Payroll tax discussed in Estimates Hearing
AMA Queensland has continued to advocate against the unfair imposition of payroll tax on general practices, including with the Queensland Government and Opposition.
Our efforts are having a direct impact, with the Shadow Treasurer asking at least 14 questions about the Government’s approach to payroll tax during the Estimates Hearing on Monday 1 August 2023. Questions related to:
- the number of medical practices and impacted doctors
- total number of amnesty EOIs already submitted
- reports of practices withdrawing services or closing
- modelling of impact on state hospitals; bulk-billing; ambulance call-outs; RACF; provision
- basis for $100M Budget estimate for GP payroll tax revenue
- reasons for ineligibility of new practices; 5-year liability period; and requirement to pay liability before lodging appeals
- consultation with, impacts and estimated payroll tax revenue for non-GP practices including radiology, dentistry and physiotherapy
The transcript can be accessed on the Parliament’s website and extracts of key questions asked and responses given are set out below.
AMA Queensland again urges practices to seek appropriate professional advice in time for the EOI deadline of 29 September 2023. The QRO has indicated practices that do not register may be the subject of compliance activities following the closure of the EOI process.
Payroll Tax Key Questions and Responses: Estimates Hearing 1 August 2023
Q1. Consultation with dentists, physios and radiologists on Public Ruling
Mr JANETZKI: Acting Under Treasurer, I note that the acting revenue commissioner is in the room today. I am turning now to a private ruling released by the Queensland Revenue Office on 22 December. It is a ruling that upends business structures that care for the most vulnerable in our community, the sick. Can the Acting Under Treasurer outline what consultation the Queensland Revenue Office had with the medical profession and not just general practitioners but also dentists, physiotherapist and radiologists?
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Ms Kelly: The contractor provisions in the Payroll Tax Act have been in place in their current form since 2008 and the Queensland Revenue Office has not changed how it administers those provisions in relation to businesses that run medical practices. On 3 February the government announced an amnesty in relation to payments made to contracted general practitioners that will expire on 30 June 2025. The amnesty recognises the need to support medical practices to come into compliance with the payroll law with the least disruption possible and notes the significant pending and ongoing reforms to Medicare. Taxpayers eligible for the amnesty will not be required to pay tax in respect of payments made to contracted GPs up until 30 June 2025 and for the previous five years. Medical practices have been able to register interest in the amnesty since 10th February and to date we have 93 medical practices register.
The QRO has and continues to engage with industry representatives regarding the amnesty to work through relevant issues and to provide greater clarity to medical practices and advisers on this issue. For example, the QRO has published web content on the administrative arrangement. I know they have met with peak body representatives to provide further information regarding the ruling and to clarify the payroll tax treatment that, again, I confirm has been in place since 2008.
Q2. $100M Budget estimate for GP payroll tax revenue
Mr JANETZKI: Acting Under Treasurer, the budget revealed that $100 million per annum may have been recovered had payroll tax on practice payments to contracted GPs been collected. Can you describe for us the basis for Treasury reaching that figure of $100 million per annum?
Ms Kelly: The estimate is based on assumptions including the number of contracted GPs in Queensland, the average taxable wages of those practitioners and the proportion of contracted GPs’ taxable wages on which employers have been paying payroll tax. The assumptions for this were informed by available information and data including the Australian government Department of Health and Aged Care data on general practice workforce providing primary care services in Australia, information collected by the QRO through audits of medical centres paying taxable wages and surveys of the sector published by the RACGP.
Q3. Number of medical practices and impacted doctors
Mr JANETZKI: Acting Under Treasurer, can you furnish us with the number of medical practices and impacted doctors? Are those numbers available now?
Ms Kelly: Honourable member, I would refer back to my previous advice that it was informing policy of the executive government at the time and would be informing CBRC and cabinet contributions so I would be limited in what I could provide to the group.
Q4. Payroll tax revenue estimate for non-GP practices including dentists, physios, radiology and other health services
Mr JANETZKI: The amnesty that has been announced by the Treasurer relates to general practitioners. That is a $100 million per annum amount that will now be forgone over the next three years, and I might come back to that amount shortly. Can you detail for us the amount of payroll tax that is now going to be collected from other practitioners caught up in the private ruling issued by the Queensland Revenue Office—medical practices including dental clinics, physiotherapy practices, radiology centres and other relevant health service providers? How much revenue is expected to be collected because of the change in that tax ruling from those particular medical practices?
