Victorian payroll tax may double regional emergency department visits

February 26, 2024 BY

HotDoc founder and CEO Dr Ben Hurst. Photo: SUPPLIED

THE Victorian government’s new payroll tax on medical clinics could see emergency department visits surge, potentially affecting the state budget by a $1 billion a year.

A HotDoc survey found 4 per cent of respondents would choose hospital emergency departments over GPs to avoid extra fees, potentially leading to 2.2 million more visits annually.

HotDoc chief executive officer Dr Ben Hurst, criticised the timing of what he dubbed the “patient tax” amid rising living costs, stressing its impact on vulnerable families.

“The government has introduced a patient tax at a time when households are enduring sustained cost of living pressures, with many families already finding it difficult to pay for everyday essentials such as groceries, petrol and utilities.

“HotDoc is fearful many families, especially those that are socio-economically disadvantaged, will forego seeking care from their GP and load up the emergency departments at hospitals at a time when they are already over burdened and under staffed.”

In August 2023, the State Revenue Office of Victoria issued a ruling to clarify 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 government for the lack of support and contextual guidance around the ruling, which doctors claim is 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.

The Times News Group previously reported that nearly 250 GP clinics in Victoria were at risk of shutting down following the state government’s move to enforce payroll tax on independent GPs.

Earlier this month, federal Health Minister Mark Butler called on his Victorian counterparts to review the controversial tax.