The ongoing debate around payroll tax for medical practices and its impact on General Practices continues. Since 2023, several Australian state revenue offices have released rulings that aimed to clarify their approach to the medical payroll tax, specifically focusing on contractor arrangements between doctors and medical centres.
The rulings were originally identical across all four states, Queensland, New South Wales, Victoria and South Australia (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, and South Australia have introduced legislation providing exemptions for bulk billing services, which differ for each state. This has led to significant discussion around payroll tax and medical practices.
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. This update reflects the most recent developments in payroll tax across Australia.
Australian Capital Territory
The ACT Government had provided an amnesty for GP practices that bulk bill 65% of their patients for two years to 30 June 2025, practices had needed to register with ACT Revenue and MyMedicare to qualify… The ACT Revenue Office has provided examples of when they believe relevant contracts will apply. In July 2025, the ACT Government waived the requirement for a 65% target. This is a great boost for ACT practices and their financial viability. Although ACT is one of the lowest in bulk billing, this still contributes to broader developments in payroll tax for medical practices.
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 from 4 September 2023 to 3 September 2024, to allow practices to work through issues. During the pause, interest or penalty tax was not applied to any unpaid payroll tax. Following the completion of the pause, legislation was introduced to provide a rebate for practices where GP services are bulk billed. The ‘relevant proportion’ in metro Sydney is at least 80% and in regional areas at least 70%.
The rebate applies to the amount that is considered a relevant contract amount. When a medical centre has both contractor and employee GPs, the ‘relevant proportion’ used to assess rebate eligibility must consider all GP services provided by both groups. However, if the eligibility threshold is met, the rebate will only apply to the amounts paid to contractor GPs under a relevant contract. The ‘Contractor’ section of the payroll tax return contains the disclosures required for GP medical practices to claim the rebate.
Northern Territory
The Northern Territory has provided no details in relation to GP practices; however, the threshold for when payroll tax applies increased on 1 July 2025 to $2,500,000. However, any future changes to the policies for payroll tax in the Northern Territory could mirror broader national reforms.
Queensland
Queensland has provided a full exemption for wages paid by a GP practice to GPs via an amendment to the Payroll Tax Act.
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. This is a key example of how the QLD state revenue payroll tax policy differs significantly from other states.
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 considered by Revenue SA to be ‘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 in SA will significantly affect most 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 2024 election campaign that if elected, the payroll tax would not apply to contracted GPs, which is a notable position in the conversation of payroll tax in Tasmania.
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, as the Tasmanian payroll tax legislation includes a ‘relevant contract’ definition. Payroll tax does not seem to be high on the agenda for the Tasmanian Government.
Victoria
On 11 August 2023, the State Revenue Office of Victoria released the ruling PTA-041 Relevant contracts – medical centres. In May 2024, the Government announced that all GP practices would receive relief from prior assessments on payments to contractor GPs, and this would continue up until 30 June 2025 with the Treasurer utilising their ex-gratia powers..
Further to this, 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 and includes a formula for calculating the exemption. The formula is based on the total proportion of income received that is fully funded (bulk billed) and this is applied to GP wages.
As part of the 2025 annual reconciliation, medical centres are requested to provide a figure for Exempt GP wages. It is recommended you seek advice before providing this figure.
Victoria has the lowest tax-free threshold for payroll tax ($1,000,000 from 1 July 2025, previously $900,000) of all the states. This means that Victorian practices are more likely to be subject to tax. Understanding the new medical practice payroll tax ruling is vital for GPs operating in the state.
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 to 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. Of course, several other factors need to be considered, including work hours, rosters, and leave, as well as the 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. Nonetheless, practitioners must be cautious in interpreting the payroll tax WA rules, as they differ from the harmonised states.
Below is a summary of the current thresholds and rates in each State/Territory effective 2025/2026.
| State | Remuneration Threshold | Payroll tax rate |
| ACT | $2,000,000 | 6.85% |
| NSW | $1,200,000 | 5.45% |
| NT | $2,500,000 | 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 | $1,000,000
*employers with wages between $3m – $5m subject to 50% phase out of threshold |
4.85% (regional 1.2125%)
1% Surcharge for wages over $10m |
| WA | $1,000,000 | 5.5% |
Keeping up to date with changes in payroll tax for medical practices is essential to remain compliant as payroll tax in Australia evolves. To ensure that your exposure is minimised and your contracts are reflective of what’s necessary, please contact your local William Buck health advisor.
