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Tax cuts compensate for freeze: Govt

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Any hit to doctor incomes from the Medicare rebate freeze will be offset by cuts in the company tax rate, according to the Federal Government.

Resisting calls to match Labor’s commitment to reinstatement Medicare rebate indexation from 1 January next year, Coalition MPs have instead argued that doctors and medical practices will benefit from company tax cuts detailed in the Budget.

“One thing that I’m pleased about is that the many medical practitioners who are out there, on the first of July, they will get a company tax cut, those who are operating in those structures, but also those who are in unincorporated structures,” Treasurer Scott Morrison said.

The Treasurer’s claim was echoed by Health Minister Sussan Ley, who said that, “many GPs are also small business owners and employers, and the Coalition’s 10-year enterprise tax plan will benefit them directly”.

The changes include a 1 percentage point cut in the tax rate for companies with an annual turnover of less than $10 million down to 27.5 per cent, and expanded tax discounts worth 8 per cent of personal taxable income, capped at $1000, for unincorporated businesses with a turnover of less than $5 million.

But AMA President Professor Brian Owler told the Sydney Morning Herald the Treasurer’s “surprising” comments missed the point, and suggested a lack of understanding of how most doctors were remunerated.

“The issue about the Medicare systems is the payments. It’s not actually about the doctors’ incomes,” Professor Owler said. “And certainly, the cost pressures that doctors are experiencing in their practices have nothing to do with tax cuts. It has to do with the rising costs of staff, leases, equipment and all of the things that go along with that.”

Adrian Rollins