Budget 2017 – Key Issues for doctors

May 10, 2017

Medicare

The freeze on indexation on Medicare rebates is to be lifted for GP bulk billing incentives (children and concessions) only from 1 July 2017. Indexation will be reintroduced for standard GP and specialist consultations from 1 July 2018; and specialist procedures and allied health services from 1 July 2019. While funding of $1 billion has been announced for the phased lifting of the indexation freeze, the estimate for 2017-18 is less than $10 million. Further, indexation is set to be introduced from 1 July 2020 for certain diagnostic imaging items on the MBS. Funding continues to be allocated for after-hours care.

Bulk-billing for pathology and diagnostic imaging services is to be maintained at a cost of $936.7 million.

MBS compliance arrangements and debt recovery powers are to be strengthened, with an estimated saving of over $100 million, and the MBS Review will continue, with additional funding of $44.2 million provided over three years.

From 1 July 2019, the Medicare levy will increase by 0.5% to 2.5%.This increase is intended to fund the Commonwealth’s share of the National Disability Insurance Scheme. A Medicare Guarantee Fund will be established to cover costs of healthcare provided by the MBS and PBS. Funding sources will include the increased Medicare Levy after allocation for the NDIS and from a portion of personal income tax.

Prescribing

Projected savings of $1.8 million from reduced costs of medicines were announced. The key impact on doctors, which was canvassed before the Budget announcement, was a plan to encourage doctors to prescribe generic medications. Further work was also announced to implement a legal form for electronic prescribing. The government will retain the existing PBS co-payment and safety net.

eHealth

Funding of $9.1 million over 4 years will be allocated for rural and regional Australians to access psychologists via telehealth. $374.2 million over two years was announced for the national rollout of the opt-out model for My Health Record.

Primary Health Care

The implementation of Health Care Homes has been delayed from the mooted 1 July start, with a trial of 20 practices to commence from 1 October 2017 and the remaining 180 to commence on 1 December 2017.

Spending of $99.3 billion over the next five years for has been announced for aged care services including an extension of funding for Commonwealth Home Support Programme.

Mental health

Over $160 million is to be invested in mental health services, which includes funding for a range of programs including telehealth access to psychological services for those living in rural and remote Australia, support for veterans and their families, $15 million for priority mental health research, $11.1 million to be targeted to areas with high suicide rates and $80 million for community mental health services to be delivered via primary health networks over four years.

Superannuation

From 1 July 2018, people aged 65 or over will be able to make non-concessional contributions to super of up to $300,000 from the proceeds of selling their home.This may assist doctors downsizing for retirement and importantly the contributions will be exempt under existing rules including contributions limits, age test, work test and the $1.6 million balance test for making non-concessional contributions. It applies to the sale of a principal residence owned for ten years or more. Importantly it is available to both members of a couple for the same home, so a total of $600,000 could be contributed to super.

From 1 July 2017, limited recourse borrowing arrangements (LRBA) will be included in an individual's total superannuation balance and transfer cap. This will primarily affect self-managed superannuation funds (SMSFs) who have these borrowing facilities for property held within the fund but could also apply to other assets of the fund which have been LRBA financed, for example commercial property (such as practice premises) and residential property held within their SMSF.

From 1 July 2018, non-arm’s length income provisions will apply to superannuation.This will ensure that expenses that normally apply in commercial transactions are included when considering whether a transaction is on a commercial basis. This will limit SMSFs from using related-party transactions to increase superannuation savings.

Financial services

No changes were announced in relation to life insurance specifically. A new complaints body is to be established known as the Australian Financial Complaints Authority (AFCA).This is intended to provide a more streamlined dispute resolution service for consumers of financial services and will replace the existing Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CID) and the Superannuation Complaints Tribunal (SCT).The change is to come into effect on 1 July 2018.

Taxation

From 1 July 2019, the Medicare levy will increase by 0.5% to 2.5%.This increase is intended to fund the Commonwealth’s share of the National Disability Insurance Scheme. The increase to the Medicare levy will affect all income earners, with an additional impost of 0.5% on taxable income above the low-income thresholds.

From 1 July 2018 the Child Care Rebate will not be available to families with incomes of $350,000 or greater.

From 1 July 2017, deductions for travel expenses related to residential rental properties will no longer be allowed. Also from 1 July 2017, plant and equipment depreciation deductions will be limited to actual outlays incurred by investors. Investors who purchase plant and equipment for their residential property after 9 May 2017 will be able to claim a deduction over the life of the asset. Subsequent owners of a property however will be unable to claim deductions for these assets. This will reduce the tax effectiveness of rental property investment and the benefit of negative gearing strategies.

Small businesses (with an annual turnover of less than $10 million) will be able to immediately deduct assets less than $20,000 purchased by 30 June 2018.This may be of benefit to many medical practices.

Hospitals

An increase of $2.8 billion over 4 years was also announced.

Other measures

Various other measures that may affect doctors or medical practices included the announcement of a Skilling Australians Fund levy to be paid by businesses employing foreign workers on categories of some skilled visa.

Student contributions to HELP will increase on 1 July 2018 by 1.82% p.a. for 4 years (total increase 7.5%). This will impact those currently studying medicine and pre-med courses who participate in HELP. Also from 1 July 2018 Doctors with HELP debt may be impacted with a new minimum repayment threshold of $42,000 (previously $55,874) and the maximum repayment rate increases to 10% for incomes above $119,882 (previously 8% above $103,765).

Learn more

More Budget information
Federal Budget 2016
Federal Budget 2015

The Budget measures described above are subject to change as the enabling legislation passes through parliament. For full details you should consult the detailed legislation. If you have any questions about the Budget or how it may impact you or your practice, you should seek advice from your financial advisor or other professional advisor. This information is not comprehensive and is provided to Avant members as general information only. It does not take into account your individual circumstances or financial position and does not constitute legal, financial or other professional advice. Avant is not responsible to you for any loss suffered in connection with the use of this information, and information is only current at the date initially published. © Avant Mutual Group Limited 2017.

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