Victorian GP clinics face closure due to payroll tax

A SURVEY from HotDoc has revealed nearly 250 GP clinics in Victoria are at risk of shutting down following the state government’s move to enforce payroll tax on independent GPs.

The survey found 16 percent of clinics were worried about their future, contemplating closure.

To counter the financial pressure, 95 percent were considering raising patient fees.

In August 2023, the State Revenue Office of Victoria provided a ruling aimed at clarifying payroll tax obligations for medical centre businesses.

This ruling challenges the traditional practice model where doctors are classified as independent contractors, which previously exempted them from payroll tax.

Doctors have criticised the Victorian government for the lack of support and contextual guidance around the ruling, which doctors claim are both complex and ambiguous in parts.

Effective both retrospectively and prospectively, clinics are being forced to re-evaluate their public pricing strategies to accommodate the added tax burden and address potential liabilities for the past five years.

Point Lonsdale Medical Group practice manager Dr Georgina Jackson said it was a difficult time for clinics.

“It’s quite a stressful situation for general practice at the moment.

“Most other states have clear guidance around business models and how they are supposed to set them up, but Victoria is still not very clear as to how we can cover ourselves with payroll tax.”

Ms Jackson also noted the conflict between federal incentives for bulk billing and affordable healthcare and the new tax ruling.

“The federal government’s incentives are meant to encourage bulk billing and make healthcare more affordable,” she said.

“However, with the looming payroll tax, we may not be able to afford bulk billing moving forward.”

HotDoc founder and chief executive officer Dr Ben Hurst said the payroll tax would have a detrimental effect on healthcare accessibility.

“We have surveyed hundreds of GPs and patients about the impact of this tax and it’s clear that it’s going to force clinics to close.”

“That means higher fees and longer wait times to see your GP.

“Many parts of the state already have a long wait time to see a GP.

“We have a responsibility to the three million Victorians who use our platform to fight this tax.”