The GP tax that threatens to bankrupt your local practice

General practitioners – particularly Victorian ones – are up in arms about a proposed new tax they say could bankrupt them. Measures to avoid such an outcome could include a hike in GP fees, directly impacting patients.

The Royal Australian College of General Practitioners (RACGP) claims the Victorian government is instituting what is nothing more than a “tax grab”. Queensland GPs have faced a similar ruling, but that state’s government has agreed to discussions, the college says.

RACGP president Dr Nicole Higgins acknowledges the GP tax is not just a problem in Victoria. However, “the Victorian government is the only one that hasn’t come to the table with GPs to find a solution”, she says.

As a result, Victorian GPs have launched an unusual campaign asking patients to sign an online petition of protest. Instigated last week through, the petition is a call to “stop the tax grab and keep GP care affordable”.

What is the GP tax and why is it causing a problem now?

Remarkably, the standoff between doctors and governments has not been triggered by any legislative changes. Rather, a new interpretation of existing rules is at the heart of the matter.

These rules revolve around payroll tax, something to which practices have long been subject. General practices already pay payroll tax on their employees, including receptionists, GPs in training and nurses. However, it has never applied to GPs themselves because most doctors work under independent agreements. They are not technically employees.

Under the new interpretation of the GP tax rules, though, they will be.

Increased financial strain is not the worst aspect of the new interpretations. The killer blow for many practices, says the RACGP, is a plan to apply it retrospectively.

To highlight the potential damage to clinics, the RACGP cites the case of one practice in Melbourne’s eastern suburbs. The Burwood-based clinic has been served with a notice to provide 10 years’ worth of records for audit. The practice is part of a group that serves more than 200,000 patients across Victoria.

All eight practices are facing closure as a result of a potential retrospective tax, the RACGP says. This will leave “these patients without a GP” if applied across the entire group.

The alternative is to pass the costs on to patients. “Most clinics run on very thin margins and will need to pass on the costs to patients,” the RACGP’s petition says.

At a time where cost-of-living pressures are coming from many directions, such an increase could see patients shunning vital care.

Is there any good news?

While the upshot of the campaign against the tax remains to be seen, there is some good news – potentially for patients and GPs. A change introduced by the federal government could make it much easier for Australians to access free GP visits.

The change, effective from 1 November, provides a sharp increase in rebates to practices that bulk bill vulnerable patients. GPs who do so will receive triple the amount currently provided by the government.

This 200 per cent increase will vary, depending on location, however. In metropolitan areas, it will increase to $20.65 from $6.85 for a standard consultation. In very remote areas, it will rise to $39.65, up from $13.15.

Whether this increase will be enough to offset the strain caused by the new tax interpretation is debatable. That will depend on each clinic’s circumstances.

Do you think the tax sounds like a fair proposition? Would you sign the petition? Let us know via the comments section below.

Also read: Should you register with a GP? What is MyMedicare and how might it change your care?

Andrew Gigacz
Andrew Gigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


  1. Typical gouging by governments who are out of touch with the real world. This is just a blatant tax grab and to make any changes retrospective is completely immoral and opens the gates for lengthy and costly court challenges to any proposed changes. Time for a petition on this.

    • In this case the governments have not changed anything nor introduced any new tax. It sounds like beauracrats at work to me changing the interpretation of legislation. Governments need to sort this out.

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