Practice viability at risk as payroll tax pressure continues

Practice viability at risk as payroll tax pressure continues

06 May 2026

The concern comes after the Victorian Government announced its 2026–27 health budget, which includes $3.9 billion in new spending for hospitals and workforce needs. However, the RACGP says funding hospitals while increasing costs on general practice is creating an imbalance.

RACGP Victoria Chair Dr Anita Muñoz said the rising cost burden on clinics, especially payroll tax, is putting practice survival at risk.

She said while government spending is increasing in some areas, general practices are facing higher costs that are making it harder to employ staff and continue services.

Dr Muñoz said this is directly affecting patients, as struggling clinics may not be able to keep operating in their communities.

She also warned that when general practices become financially unviable, more patients end up in hospital emergency departments, which places further pressure on the health system.

Payroll tax has been a long-standing issue, with some practices previously facing large retrospective bills. The RACGP has argued that independent GPs should not be treated as employees for this tax.

Dr Muñoz said the college has worked to secure temporary relief in the past, but believes a permanent solution is needed.

She pointed to Queensland, where general practices were made exempt from payroll tax, and said Victoria should follow the same approach.

According to her, the money raised from payroll tax in general practice is small compared to total state revenue, but the impact on individual clinics can be significant.

She said some practices may be forced to pass costs on to patients or risk closing down.

Dr Muñoz also said the health system will remain under pressure until governments invest more fairly in general practice, which she described as the foundation of healthcare.

https://www1.racgp.org.au/

 
Source: newsGP (RACGP)

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