New tax grab will hurt patients

Transcript: AMA Queensland President Dr Maria Boulton and Dr Aaron Cooper, Doorstop, Queensland Parliament, Wednesday 9 November 2022.

Subjects: Tax on GP patients

Explore more: AMA Queensland payroll tax campaign

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MARIA BOULTON:   We're here today to discuss this new tax grab that's going to affect patients. The state government is now approaching practices to pay patient tax, which they haven't had to do before. As a consequence, we fear that many general practices will be forced to shut their doors, which is exactly what we don't need at this time when we know that our health system is overstretched, when we know that GPs are underfunded, when we know that Medicare rebates haven't kept up. We know that other states are considering a payroll tax exemption on general practice to ensure that general practice services continue to be available for patients in their community. We're calling for the state government to follow suit.

JOURNALIST:   Why is the government now asking for you to pay patient tax when you haven't for over a decade?

DR MARIA BOULTON:   General practices have always had employees or staff members, for example, receptionists, nurses, and we're compliant with those taxes. However, there seems to have been a change in the recent few months following a tribunal decision in New South Wales where now GPs have been asked to pay payroll tax, even though GPs are not employees. This has never happened in the past, this is new and we're concerned that this is a tax grab that in the end will cost patients access to general practice. We have to remember that for every dollar that you remove from general practice, it will cost $10 down the track.

JOURNALIST:   Can you explain why you're calling it a tax on patients?

DR MARIA BOULTON:   Because general practices, as we know, have been subsidising a lot lately. We've subsidised the COVID vaccine rollout. We've subsidised COVID care as well for the community, and we know that Medicare rebates have not kept up with the cost of providing services for decades, so there is no way that general practices can continue to carry these costs.

This is just one more cost that general practices just can't afford. And if you're a general practice owner and the decision is to close your doors or to pass on that tax to the patient, it's a really terrible decision to make, and that is why it is a patient tax.

JOURNALIST:   The Treasurer's office says that as a result of that court ruling, they're not changing any payroll tax for GPs. I guess, what kind of information do you have that is leading you to these concerns?

DR MARIA BOULTON:   Well, our GP members have actually approached us and continue to approach us because they've been approached by the State Revenue Office. In practical terms, what's happening is very different. We've noticed a change. We've also noticed many tax accountants and lawyers have suddenly started doing all these seminars on payroll tax, because of the fact that they've been approached by concerned GPs who are concerned that they have been approached by the State Revenue Office.

JOURNALIST:   The Revenue Office says that the treatment of Queensland medical practices in relation to payroll tax has not changed since 2008, that this legislation hasn't changed. Is that the case though?

DR MARIA BOULTON:   No, what we're seeing is we're seeing more of our AMA Queensland practice owners members continue to be approached, they continue to be asked to pay back payroll tax in the vicinity of hundreds of thousands and going back five years. We've also been advised by the State Revenue Office that tax law is very complex and ever-changing. And when we sought clarity as to how to move forward, whether they could give us something in black and white, as in details as to what makes you compliant or not, they said all they could give us was some general dot points because tax law is complex and ever-changing.

JOURNALIST:   I guess that's a key question though. Is this an illegal tax that they are asking for? Or is it actually [inaudible].

DR MARIA BOULTON:   Well, I guess why the increase in activity? We've noticed a definite increase in activity, and that's not just in Queensland but in other states. That's on the back of a New South Wales tribunal decision, and certainly we know that our members are very concerned.

Also, it's a bad tax if it's going to affect patients’ access to see their doctor. It's a terrible, terrible tax. We know too that hospitals are payroll tax-exempt for a reason, because healthcare needs to be accessible and it needs to be affordable for patients.

JOURNALIST:   Introduce yourself, just tell us who you are.

DR AARON CHAMBERS:   Sure. My name's Aaron Chambers and I'm a GP owner in Brisbane on the southside.

JOURNALIST:   Okay. Can you tell us your story and how this is affecting you?

DR AARON CHAMBERS:   We've been in practice for about five years now and opened up what's really a community-led general practice, it's all about looking after the health of our community.

