat from levying payroll tax on GPs in a ruling due next week, Treasurer Cameron Dick said in Queensland Parliament yesterday.
Mr Dick, pictured, said dropping the tax, which has met fierce resistance from medical bodies and a range of responses from state revenue offices, would help secure the future of Queensland medical centres.
“We'll make clear that under normal business arrangements, patient fees including any out-of-pocket expenses when they are paid directly by a patient to a GP for that GP services, will not be subject to payroll tax,” he said.
“I understand that this presents a viable option for these practices going forward.”
Royal Australian College of GPs Queensland chair Dr Bruce Willett applauded the decision and said it would help keep essential GP care affordable.
“I want to thank our government for listening to the RACGP, our member GPs and practice owners, and I look forward to seeing the detail in the Revenue Office ruling,” he said.
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“This issue has caused a great deal of anxiety and stress for GPs, practice owners and our teams.”
“The government has chosen to put Queenslanders’ health and wellbeing first. They have chosen to help keep essential general practice care affordable. And in the longer term, their actions will help to save the state budget by ensuring more people can get the care they need from a GP, and don’t end up in hospital.”
“GPs across Queensland will be celebrating today, and our community should be celebrating too.”
The RACGP has advocated strongly against payroll tax on GPs in the wake of a court ruling in Thomas and Naaz last year which classified GPs at certain medical practices as employees for payroll tax purposes.
The ruling had national implications but each state applies its own payroll tax and there has been a patchwork of responses varying from business as usual in Western Australia to various amnesty arrangements in Queensland, South Australia and, most recently, NSW.
Victoria has yet to announce any protection from payroll tax compliance.
Willam Buck health specialist director Paul Copeland said Queensland had led the way on the issue and was now promising to confirm critical details next week.
“The Queensland approach to this issue, although somewhat clunky, has still been nation-leading,” he said. “The Queensland State Government was the first to issue a ruling in relation to this issue in an attempt to provide clarity to the medical industry in December 2022.”
“The ruling actually had the opposite effect of that intended and created an almost immediate uproar.”
“This then resulted in the announcement of the two-year amnesty for general practice after much lobbying from both the RACGP and the Australian Medical Association in Queensland.”
“The amnesty however only extended to general practice and as such is now causing rising angst among other medical industry groups, notably other medical specialists, dentists and allied health practitioners (who do not fall under the amnesty).”
“South Australia issued a one-year amnesty but did not back this with a ruling. Rulings were recently issued in NSW and Victoria and were substantially the same as that in Queensland. They did not provide the clarity the industry was seeking as much of the guidance and examples in the ruling covered operational models which are not widely used.”
But he said the Thomas and Naaz ruling contained the seeds of a way forward in its position on a “flow-of-funds” approach to paying GPs.
“The flow-of-funds solution to this issue was raised after the judgement in the Thomas and Naaz Court of Appeal decision earlier this year. The position was consistent with the Queensland payroll tax ruling,” he said.
“There was still a lack of consensus on this issue and advisers promoted other payroll tax options to the market. This created ongoing stress in an industry already struggling with workforce shortages and rising costs.”
The promised Queensland ruling next week would cement a solution, he said.
“Confirmation in the form of a ruling from the Queensland State Revenue Office that the flow-of-funds solution, where practitioners receive the patient fees directly and then pay a service fee to the practice, will fall outside the ambit of the payroll tax legislation has been a welcome relief.”
“Systems can now be adopted and practices can move forward.”
AMA Queensland president Dr Maria Boulton also welcomed the state government announcement with some medical centres already reeling from payroll tax bills running into hundreds of thousands of dollars.
“This is a sensible decision that recognises most GPs work independently and should not be subject to payroll tax,” she said.
“This new public ruling, combined with the amnesty until June 2025, will give practices the time to ensure they comply with the new interpretation of the payroll tax law.”
“We saw practices suddenly being hit with backdated payroll bills ranging from tens of thousands to millions of dollars.”
RACGP surveys found 78 per cent of medical centres would have to raise fees to cover the tax and more than a third said they would consider moving interstate to avoid unfavourable payroll tax settings.
RACGP president Dr Nicole Higgins urged other states to follow Queensland’s lead.
“The vast majority of practices run on very thin margins and would have had to pass the costs of any extra payroll tax on to patients,” she said.
“I strongly urge other jurisdictions to follow Queensland and ensure GP services are not subject to extra payroll tax to provide certainty to GPs, practice owners and teams.”
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