The South Australian government has denied imposing payroll tax on general practices will exacerbate ambulance ramping despite a peak medical body saying vulnerable patients will be worse off and forced to use emergency departments when most clinics pass on the cost.

The Royal Australian College of GPs (RACGP) launched a campaign on Monday to urge the state government to stop enforcing payroll tax on doctors from July 1, saying the move would mark the end of bulk-billing for some clinics.

RACGP state chair Sian Goodson said a New South Wales tribunal ruling in 2022 sparked a change to the interpretation of payroll tax, deeming doctors as employees of GP clinics instead of contractors.

She said 95 per cent of clinics that responded to a HotDoc survey were planning to increase patient fees by an average of $12 per appointment, if forced to fork out more payroll tax.

“Practices simply can’t absorb this cost, so unfortunately that’s going to lead to increased fees and a patient tax on general practice,” Dr Goodson told ABC Radio Adelaide.

“Now, this is at a time of cost-of-living crisis. People can’t afford to pay any more to see their GP.”

Daniel Byrne says the costs will inevitably be passed onto patients.(Supplied: RACGP)

Chandlers Hill Surgery owner Daniel Byrne said he would be forced to pass on the cost to his patients, which he estimated would amount to $140,000 a year across two clinics.

He said vulnerable patients would lose out the most.

“The altruism in my heart has been ripped out by this payroll tax,” Dr Byrne said.

“I treated two patients with pneumonia in the last week, both of whom would end up in the hospital under this new system if they can’t afford to see me.

“That’s thousands and thousands of dollars for a hospital stay, whereas I’ve saved taxpayers that money by treating them in the community for a fraction of that cost.

“That $12 extra fee, that’s not coming to me, that’s going straight into a bank account run by [South Australian Premier Peter] Malinauskas and the Labor Party. I won’t be seeing a cent of it.”

Dr Byrne said GPs at his clinics were independent contractors running their own business.

“I’m just becoming a tax collector. It’s like a GST on health,” he said.

“You can’t put a payroll tax when there is no payroll — it’s absurd, it’s ludicrous.”

Jen Wang says increased consultation fees would create more financial stress for families. (ABC News)

Northern suburbs resident Jen Wang said she was concerned extra fees would put more financial pressure on South Australian families. 

“Going into the doctor is an essential need for most people and it’s going to be quite difficult for a lot of families if they already struggle in their daily life,” she said. 

“The most expensive fee I pay for the GP is more than $100.

“Everything we pay is extremely higher than what it used to be.”

Treasurer says payroll tax is nothing new

But South Australian Treasurer Stephen Mullighan told ABC Radio Adelaide it was not a new tax, nor a re-interpretation, but rather a “longstanding tax obligation” under the Payroll Tax Act for 15 years.

He said the NSW case reinforced “that payroll tax is liable on the wages of GPs in larger clinics”.

“What’s come to light in recent months is there had been a large number of medical practices which had been structured in a way based on the advice they’d had from their lawyers and accountants to try and avoid paying payroll tax obligations,” Mr Mullighan said.

Mr Mullighan said the government had been working with RACGP by not imposing payroll tax retrospectively, as well as giving practices time to comply, including an amnesty this financial year.

“It’s difficult to justify giving a state tax holiday when federal government renumeration is not enough,” he said.

“I could understand the argument if they said, ‘We shouldn’t have to pay income tax because the federal government is not paying us enough.'”

Stephen Mullighan says general practices will have to start forking out payroll tax for doctors from July 1.(ABC News: Lincoln Rothall)

Mr Mullighan said he was “not expecting” ramping to get worse when the amnesty ended on June 30.

Dr Goodson said she and her colleagues wanted to meet with Mr Malinauskas to discuss pausing the government’s plan for another year.

“This is going to decimate bulk-billing in South Australia, make it even harder for vulnerable patients to see a GP,” Dr Goodson said.

“And where are those patients going to go if they can’t see their GP? They are going to end up in our emergency departments.”

Australian Medical Association SA (AMA SA) has also been calling on the state government to reverse the plan since it was announced in June last year.

“Nine months later, GPs are now receiving notices that they must begin paying this additional tax and are confirming that the cost will force them to shut their practices and even stop practising altogether,” AMA SA president and GP John Williams said.

The future of GPs

Dr Goodson said general practices had already been operating on tight margins for a long time.

“GPs aren’t employees, they work independently. They don’t get sick pay, they don’t get annual leave, they don’t get study leave,” she said.

“They’re not providing services to the practice, the practice is providing services to them. They pay a service fee for those services … [and] therefore they shouldn’t be paying payroll tax.”

Melanie Smith, the RACGP SA deputy chair and a GP in southern Adelaide, said the payroll tax had put “a lot of uncertainty” in her plans to open a practice.

“I’m certainly not prepared to commit to become a practice owner in a climate where now colleagues of mine, who are already practice owners, have said they are probably going to retire early or sell up their practices if they can with the advent of payroll tax because they just won’t be able to continue,” Dr Smith said.

Melanie Smith says the payroll tax will impact where doctors choose to open general practices.(ABC News: Shari Hams)

Since the NSW tribunal ruling found payments to doctors in medical centres were taxable wages for payroll tax purposes, different state revenue offices have determined whether GPs are employees working in clinics.

AMA SA said a review by Revenue SA found contracts between clinics and their GPs were “taxable relevant contracts”.

Dr Smith said the implementation of payroll tax had long-term effects on the workforce and where doctors would choose to train or work.

“Certainly with the way the new interpretation is being applied in different states, the opportunities to run a viable general practice business are much more attractive to run in some other jurisdictions, so that’s definitely going to factor in our ability to attract new candidates to the training program at this stage,” Dr Smith said.

“And that would have flow-on effects to our longer-term future workforce as our GP workforce ages and retires.”

Opposition health spokesperson Ashton Hurn said the tax would force patients into “already stretched” emergency departments, adding pressure to the health system.

“It’s a lose-lose for patients and practices alike,” she said.

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