Dáil Éireann Debate, Wednesday - 17 January 2024
323. Deputy Mick Barry asked the Minister for Finance to provide an update on consultations with representative organisations about the taxation treatment of GMS income for GP practices; and if he will make a statement on the matter. [56764/23]
View answer368. Deputy Marian Harkin asked the Minister for Finance if, following the recent amendment brought forward to the Finance (No. 2) Act 2023 to rectify the issues caused by changes to tax laws for the treatment of GP income, and where the changes still impact a number of GPs who are in, or hoping to be taken over by management companies to facilitate the business side of general practice, if he can advise if this matter is being addressed; and if he will make a statement on the matter. [1739/24]
View answerI propose to take Questions Nos. 323 and 368 together.
My Department and Revenue have, for some time, been aware of issues arising from contractual arrangements within the General Practitioner (GP) community whereby some GPs treat income under their General Medical Services (GMS) contract as income of a GP practice in which they are a partner or an employee, rather than income of that individual GP.
Revenue issued a guidance note to tax practitioners through the Tax Administration Liaison Committee in July 2023 clarifying the correct tax treatment of GMS income under tax legislation. That guidance confirmed there would be a transitional period for compliance with existing tax law, to 31 December 2023. Supplementary guidance on this matter was published on 10 November 2023 on the Revenue website.
In accordance with Section 58 of the Health Act 1970, a GMS contract is between the HSE and an individual GP. This means that, as a matter of law, income under a GMS contract belongs to the GP who entered into the contract with the HSE. The position does not change because a GP treats their GMS income as income of a medical practice. Following on from that fact, the legislation at the time did not provide for a legal basis for Revenue to treat income arising under a GMS contract entered into between an individual GP and the HSE as if it were income arising under a contract between the HSE and the medical practice in which the GP is a partner or an employee.
A GP who holds a GMS contract is a chargeable person as regards income arising under that contract and should report such income under the self-assessment system. The GP is also the specified person for the purposes of Professional Services Withholding Tax (PSWT), which means they are entitled to claim a credit for PSWT deducted by the HSE on GMS payments.
Although the guidance issued by Revenue was widely reported as a proposed tax change, it did not, in fact, introduce a change to the tax treatment of GPs. Instead, it simply clarified the existing legal and administrative position.
However in an effort to find a solution to this issue, discussions took place between officials in the Department of Finance, Revenue, the HSE and the Department of Health.
As part of Finance (No. 2) Act 2023, I introduced a new section 1008A into Part 43 of the Taxes Consolidation Act 1997. The section provides that, where individual GPs enter into contracts with the HSE to provide certain medical professional services and provide those services in the conduct of a partnership profession with other individual GPs, the income from those professional services can be treated for income tax purposes, to be that of the partnership. PSWT credits may be claimed by the partnership under such instances. Where this occurs, the partner who has the contract with the HSE, and not the precedent partner of the medical partnership, should provide the tax number of the medical partnership concerned to the HSE for the purposes of PSWT.
This provision will ensure that, where elected, all amounts paid to, or for the benefit of, a GP by the HSE in respect of GMS and ancillary public services can be treated as income of the partnership. A joint election to treat the GMS and ancillary public services as income of the partnership must be made by the GP contracted by the HSE to provide the relevant medical services and the medical partnership concerned. Revenue guidance has been updated to take account of this, with further information available at: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-01-15.pdf.
The provision will only apply to income tax for individual doctors who operate in partnerships with other individual doctors and will not apply to, or change, the tax situation for doctors who are employees of a partnership or other arrangement, including corporates. It is also limited only to income arising from General Medical Services (GMS) and certain ancillary public income.
It would not be appropriate for tax legislation to seek to accommodate all contracts and business practices in the sector. The core issue concerns the contractual arrangements involving GPs, which is a matter under the remit of the Minister for Health. As such, the Minister for Health has confirmed that the Strategic Review of General Practice, which is now underway, with input from key stakeholders, will examine the broad range of issues affecting general practice, including the relevant HSE contracts and propose measures necessary to modernise them.
