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Tax relief for rural doctors

The AMA has welcomed the Government's updated advice that revised rural incentive payments to rural doctors will not be subject to 46.5% PAYE withholding tax.

04 Jul 2010

The AMA has welcomed the Government’s updated advice that revised rural incentive payments to rural doctors will not be subject to 46.5% PAYE withholding tax.

Rural doctors were recently told that they would be hit with the high tax rate when the Department of Health and Ageing advised that it had consolidated the Rural Retention Program and the Registrars Rural Incentives Payment Scheme as well as a new relocation grants scheme into a single incentives scheme called the General Practice Rural Incentives Program (GPRIP).

AMA President Dr Andrew Pesce said that the new arrangements promised to make more rural practices eligible for funding and that many practices would get increased funding, but an initial Australian Tax Office (ATO) ruling said that the incentives would be taxed at 46.5% at the point of payment.

“This was an unexpected high tax for doctors that had the potential to create cash flow problems and erode the positive impact of the new incentives,” Dr Pesce said.

“The upfront tax rate would have negated the potential benefits of the new funding.

“The AMA raised the problem with the Government and a review was undertaken.

“We have since been advised by the office of the Minister for Rural and Regional Health, Warren Snowdon, that the matter has now been resolved, with the ATO revising its original decision.

“Payments under GPRIP will not be subject to an upfront 46.5% withholding tax, but payments under the scheme will need to be declared as income as per normal arrangements.

“We thank the Minister for hearing our concerns and acting quickly,” Dr Pesce said.


Published: 04 Jul 2010