Doctors are warning that appointments will become more expensive as some general medical practices are set to be hit with an extra tax.
Practices will have to start paying payroll tax if they spend more than $2 million a year on wages.
The ACT government has announced general medical practices will be exempt from paying the tax for two years if they bulk bill 65 per cent of all patients. The government says it will only affect a small portion of clinics.
But doctors are not happy about this, saying it's too difficult to bulk bill in the nation's capital. So is a doctor's visit about to become more expensive?
Why are general practices being hit with this tax now?
General medical practices did not pay payroll tax as the doctors who worked there were considered to be contractors and their wages were not included as part of the overall business.
But this changed after the NSW Supreme Court ruled general practitioners were subject to payroll tax.
All states and territories have an agreement where they co-ordinate the application of payroll tax so this meant the ruling applied across the country.
Not all jurisdictions have taken the same approach to the tax. NSW, Queensland and South Australia all agreed to an amnesty period of up to two years where GPs will be exempt from paying the tax.
The Royal Australian College of General Practitioners has said it is in discussions with the Victorian, Tasmanian and Northern Territory governments about the tax.
The Western Australian government told the college it would not apply the payroll tax.
Doctors have warned consultations could increase by up to $20 to cover the tax.
What is the ACT government's response to the ruling?
Chief Minister Andrew Barr has followed other states in offering an amnesty from the tax but there's a catch.
Canberra general practices that don't want to pay the tax for two years will have to bulk bill 65 per cent of all patients.
"By offering this pathway, the ACT government aims to support businesses in achieving tax compliance while keeping the community's needs at the forefront of decision-making, including increasing healthcare accessibility and reducing cost of living," Mr Barr said.
Although the court ruling says general practices are eligible for payroll tax governments are able to make a decision about how to apply this. The ACT's opposition will introduce a bill on Tuesday afternoon to completely exempt general practitioners from paying payroll tax.
In his announcement, Mr Barr said general medical practices could take advantage of the Commonwealth's new incentives for bulk billing.
The federal government tripled bulk billing incentives for general practice consultations for children under 16 and concessions card holders in this year's budget.
But doctors have said this will not increase bulk billing rates in the capital.
"In the ACT we do not have a viable GP service unless we are getting income for those services," Australian Medical Association ACT president Walter Abhayaratna said.
"Those services are not having profits that are large profits, they're keeping their doors open, just barely.
"Linking this to bulk billing rates for us is an insult to general practices and people need to understand that it's not viable for us to go to 65 per cent bulk billing rates in the ACT."
Royal Australian College of General Practitioners president Nicole Higgins said the government did not understand how bulk billing worked.
"It's designed to ensure that the most vulnerable people in the community can get the care they need - the federal government's tripling of bulk billing incentives is only for people on healthcare cards, pensioners and children," she said.
The only element of the ACT government's announcement from doctors is that the territory government will not seek backpay of payroll tax acquired before June 30 2023. Earlier in the year, some practices said the ACT Revenue Office had been calling to seek backpay.
How many clinics in Canberra bulk bill?
The nation's capital has one of the lowest bulk billing rates in Australia.
A healthcare comparison online directory, Cleanbill, found only 5.5 per cent of general practices in the ACT bulk bill all patients. This is far lower than the national average of 42.7 per cent and Sydney's 67.3 per cent.
When bulk billing rates are measured on a patient level, 56 per cent of all patients in the ACT are bulk billed. The national rate is 75 per cent.
The average out-of-pocket cost to see a doctor in Canberra is $49, Cleanbill's analysis found.
One of the main reasons Canberra's bulk billing rate is so low is due to a shortage of general practitioners. There are about 100 doctors for every 100,000 people in the ACT. In other metropolitan cities it is about 120.
How many general practices would pay payroll tax?
The government has said fewer than 10 clinics in Canberra would be required to pay payroll tax but that is based on the fact 10 healthcare centres are already registered for payroll tax.
Under the ACT's payroll tax legislation, businesses that pay more than $2 million on wages have to pay the tax. The tax is paid at a rate of 6.85 per cent but it is only applicable to the dollars earned above $2 million. The first $2 million in wages is not taxed.
This would mean a practice would pay $6850 for every $100,000 of payroll above $2 million. A clinic with a payroll of $3 million would pay $68,500 a year in tax.
So this would apply to the largest general medical practices in the territory and it is a point that has been consistently made by the government.
"The extent of the payroll tax liability for general practice here in the ACT, because of that $2 million threshold, is very low," Mr Barr told the Assembly in May.
But the opposition has said this would affect thousands of patients as these are the larger practices.
Garema Place Surgery owner and general practitioner Felicity Donaghy questioned Mr Barr's suggestion that only 10 general medical practices would be required to pay payroll tax.
"There are 10 practices currently paying it but a majority of practices will be paying it if GP payments are included in the figures that make us liable for payroll tax," she said.
When asked for clarification on this, an ACT government spokeswoman said there were 10 general practices currently registered for payroll tax.
Why do general practices think they should be exempt from payroll tax?
General medical practices, with a payroll over $2 million, were already required to pay payroll tax on workers such as nurses, reception staff and some allied health staff.
But prior to the court's ruling, the wages for individual doctors were not eligible for payroll tax.
Doctors have argued individual GPs tenant out space in practices and are therefore contractors.
"GPs who work in my practice are not employees, they set their own appointments, they look after their own patients, they bill how they want to bill, they are not my employees," Dr Donaghy said.
