General practice is vital for keeping Victorians out of hospital. After listening to advocacy from the sector, the State Government has announced changes that deliver certainty and clarity to Victorian general practices. While AMA Victoria acknowledges that there will be costs associated with this transition for practices that are not currently paying payroll tax on GP contractor wages, it is positive news for general practices, general practitioners and Victorians.

In December 2020, AMA Victoria first wrote to the Victorian Government regarding payroll tax on general practices. At the time, we urged the Government to “act on this quickly and reform payroll tax law in this state to prevent this from happening. If not, we could see medical practices... either abandoning bulk billing or being forced to close due to mistargeted laws.”

While the Government didn’t act on this quickly, we are pleased that today, reforms to payroll tax law have been announced that will help ensure the continued viability of general practice in Victoria.

Indeed, this was a long time coming. AMA Victoria has been consistently advocating on this issue for several years, with countless representations to the government, opposition, crossbench, and other stakeholders, as well as media advocacy.

It's also important to acknowledge that we didn’t get everything we asked for.

In our 2023/24 Advocacy Priorities document, we requested that the government:

• Provide a clear statement that no retrospectivity will be applied to medical payments to medical practitioners related to payroll tax assessments on medical practices.
• Exempt Victorian medical practices from payroll tax obligations on medical payments to medical practitioners, distinguishing the circumstances from the reasoning in Optical Superstore and similar cases.

We have achieved the former for general practice. The Government will provide a retrospective exemption from payroll tax for payments to contractor GPs covering the period through to 30 June 2025. This will be available for any general practice business that has not already received advice and begun paying payroll tax on payments to their contractor GPs on this basis.

Regarding a prospective exemption, from 1 July 2025 the Government will provide an exemption from payroll tax for payments to contractor GPs from encounters involving Medicare or DVA payments where there is no copayment by the patient.

The status of split billed consultations remains the subject of continued discussion. Today’s announcement will be enshrined in legislation (and we can confirm AMA Victoria will be involved in the drafting process), and these matters are being actively considered. Members can rest assured that AMA Victoria will continue advocating for the best interests of Victorian patients and our members who treat them.

We appreciate that today’s announcement will be profoundly frustrating for general practices that have heretofore been paying payroll tax (an obligation that will continue until at least June 2025, depending on the nature of the practice). We have communicated to the Government that this continuing obligation is unfair and that payroll tax refunds for practices paying payroll tax on Medicare earnings to date should be considered, and we will continue advocating this position.

We also understand that today’s announcement only covers general practice, and non-GP specialists in private practice, depending on how their practices are structured, will have continued uncertainty. Please rest assured that your interests are being represented by AMA Victoria at the highest levels of the Victorian Government.

But today’s announcement remains unequivocally good news, and it is one we fought long and hard for our members to secure. This announcement delivers the necessary certainty and clarity to GPs and avoids retrospective payroll tax bills forcing practices to close.

Noting the approach taken by the Victorian SRO to date in comparison to other jurisdictions, which has rendered it virtually impossible for Victorian practices to restructure to avoid payroll tax liability, we advocated for a political solution. Today, one was received.

We will keep members updated on the latest developments in the weeks ahead and will provide further details in conjunction with our corporate partners, the Bongiorno Group and Kennedys, when they become available.
 

AMA Victoria’s history of payroll tax advocacy:

• Victorian general practice advocacy for 2024-25: invitation for member feedback
• General Practice update- Meeting with Victorian Treasurer- a positive first step
• Communications and Advocacy update: 8 February 2024
• Communications and Advocacy update: 1 February 2024
• General Practice update
• Communications and advocacy update: 2 November 2023
• Have your say on payroll tax
• Communications and advocacy update: 4 May 2023
• Communications and advocacy update: 13 April 2023
• Communications and advocacy update: 2 February 2023
• Communications and advocacy update: 24 November 2022
• Communications and advocacy update: 7 April 2022
• Communications and advocacy update: 24 March 2022
• The implications of payroll tax decisions on medical practices