Member update: payroll tax

Stay updated about our ongoing payroll tax campaign.

Member update: payroll tax

For many of our GP members, 2022 ended with uncertainty around backdated payroll tax bills going back five years. This followed the 2021 Thomas and Naaz ruling in the New South Wales Civil and Administrative Tribunal, which found GPs were employees of practices.

This NSW ruling had unexpected knock-on effects in other states, with state governments deciding to audit GPs who were compliant with tax laws as they had been interpreted for more than a decade. This was patently unfair. The business model had not changed, the letter of the law had not changed – only how it was being interpreted. 

This was just a sneaky tax grab by state governments on Medicare rebates paid to patients by the federal government.

Payroll tax is one of the biggest issues voiced by our members, increasingly so as more members became affected. Some members faced closure due to unforeseen bills ranging from tens of thousands for newer practices to millions for more established clinics. AMA Queensland has been seeking a meeting with the Treasurer since November 2021. We had many meetings and correspondence with the Queensland Revenue Office (QRO) to seek clarity for doctors around the state. AMA Queensland has been advocating for an exemption from payroll tax for medical practices since the start of our advocacy campaign in 2021. We have also held meetings with stakeholders, the Queensland Health Minister and other politicians as well as an extensive media campaign.

Finally, on 22 December, the QRO confirmed in writing it had changed the interpretation of the law, providing us with a new public ruling. In a significant win for affected members, the QRO decided to limit audit activities onwards of July 1 2021, the year of the NSW tribunal ruling.

We are seeking confirmation that retrospective bills already issued will be cancelled immediately and any retrospective payments already made are immediately reimbursed to practices.

The QRO’s recent decision came as a direct result of AMA Queensland advocacy. It is the difference between some practices closing altogether and being able to remain open.

Our push for an exemption continues and we have been very actively campaigning for this already in 2023. The public ruling itself makes it clear GPs will be liable for payroll tax in the future. We are working with our corporate partners to find the best advice for practices to prepare you for the impact of this new tax. It will be very important for businesses to build in financial capacity for this new liability. This will not stop us advocating for an exemption, but general practice will need to mitigate this risk through expert advice and business readiness.

It is inevitable that practices will have to pass this new tax on to patients. It is not so much a payroll tax as a patient tax, and it will disproportionately affect the elderly, the chronically ill and people who can least afford it – the often vulnerable frequent flyers of the health system.

It will also lead to more pressure on our stretched emergency departments as GP care becomes less accessible.

We are continuing to advocate for a change to this law interpretation and continuing to push a payroll tax exemption for general practice.

Dr Maria Boulton
AMA Queensland President