We were approached by the Queensland Revenue Office earlier this year saying we were undergoing audit. We engaged some real industry experts, national experts in payroll tax and the legal and accounting matters that surround that, and were advised on their analysis that we're actually totally compliant with payroll tax law, we are absolutely fine to pay the payroll tax for our employees, our nurses, our administrative staff.

But in this case, the Queensland Revenue Office gave us only two weeks to respond to their orders, which we did very, very thoroughly, and the response we got back was delivered only two days after the case in New South Wales was handed down. We were handed a big bill that really is retrospective in nature and totally goes in the face of my personal knowledge of other practices who've gone through this audit process 15, 12 years ago.

We take our tax obligations very seriously, but this is genuinely a change in the way the law is being applied. This is not the same as everything that’s happened, and if you talk to any lawyer or accountant or GP owner in the industry, they know that this is totally different to the historical precedents that have been applied previously. We respect governments, they need to raise revenue. We pay taxes in order to make our state better, and I believe in that. I believe in growing healthier communities around our practice. But a government can't come in and retrospectively apply a law that didn't apply five or seven years ago, especially in a situation where general practice has handled the pandemic.

We've delivered the vaccines at a quarter of the cost that the Queensland government delivered their vaccines, and general practice has a margin that is tiny. We are not making a huge amount of money here, we are just trying to remain viable, and in order to continue to deliver those services, we cannot afford an extra tax being laid on every single cent that a patient pays when they come through the door, otherwise, practices will go broke, and I've spoken to a practice owner who will go broke if this retrospective law is applied.

JOURNALIST:   So is it the fact these tax laws have existed, but perhaps they haven't been implemented, and now there seems to be a crackdown and that's why they implemented -

DR AARON CHAMBERS:   Across this country, there's been a crackdown on sham contracting, which I support. I've looked at some of the cases interstate where effectively it's a sham contract arrangement and that's unreasonable, it creates an unlevel playing field.

What we're talking about is doctors who are independently practising doctors. Medicare has built up over many years, where a doctor's relationship with Medicare is through their patient directly. The practice actually has no role in that relationship between Medicare and the patient. Doctors are independent professionals who are highly skilled at what they do, and the practice is there to provide them a service. In effect, the doctors are customers of a practice.

JOURNALIST:   After you were audited, how much was your bill?

DR AARON CHAMBERS:   Our bill wiped out two or three years profit, retrospectively, from our practice.

JOURNALIST:   So hundreds of thousands?

DR AARON CHAMBERS:   In our case, it wasn't as big as some other cases because we're a relatively new business.

But going forward, it'll mean essentially we have to stop bulk billing our patients in order to respond to this. My concern is that there are practices that are much, much longer established than ours, who their retrospective bill is going to be way bigger and it will cause them to collapse. I've spoken directly to a doctor who's exactly in that circumstance, who runs a fantastic clinician-led community-focused practice. They are not millionaires, they make a small living to get by, but this will cause a huge bill that's going to basically wipe them out. That's a real tragedy because that's going to be repeated around the state. I think AMA Queensland modelling says it's around 80 per cent of practices will be affected by this. And if there's going to be a change in the way that they apply the law, well then we need notice to industry, we need engagement.

We've tried to engage at the highest level, but it really hasn't been forthcoming. I think the really important stat to think about is Queensland Health on one hand are trying to offload work to general practice because it's in such chaos after the pandemic, and general practice can handle that. In fact, general practice, $1 invested in general practice saves the state health system $10. So pulling $1 out of general practice and putting it into state revenue coffers is actually going to cost them 10 times as much downstream.

As a GP, I'm sure Maria's similar, we want to be the solution to this disaster of Queensland Health, but if they're going to go around auditing every general practice in the state and putting extra tax on patients, patients won't be able to seek the care they need, they won't get cheap and free access to healthcare through bulk billing, and they'll go to the state health system and it'll make this problem even worse.

So what we'd really like is for the Health Minister to speak with the Treasurer and the Premier to say, "Look, we need a fix to the state health system.” We know international experience says that primary care is the solution.

