Payroll tax update – current landscape

Background

Following the conclusion of the Federal election, the State governments have largely reached a settled position in relation to the applicability of payroll tax for medical practitioners and any relevant exemptions which may apply in each jurisdiction.

This article will set out the current exemptions applicable in each state and territory.

a) Queensland: effective from 1 December 2024, the Queensland Government introduced a blanket exemption for any wages paid or payable to general practitioners (whether employed or contracted), and those payments are not subject to payroll tax. This exemption excludes all payments made to a general practitioner from payroll tax liability and applies irrespective of whether the general practitioner bulk bills or privately bills patients.

For any arrangements with health practitioners who are not general practitioners, practices should also be aware of the Queensland Revenue Office's rulings in relation to payments made to interposing entities (including where that entity may be controlled by a practitioner). If you would like further information regarding these specific rulings, please contact a member of our team to discuss this further.

b) New South Wales: effective from 4 September 2024, the New South Wales Government introduced:

Where there are multiple practices operated by the same entity, the rebate is determined based on the services provided fromeach location. In order to qualify for the rebate, the practice will need to concede that its arrangements with practitioners are relevant contracts and that it is liable for payroll tax in relation to those payments made to practitioners.

c) ACT: effective from 1 July 2025, the ACT Government introduced an exemption for wages paid or payable to general practitioners (whether employed or contracted) attributable to services which have been bulk billed, provided under the Veteran's Entitlements Act 1986 (Cth) or under the Workers Compensation Act 1951 (ACT). This position replaced the previous exemption which was in effect prior to 30 June 2025, which required practices to bulk bill at least 65% all services rendered from that practice in order to qualify for an exemption.

It is important to note that the exemption only applies to those payments which are specifically attributable to the relevant excluded services set out above. Any payments arising from any other services (such as privately billed patients) will not fall under the exemption and will remain subject to payroll tax if made under a relevant contract.

d) Victoria: effective from 1 July 2025, the Victorian Government introduced an exemption for wages paid or payable to general practitioners (whether employed or contracted) where services are fully funded by the Government. The exemption is applied as a proportional percentage reduction (as distinct from the ACT's position), meaning the percentage of a general practitioner's wages that are exempt will be equivalent and proportional to the percentage of their services that are fully funded by the Government (by reference to the total income attributable to those fully funded services).

e) South Australia: Effective from 1 July 2024, the South Australian Government introduced an exemption for wages paid or payable to general practitioners (whether employed or contracted) attributable to services which have been bulk billed, provided under the Veteran's Entitlements Act 1986 (Cth) or under the Return to Work Act 2013 (SA).

Whilst this exemption operates similarly to the position in Victoria in that the exemption is applied as a proportional percentage reduction to a general practitioner's wages, it is distinct in that the calculation of this percentage is made by reference to the proportionate number of bulk billed services (as opposed to the income attributable to such services).

f) Tasmania: in Tasmania, medical practices may qualify for a payroll tax exemption if they operate as a not-for-profit or charitable organisation under the Payroll Tax Act 2008 (Tas). Practices outside these categories are subject to payroll tax where their total wages exceed the relevant threshold. Both sides of Government have confirmed in their recent election campaigns that if elected payroll tax would not apply to contracted general practitioners, however there has yet to be any formal announcement nor any legislative changes implemented.

g) Northern Territory: the Northern Territory is the only jurisdiction which has not issued any specific guidance or rulings relating to the applicability of payroll tax in the context of medical practices.

Practices should continue to monitor the treatment of medical practice arrangements in other jurisdictions as these are likely to inform the approach which may be taken in the Northern Territory.

h) Western Australia: Payroll tax legislation in Western Australia is distinct from other states and does not include the broader "deemed employer" provisions found in other jurisdictions. Accordingly, we recommend that practices carefully review their arrangements with practitioners (including both their written agreements as well as their actual practices "on the ground") to ensure those arrangements are not otherwise characterised as a relationship which may be subject to payroll tax.

As you will note, the majority of the exemptions available in each jurisdiction only apply to general practitioners. Accordingly, practices who have arrangements with any other health practitioners (such as allied health professionals, specialists, or dentists) will not be in a position to benefit from the above exemptions.

Given the ever-evolving nature of payroll tax across Australia, we strongly recommend that practices carefully review their arrangements with all practitioners (especially where your practice may not qualify for the exemptions outlined in this article) in order to ensure you are aware of any potential payroll tax risks which may arise for your practice. If you are unsure about any of the above or would like any assistance in reviewing your current arrangements, identifying risks, and advising on the steps necessary to ensure compliance, please reach out to our team at Avant Law for a free confidential, no-obligation consultation.

State-by-State Summary

Queensland FULL EXEMPTION

• Effective: 1 December 2024
• Coverage: All payments made to general practitioners (employed or contracted)
• Conditions: None - applies to all GP payments regardless of billing arrangements

New South Wales REBATE SYSTEM

• Effective: 4 September 2024
• Coverage: All payments made to general practitioners
• Conditions: Practice must achieve minimum bulk billing/DVA rates:
  • 80% in metropolitan Sydney
  • 70% in all other NSW areas

Victoria PROPORTIONAL EXEMPTION

• Effective: 1 July 2025
• Coverage: Percentage of payments made to general practitioners
• Conditions: Exemption based on percentage of fully funded services (by income)

South Australia PROPORTIONAL EXEMPTION

• Effective: 1 July 2024
• Coverage: Percentage of payments made to general practitioners
• Conditions: Exemption based on percentage of fully funded services (by number of services)

ACT SERVICE-SPECIFIC EXEMPTION

• Effective: 1 July 2025
• Coverage: Payments made to GPs for fully funded services
• Conditions: Exemption only for payments attributable to excluded services

Tasmania LIMITED EXEMPTIONS

• Coverage: Only not-for-profit/charitable practices exempt
• Future: Both major parties promised GP exemptions if elected

Western Australia NO SPECIFIC EXEMPTIONS

• Coverage: No "deemed employer" provisions like other states
• Future: Carefully review arrangements to consider if payroll tax may be payable

Northern Territory NO GUIDANCE

• Coverage: Only jurisdiction with no specific medical practice guidance
• Future: Monitor developments in other jurisdictions

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.