AMA VICDOC Winter 2025 - Magazine - Page 84
T H E P O L I CY D ES K
PROSPECTIVE
LEGISLATIVE REFORM
AMA Victoria continued to advocate
for longer term certainty for medical
practices beyond the immediate threat
of retrospective tax bills. This next phase
of advocacy culminated in November
2024, when the Victorian Parliament
passed the State Taxation Further
Amendment Act 2024. The legislation
introduced a prospective payroll tax
exemption, effective from 1 July 2025,
for GP payments relating to “fullyfunded” consultations (including bulk
billed Medicare, DVA, TAC, and WorkSafe
services). From that date, payroll tax
liability may apply — depending on a
practice’s structure and arrangements —
only to income derived from privately
billed services.
While AMA Victoria had advocated for a
broader exemption that included private
billing, the final outcome was more limited.
Combined with the earlier ex gratia relief
for retrospective liabilities, the reform
provided partial reprieve but fell short
of delivering full clarity or certainty for
practices that rely on private billing to
remain viable.
Alongside the RACGP and other peak
bodies, we wrote to the new Treasurer,
Jaclyn Symes, in February 2025 to confirm
the Government’s commitments and
press for further reform, particularly for
practices reliant on private billing. In May,
the Treasurer reaffirmed both the exgratia relief and the exemption for fully
funded services. However, privately billed
consultations remain (potentially) subject
to payroll tax under the current legislative
and administrative framework, and no
broader reform has been signalled to date.
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AMA VI C TO RIA
CURRENT SITUATION AND
PRACTICE RESPONSES
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The SRO continues to apply a strict
interpretation of payroll tax law to
contractor arrangements in medical
practices. Under Revenue Ruling PTA041 payments to independent contractor
doctors (for non-fully funded services)
attract payroll tax where the arrangement
is deemed a “relevant contract.” While the
ruling does not prescribe a definitive list of
business features that give rise to liability,
risk may be heightened in integrated
practice models — particularly those
involving shared administration, reception
services, billing, or patient booking systems.
In response, many practices that
engage contractor GPs and rely on private
billing are attempting to restructure
their arrangements to reduce exposure.
These efforts often involve separating
administrative functions, revising payment
flows, or adjusting contract terms under
legal and accounting guidance. However,
such changes can be costly, complex, and
may ultimately offer limited protection.
Crucially, even comprehensive
restructuring may not shield practices
from payroll tax liability. While many
practices are exploring new operating
models in an effort to reduce their risk,
the SRO has repeatedly stated that
most general practice arrangements –
regardless of how they are reconfigured
— will remain within scope of Victoria’s
payroll tax regime. AMA Victoria notes
this position but, as we are not legal or
accounting experts, does not express
a view on its accuracy. We are aware,
however, that many independent legal,
accounting, and taxation professionals