In Australia, we spend about 7.4 per cent on general practice, internationally they're moving to spending 10 per cent. This is just another example of the federal-state divide in healthcare in Australia. And in order to fix that, we need the state government to say, "Okay, we understand the role of general practice, we're not going to be part of the problem, we're going to be part of the solution, and ensure that the funding and the sustainability of general practice is there, so that we can continue to care for our communities.”

JOURNALIST   Is this the end of bulk billing in Queensland, do you think?

DR AARON CHAMBERS:   I've done the modelling in our practice and looked at some industry benchmarks. It is impossible to provide high quality care and bulk bill if this comes through. The two are mutually incompatible.

To give you an example, the margin in general practices and for those who understand business, 3 to 4 per cent is the AMA Queensland figure of the margin of profit in general practice. Now, any business running at that, it is wafer thin. The tax is 5 per cent on that, and it's on revenue, it's not on profit, this isn't a small tax on profit. This is a tax on every single cent that a patient spends when they go to their GP. If the margins are 3 per cent and you add a 5 per cent tax, that means every single practice across the state will be losing money.

JOURNALIST:    I guess back to Rachel's question. The legislation has existed but it's being applied differently?

DR AARON CHAMBERS:   It's being applied very differently-

JOURNALIST:   I guess in the past, perhaps the Revenue Office maybe turned a blind eye towards-

DR AARON CHAMBERS:   I don't think they've turned a blind eye. I personally know a general practice owner who 12, 15 years ago went through an audit, they were found to have some problems and they had to pay a liability and they accepted that liability because their setup was incorrect. They then went through the process with the Queensland Revenue Office and were found to be absolutely compliant with their payroll tax obligations. Our setup is nearly identical to that practice, and yet we've just received the bill, with no engagement.

We've tried to talk to the Queensland Revenue Office directly, to understand where they're coming from, to explain the situation. Our accounting advisor repeatedly asked to meet with the Queensland Revenue Office, they were denied the opportunity to speak with them.

So I just don't buy it that this is not a new tax on general practice, it absolutely is. The law, you're right, has existed for a long time, but law in this area, it's an extremely complex area. For example, it's very clear in federal law that GPs are not employees, full stop, and this has been federal precedent that's shown that, and yet the state has a different definition that they're trying to broaden to capture multiple different types of arrangements that essentially haven't been captured in the past.

JOURNALIST:   Is it in the sense that a change in interpretation of tax scrap from the government?

DR AARON CHAMBERS:   Correct, yes. Essentially, I think it's trying to plug the hole in revenue gap. I think it's seeing what's happening interstate and then they're overgeneralising the application of that precedent.

It's moved from a precedent in Victoria, which was way outside what's reasonable and doesn't even come close to represent what happens in general practice. Then there was a case in New South Wales that does relatively closely represent general practice, but that was a practice where they were treating these GPs as employees. They were telling them when they could work, how many hours, they were playing on a minimum rate of pay, they were effectively employees of the practice.

That does not apply to your routine family-led general practice, where each clinician is independently looking after their patients. They're highly trained individuals, they decide when they work, they decide what sort of care to provide. It's a real shame if we lose that system.

JOURNALIST:   And so you feel there'll be an exodus of practices or people-

DR AARON CHAMBERS:   General practice is already under such high pressure. There are practices who are already on the brink through COVID. There's been a lack of indexation of Medicare rebates at a federal level for a decade, that means general practice is completely underfunded and on wafer-thin margins, and general practice is already collapsing. If the state government adds this tax on patients, either patients are going to all have to pay out of pocket and bulk billing will cease to exist, or practices will collapse. That's the only two ways that we can go.

DR MARIA BOULTON:   It's already happening. We've seen the collapse of the Tristar Medical Group, who also had a lot of clinics in regional and rural areas.

That's the thing about Queensland, we’re particularly vulnerable because we know that in some towns and remote areas, you only have your GP, and if your GP closes its doors, what's going to happen to the healthcare of those people in those towns?