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What are we collecting in the next number of years from all those other practices?
Ms Kelly: I do not have that information at hand, honourable member. I would seek to provide advice on what we can provide by the end of the hearing.
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Mr DICK: The member for Toowoomba South asked the Acting Under Treasurer about modelling done on the effect of a purported change to payroll tax and what effect that would have on physiotherapists, dentists, radiographers and other health service providers. In a separate question, the member for Toowoomba South asked about modelling on the impact of the purported change on aged-care residents and their access to general practitioners. As the Acting Under Treasurer has made clear on a number of occasions during the hearings, there has been no change to payroll tax arrangements in Queensland since 2008—I made that point as well—so there is no change that could be modelled for those cohorts or any cohort.
Q5. Modelling of payroll tax revenue for physios, dental, radiology and other health services
Mr JANETZKI: Thank you, Chair. If Treasury can forecast, though, how much will be collected from general practitioners, surely there would have been some analysis undertaken with respect to all of these other medical practices—physios, dental, radiology?
Mr DICK: Why? It is only GPs who have asked for it.
Mr JANETZKI: My question is to the Acting Under Treasurer. Surely there was analysis undertaken so as to determine how much extra would be collected because if it is $100 million per annum for general practitioners there must be an awful lot of increase and additional payroll tax to be collected by the state.
CHAIR: I know this question said ‘surely’ it must have happened but it is still effectively the same question. I want to say that witnesses do not, on repetition of the same question, need to change their answer but I will put the question again.
Ms Kelly: The amnesty just applies to GPs. It is not intended at this point in time, as far as I am aware, to apply to other medical practitioners. I am not aware of modelling that has been done on specific areas, whether it be physios et cetera. What we generally do is we will have broad line items around revenue. We will not necessarily go down to specific industries or cohorts in terms of that analysis. We would only look at that if we were looking to change a policy position and were requested to do so by the government.
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Mr DICK: The member for Toowoomba South asked the Acting Under Treasurer about modelling done on the effect of a purported change to payroll tax and what effect that would have on physiotherapists, dentists, radiographers and other health service providers. In a separate question, the member for Toowoomba South asked about modelling on the impact of the purported change on aged-care residents and their access to general practitioners. As the Acting Under Treasurer has made clear on a number of occasions during the hearings, there has been no change to payroll tax arrangements in Queensland since 2008—I made that point as well—so there is no change that could be modelled for those cohorts or any cohort.
Q6. Modelling of impact on state hospitals if private hospitals close EDs or ICUs
Mr JANETZKI: Acting Under Treasurer, this change to payroll tax interpretation applies to doctor groups that provide intensive care services and emergency services to private hospitals. What modelling has Treasury undertaken to understand the impact on state hospitals of private hospitals potentially closing their intensive care or emergency department units?
Mr DICK: Point of order. It is a completely hypothetical question—
Mr JANETZKI: It is a straight yes or no, Treasurer.
Mr DICK: No-one has ever suggested, other than the member for Toowoomba South, that there is any impact.
CHAIR: I apologise, but we were having a discussion with the deputy chair.
Mr DICK: The premise of the question is false.
CHAIR: Could ask for your indulgence, member for Toowoomba South, and ask you to repeat the question? I apologise for that.
Mr JANETZKI: I will move on to the next question because I have foreseen the answer to the last one.
Q7. Modelling of impact on bulk-billing
Mr JANETZKI: I will move on to my next question. Acting Under Treasurer, what modelling has Treasury undertaken to ascertain the impact of this new tax on bulk-billing rates in Queensland?
Ms Kelly: I will go back to the statement I made at the beginning which is that the contractor provisions with regard to payroll tax have been in place in their current form since 2008. The Queensland Revenue Office has not changed how it administers those provisions in relation to businesses that run medical practices.
Q8. Modelling of impact on ambulance call-outs
Mr JANETZKI: Acting Under Treasurer, what modelling has Treasury undertaken with Queensland Health to ascertain the impact of this new tax on increased ambulance call-outs at a time of record ramping?
Ms Kelly: I reiterate that it is not a new tax, but we have not done modelling on that.
Q9. Modelling of impact on RACF
Mr JANETZKI: My next question is to the Acting Under Treasurer. I return to the payroll tax issue for general practitioners. Has Treasury modelled how the changes will affect the access of residential aged-care facility residents to their visiting GPs given a large proportion are not currently charged a gap?
