The payroll tax debate and its impact on General Practices continue. Since 2023, several Australian state revenue offices released payroll tax rulings that aimed to clarify their treatment of payroll tax for medical centres.
The rulings were originally identical across all four states (QLD, NSW, VIC & SA), in line with the Payroll Tax Harmonisation Agreement. However, each state then implemented different amnesties and subsequent amendments. These rulings establish the circumstances under which each state would deem a contract to be ‘relevant’ and provide examples showcasing some exemptions and how they might apply. Queensland has modified its ruling twice since its first release, so it now differs from other states and later provided a full exemption to GPs. After much lobbying by various industry groups, Victoria, New South Wales & South Australia have introduced legislation providing exemptions for bulk billing services which differ for each state.
As each state has different thresholds, rates of tax, amnesties and audit activity, we have provided a state-by-state (or territory) analysis of current positions below.
Australian Capital Territory
The ACT Government have provided an amnesty for GP practices that bulk bill 65% of their patients for two years to 30 June 2025. Applications closed on 29th February 2024 to be part of the amnesty. The ACT Revenue Office has provided examples of when they believe relevant contracts will apply.
New South Wales (NSW)
The NSW Revenue Office released a Payroll Tax Ruling on 11 August 2023 in line with the other states. After consultation with peak bodies, a 12-month pause on audits was announced on 4 September 2023 to 3 September 2024, to allow practices to work through issues. During the pause interest or penalty tax will not be applied to unpaid payroll tax. Under the legislation an exclusion is available for practices where at least 70% of GP services are bulk billed. The exclusion applies on the amount that is considered relevant contract amounts paid to GPs.
Northern Territory
No details have been provided from the Northern Territory.
Queensland
Queensland has provided a full exemption for wages paid by a GP practice to GPs via an amendment to the Payroll Tax Act. This only applies for GP practices and all other medical & health practices should follow the Ruling.
The Queensland position is very clear in that payments made by patients directly to individual practitioners will not be considered liable for payroll tax. The latest Ruling expands on comments made about third-party arrangements, explaining that patient fees cannot be made to practitioners via entities, including trusts or companies. It also excludes from the exemption arrangements where funds may be held by major banks or institutions before being paid to the practitioner.
South Australia
General practices in South Australia were able to register for a payroll tax amnesty that covered the period from 1 July 2018 to 30 June 2024. The majority of practices that applied for the amnesty have been advised that the arrangements they have with their general practitioners are ‘relevant contracts’ for the purposes of payroll tax. These practices were expected to report and pay payroll tax from 1 July 2024. From 1 July 2024 an exemption is now available for payments relating to bulk-billed consultations.
The additional expense for payroll tax will significantly affect most South Australian general practices with many expected to increase patient fees to cover the cost.
Tasmania
There have been no concessions or amnesty announcements from Tasmania. Both sides of Government confirmed during the most recent election campaign that if elected payroll tax would not apply to contracted GPs.
While the state has not released a ruling, they are part of the Harmonisation Agreement, which means any legislation if implemented is likely to be similar to other states across Australia. The Tasmanian payroll tax legislation includes a ‘relevant contract’ definition and similar exemptions, so we expected at some point that legislation across all states would align.
Victoria
On 11 August 2023, State Revenue Office Victoria released the ruling PTA-041 Relevant contracts – medical centres. After significant lobbying by industry groups in May 2024, the Government announced that all GP practices would receive an exemption from prior assessments on payments to contractor GPs and this would continue up until 30 June 2025. The Treasurer also confirmed they would utilise their ex-gratia powers to help practices affected by retrospective tax bills for payroll tax.
The Victorian government announced an exemption from payroll tax payments to contractor and employee GPs from 1 July 2025 for GP services that are fully funded (bulk billed). The legislation around this exemption was introduced in October 2024 with further details on practicalities to be provided by State Revenue Office Victoria prior to 30 June 2025 (still pending).
With Victoria having the lowest tax-free threshold for payroll tax ($900,000 from 1 July 2024 and increasing to $1,000,000 from 1 July 2025) of all the states, it means that the risk is a lot higher for Victorian practices being subject to tax.
Western Australia (WA)
Payroll tax legislation in WA is different from other States, particularly around the treatment of contractors.
Under WA payroll tax legislation, the totality of the relationship between the contractor and the party they are providing services needs to be examined. This means it is more of a ‘common law’ test, which has been established in the courts.
WA GP practices hence need to have service agreements in place with their doctors, which accurately reflect the way they interact, to ensure that the relationship between doctor and practice is a genuine contractor relationship and not subject to payroll tax. There are of course several other factors that need to be considered, including work hours, rosters and leave; collection of patient fees, invoicing; advertising and financial records.
The WA Government has said the $1 million tax-free threshold means that a majority of GPs are not subject to payroll tax, and it does not intend to change provisions.
| State | Remuneration Threshold | Payroll tax rate |
| ACT | $2,000,000 | 6.85% |
| NSW | $1,200,000 | 5.45% |
| NT | $1,500,000 | 5.5% |
| QLD | $1,300,000 | 4.75% |
| SA | $1,500,000 | Variable rate: 0%–4.95% for wages between $1.5M–$1.7M; 4.95% above $1.7M |
| TAS | $1,250,000 | 4% for wages between $1.25M–$2M; 6.1% above $2M |
| VIC | $900,000 increasing to $1,000,000 on 1 July 2025 | 4.85% (regional 1.2125%) |
| WA | $1,000,000 | 5.5% |
To ensure that your exposure is minimised and your contracts are reflective of what’s necessary, please contact your local William Buck health advisor.
