National practice owners survey reveals major impact on viability of practices and access to Medicare if payroll tax rolled out

Fear over the potential impact of recent payroll tax rulings on GP clinics is high in New South Wales and Victoria, with 40% of practice owners and a quarter of other GPs describing themselves as “extremely concerned,” Healthed’s most recent national survey of over 300 practice owners and 733 non-owners has revealed. The survey opened Tuesday night.

So far, five out of 300 practice owners have received a bill for unpaid payroll taxes, with others waiting to see if they will be targeted.

On Thursday, the NSW Government announced a 12-month pause on payroll tax audits for GPs and their practices, buying some time to find a long-term solution, but Victoria has yet to announce similar plans.

The temporary reprieve in NSW comes after extensive media coverage of massive back-dated payroll tax bills as high as $800,000 are leaving some practices in Victoria and New South Wales on the brink of closure, with fear reverberating across both states and beyond. One northern NSW practice was given 21 days to pay a $450,000 retrospective tax bill. 

When practice owners in our survey were presented with the hypothetical notion of a $250,000 retrospective payroll tax bill, 29% said they will close or sell.

In NSW the payroll tax is 5.45% when wages total more than $1.2 million, while in Victoria it’s 4.85% when wages exceed $700,000.

When the practice owners were asked how they will deal with payroll tax liability into the future, a significant proportion said they will pass on the costs to patients, or reduce or eliminate bulk billing. Just over a quarter of practice owners said they would not be affected by a payroll tax (27%). Remarkably, 10% said they will close or sell their clinic.

There are many others are still assessing the ramifications and seeking out professional advice so do not yet have a clear idea of the impact.

Below is a basic breakdown of the interim results:

• 21% will raise their consultation fees
• 18% will reduce or eliminate bulk-billing
• 10% plan to close or sell the practice
• 3% of practice owners said they would absorb the increase of future payroll tax

More to come next week!

Credits

Survey conception and design – Dr Ramesh Manocha, Yasmin Clarke, Lynnette Hoffman

Survey analysis and visualisation – Yasmin Clarke