A new South Australian government payroll tax is set to further drive up the cost of healthcare, with everyday patients to pay the price.

The state government is intent on imposing the payroll tax on general practices from July 2024.

It will place even more financial pressure on General Practitioners and the clinics that support them and their patients. 

Inflation has pushed the cost of living substantially higher over the last two years, placing enormous stress on both families and small businesses.

General practices already operate on slender margins.

They are struggling to manage both increasing costs and demand from their local communities.

They will likely have no choice but to either pass these extra costs onto patients or close their doors.

Both outcomes will put an extra burden on the South Australian healthcare system which is already at capacity.

Vulnerable patients who are unable to bear these higher costs will be forced to bypass GPs and join the hospital queues.

Most hospitals are already facing a shortage of beds and well documented ambulance ‘ramping’ issues.

What is the new payroll tax?

The South Australian government intends to act on a precedent set by the NSW Supreme Court’s Court of Appeal in 2022.

That ruling triggered a change to the interpretation of payroll tax which is a state-based tax.

It deemed that GPs were employees of medical clinics rather than contractors.

That is despite most GPs who work in Australia already meeting their tax obligations as independent contractors.

In essence, these GPs charge their patients directly for their services.

The clinics then take a fee for the room and administration costs.

They are not employees of their clinic.

Medical clinics already pay payroll tax on their employees which include receptionists, doctors in training and nurses.

But they have not previously had to pay payroll tax for the GPs.

What are the implications of the payroll tax?

If as expected the new payroll tax is imposed from July, the price of visiting a GP will rise.

Patients should be prepared for the increased cost, which will be unavoidable for medical clinics.

The small number of clinics who still offer bulk-billing will likely fall.

Some clinics will close as their business may no longer be viable, especially those with older GPs who may bring forward their retirements.

Medical students will shy away from general practice deterred by the financial model.

Patients who cannot afford the cost of a GP visit will seek treatment at already overrun public hospitals.

This will further exacerbate the unresolved problem of ramping at hospitals.

The higher cost of visiting a GP will have the greatest impact on lower-income families and Indigenous Australians who will find accessibility to healthcare even more challenging.

What can be done?

The Royal Australian College of General Practitioners (RACGP) has launched an online petition asking the government to stop its tax grab to keep GP visits more affordable for all Australians.

The RACGP has more than 46,000 members who either already work as a GP or are striving toward that goal.

They have been advocating fiercely to have this tax scrapped but need your help.

AHA Clinics have joined the fight because we wish to keep the cost of GP visits affordable for everyone in the community.

We strongly oppose the imposition of this payroll tax and encourage all of our patients to join the fight against it.

You can review and sign the RACGP petition here.

If you have any additional questions or comments, do not hesitate to email feedback@ahaclinics.com.au