In a decision that has “dramatic” implications for rural health communities around Victoria, the ATO has announced that the charitable status of community health centres around the state will be revoked.

Operation Wickenby has made great press for the ATO, with shots of high rollers being sent to court for tax evasion. But going after community health services isn’t such a good look.

Last week the ATO informed the Victorian Healthcare Association that the charitable status of community health centres around the state will be revoked as of the 31st of March. Of the 39 independent community health centres across Victoria, staff at 37 of the centres will be substantially affected.

The ATO advised the VHA that they’d formed the view that the Community Health Centres are governmental organisations and are therefore not entitled to endorsement as Deductible Gift Recipients (DGR), Public Benevolent Institutions (PBIs), Tax Concession Charities (TCCs) and Health Promotion Charities (HPCs).

Trevor Carr, CEO of VHA, told Crikey that the implications for community health centres are “dramatic.”

The decision will primarily affect community health staff salary packaging, which means community health centres’ “capacity to recruit and retain the staff they have now will be significantly impaired,” says Carr. 

The decision will particularly effect “GPS, dentists, physios and a range of other staff — at the end where the most competition for health resources is.”

So what does this mean for rural and regional health? “This will have a significant community impact,” says Carr.

“In setting those sorts of practices up through community health services, the more financially disadvantaged can access them, but if these people are no longer willing to work there, the more disadvantaged section of the community will no longer have access to that care,” Carr told Crikey.

According to Carr, community health services rely on salary packaging to produce competitive offers to staff.

The ATO’s decision will also mean that community services will be ineligible for a range of grants and federal funding streams which could affect services such as family counselling services.

Victoria is the only state in Australia that has a branch of community health centres that are independently managed. Of the 100 community health services in Victoria, 39 community health services are independently managed and the rest are units or divisions of larger health services such as Metropolitan Health Services and Rural Health Services or hospitals.

According to the Victorian government community health website, “community health services aim to provide a universal service as well as targeted services to particularly disadvantaged populations, such as people with the poorest health and greatest economic and social needs.”

“Our key strength is that we have a more integrated health service delivery model, access to a range of federal funding… and a significant presence of GPs and dentists in community services,” says Carr.

The VHA and several representatives from community health services are meeting with DHS and the Victorian Health Minister Daniel Andrews today.

Crikey contacted the ATO for a comment on their decision – they advised us that under law the Tax Office is unable to discuss taxpayer affairs with anyone except the taxpayer or their agent, but explanation of the criteria an organisation must meet to qualify as a PBI can be found on the Tax Office website.