Payroll tax for health practices is still a live policy issue, and positions may shift. Until any change is legislated, practices should plan on the rules as they stand today.
Over the past two years, state governments have answered the payroll tax fight with relief for general practice.
Queensland legislated a permanent exemption for GPs in February 2025. Victoria introduced a partial exemption from 1 July 2025, measured against a practice’s bulk-billed and fully funded GP work. New South Wales, South Australia and the ACT have their own versions, mostly tied to bulk billing.
That relief was hard won. It also only goes so far.
In Victoria, privately billed GP work stays taxable. Non-GP specialists, dentists and allied health practices sit largely outside every scheme. Queensland’s amnesty for contracted dentists closed on 30 June 2025, and normal obligations have applied since 1 July 2025.
I advise doctors and dentists as an accountant, and I also co-own a dental clinic, so I deal with these agreements as an owner as well as an adviser.
The underlying rules haven’t moved
Every state except Western Australia has “relevant contracts” provisions that can treat payments to contractors as wages. Having an ABN and sending an invoice doesn’t settle the question.
In Optical Superstore (Victoria, 2019) and Thomas and Naaz (NSW, 2021, upheld by the Court of Appeal in 2023), the courts found that money flowing through a practice to its practitioners could be taxable wages. The state rulings on medical centres that followed also cover dental practices.
The relief takes some GP work out of that net, and everything else stays in it. For any practice that isn’t fully inside an exemption, the old question is still there.
What revenue offices look at
When an arrangement is reviewed, the same factors tend to come up.
- Payment flow. Does the practice collect the patient fee and pay the practitioner their share, or does the practitioner bill in their own right?
- Facilities. Are rooms, equipment and staff charged under a priced service and facilities agreement, or simply provided?
- Control. Who sets hours, leave and clinical protocols?
- Patients. Do records, recalls and marketing treat patients as belonging to the practice or to the practitioner?
- Time. Does the practitioner work there for more than 90 days in the financial year?
No single factor decides a case. Revenue offices read the agreement and then look at how the arrangement runs day-to-day, and they give the second as much weight as the first.
An agreement describing an independent practitioner renting a room won’t help much if the practice sets the roster, owns the recall list and banks every fee.
What owners can check
Start by pulling out every contractor agreement and noting when each was last reviewed. Plenty were signed years ago and have stayed the same while the practice changed around them.
Then compare each agreement with what actually happens. Look at whose name is on the patient invoice and whose account the fee lands in first. If the service fee is a percentage, check it still lines up with the services the practice really provides.
If you run a Victorian GP practice that relies on the exemption, keep an eye on your bulk-billed and fully funded share through the year. The exemption is proportionate, so privately billed work still counts. It’s easier to track that monthly than to find out at the annual reconciliation.
Related
If you operate across state lines, each state has its own threshold and its own definition of exempt work. The tax-free threshold is currently $1 million in Victoria, $1.2 million in NSW and $1.3 million in Queensland.
A single standard agreement used across states may not fit any of them well.
Fixing it is two jobs
Where an arrangement needs work, the contract belongs with a lawyer.
The other half sits with whoever runs the practice and keeps the books, because the way fees are collected and service fees are invoiced has to match what the contract says. A well-drafted agreement doesn’t help much if the bank statements tell a different story.
Payroll tax for health practices is still a live policy issue, and positions may shift. Until any change is legislated, practices should plan on the rules as they stand today.
The practices I worry about least are the ones that have read their agreements recently and can show the arrangement working the way the paper says it does. That makes for a much easier conversation with a revenue office, and with a buyer when the time comes to sell.
Inam Asiful is a senior consultant at WeGrow Accountants (wegrow.au), a CPA practice with offices in Melbourne and Brisbane, and co-owns a dental clinic. This article is general information only and isn’t tax or legal advice.
