Victorian Coalition makes election pledge to scrap payroll tax for GP practices

Payroll tax for GP practices in Victoria will be scrapped if the Coalition wins the state’s upcoming election.

The imposition of the tax on practices became a national concern three years ago after the NSW Supreme Court found that patient fees paid to contracted practitioners via the practice could be considered taxable wages.

Various attempts have been made to reduce the impact of the tax, with Queensland becoming the first state to explicitly carve out an exemption for GPs in legislation.

However, that has not happened in Victoria, which has the lowest tax-free threshold of all states — at $1 million, along with Western Austrlia — with most businesses paying a base rate of 4.85% once they exceed that threshold.

The Victorian Opposition leader Jess Wilson confirmed to Nine newspapers earlier this month that an exemption would be part of the Coalition’s plans for tax reform, with the state election set for November.

Dr Aadhil Aziz, deputy co-chair of RACGP Victoria, said the pledge was a “relief” and encouraged the current Labor Government to match it.

“Most general practices are small businesses, and the margins are extremely thin — just 2-3%,” he said.

“If we want Victorians to see a GP and access affordable healthcare, general practice has to be financially sustainable.”