Ms Kelly: As I said, our modelling on the impacts of the amnesty was informed by a range of data that was available to us at the time. The assumptions were informed by, as I said, the department of aged care, general practice providing primary care services in Australia, information collected by the QRO on audits of medical centres, and surveys by peak bodies in the sector.
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Mr DICK: The member for Toowoomba South asked the Acting Under Treasurer about modelling done on the effect of a purported change to payroll tax and what effect that would have on physiotherapists, dentists, radiographers and other health service providers. In a separate question, the member for Toowoomba South asked about modelling on the impact of the purported change on aged-care residents and their access to general practitioners. As the Acting Under Treasurer has made clear on a number of occasions during the hearings, there has been no change to payroll tax arrangements in Queensland since 2008—I made that point as well—so there is no change that could be modelled for those cohorts or any cohort.
Q10. Requirement to pay liability before appeal to QCAT or Supreme Court
Mr JANETZKI: Can the Acting Under Treasurer provide the rationale for the Queensland Revenue Office requiring practices issued with payroll tax liability notices to pay the full amount of the liability assessment before they can appeal to QCAT or the Supreme Court? I note the acting revenue commissioner is here in the room.
Ms Kelly: I will take that on advice and come back to the committee before the end of the hearing. It is a very detailed question.
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Mr DICK: The member for Toowoomba South asked the Acting Under Treasurer about payroll tax liability notices and appeals to QCAT or the Supreme Court. I am advised that this is the longstanding position which has been in place since early 2002—that is, 21½ years ago. Where a taxpayer is dissatisfied with a decision on their objection, they may appeal to the Supreme Court or apply to the Queensland Civil and Administrative Tribunal for a review of the decision. It is a legislative requirement that they must have paid the whole of the amount of the tax and late payment interest payable under the assessment to which the decision relates before they can appeal or seek a review. That is what the law provides.
Q11. Number of EOIs submitted
Mr JANETZKI: Acting Under Treasurer, to be eligible for an amnesty doctors need to complete an expression of interest form and that finishes on about 29 September. To date, how many expressions of interest have been lodged?
Mrs McMAHON: She has already answered this—93.
CHAIR: This did seem to be included in an earlier answer.
Mr JANETZKI: No.
CHAIR: When questions are repetitive, witnesses do not need to continue to expand on the answer they have already given. If they have helpful information, they are free to give it. If you wish to repeat the same answer, you will not be under pressure from the committee to further expand.
Ms Kelly: As at 30 June, 93 medical practices have registered for the amnesty.
Mr JANETZKI: Is the Acting Under Treasurer expecting more or many more by the end of September?
Ms Kelly: I would be giving an opinion there.
CHAIR: It is cause for speculation.
Q12. Practices withdrawing services or closing doors
Mr JANETZKI: I have another question to the Acting Under Treasurer. Let me flip it the other way then. Has Treasury been advised of any practices or doctors who will be withdrawing their services or closing their doors because of this change to the interpretation of payroll tax in Queensland?
Ms Kelly: I am not aware of that advice to the agency. If the commissioner has been advised, I am sure by the end of the hearing we can come back to you on that.
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Mr DICK: The member for Toowoomba South asked the Acting Under Treasurer about GPs supposedly withdrawing services because of payroll tax. I am advised by the Queensland Revenue Office that the answer to that question is no.
Q13. New practices not eligible for amnesty
Mr JANETZKI: To the Acting Under Treasurer, Mark recently opened a new medical centre in Robina. Despite being granted the amnesty until 2025 on his existing centre, he is being charged on his new one. Can you explain why one is caught by the new tax and the other is not?
Ms Kelly: If the member would like to provide us with the details, I am happy for Queensland Treasury to look into those specific circumstances.
Q14. 5-year liability period
Mr JANETZKI: Acting Under Treasurer, initially the Queensland Revenue Office was intending to backdate bills five years. Can the Acting Under Treasurer provide background as to why this would be the case when under the Tax Administration Act there is discretion up to five years? Why would there be a set time frame of backdating for five years given the millions of dollars that could potentially be at stake here for medical practices and other allied medical health professionals across the state?
Ms Kelly: As I referred to earlier, taxpayers eligible for the amnesty will not be required to pay payroll tax in respect of payments made to contracted GPs until 30 June 2025 and for the previous five years. That was the decision of government taken at the time.
