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Payroll tax for medical practices: a state-by-state analysis
19 September 2023 | Minutes to read: 3

Payroll tax for medical practices: a state-by-state analysis

By William Buck

Several Australian state revenue offices have provided payroll tax rulings that aim to clarify the respective state’s treatment of payroll tax in respect to medical centres.

The rulings are essentially identical across all four states, in line with the Payroll Tax Harmonisation Agreement , however, each state will implement its own amnesties and audit activity. 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.

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 announced on 26 August 2023 an amnesty for GP practices that bulk bill 65% of their patients for two years. Practices are actively campaigning across the state for a better outcome as the conditions set out currently are not attainable for most 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, to allow practices to work through issues.

Northern Territory

No details have been provided from the Northern Territory.


Queensland was the first to issue a Ruling on the Queensland State Revenue Office’s interpretation of payroll tax as it pertains to the medical industry. This ignited a firestorm of protest, which resulted in the hasty announcement (within weeks) of an amnesty for general practitioner (GP) practice owners. Unfortunately, this amnesty does not extend to specialists, dentists and allied health practitioners.

Queensland is now set to issue a supplementary Ruling or additional guidance on the Payroll Tax Commissioner’s position that payroll tax will not apply where patient fees are paid directly to the practitioner and then the practitioner pays a service fee to the medical centre.

This ‘flow of funds’ solution has been touted by William Buck for some time and it is highly gratifying that the position we adopted so early is being supported by at least one state, with the hope that more will follow.

South Australia

General practices in South Australia can register for a payroll tax amnesty which will cover the period from 1 July 2018 to 30 June 2024. Eligible practices must register their interest for the amnesty before 30 September 2023. After registering, RevenueSA will work with the practice to determine the payroll tax treatment of arrangements with contracted and tenant general practitioners. The practice is then expected to report and pay payroll tax appropriately from 1 July 2024.

While a liability for payroll tax might exist in relation to contracted and tenanted general practitioners during the amnesty period, under the amnesty, the tax may not actually have to be paid.

The state has made no announcement about how the tax will affect specialists, dentists and allied health providers.


To date, Tasmania has been quiet on its treatment of payroll tax for medical centres. While the state has not released a ruling, they are part of the Harmonisation Agreement, which means any legislation 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 expect at some point that legislation across all states will align.

Tasmania currently has a tax-free threshold of $1.25 million, meaning a lot of practices may fall outside this limit.


On 11 August 2023, State Revenue Office Victoria released the ruling PTA-041 Relevant contracts – medical centres. There has been no announcement of an amnesty or pause on audits like in other states. The Royal Australian College of General Practitioners, the Australian Medical Association and the Australian GP Alliance have all been lobbying the Victorian Government to intervene, however, the government has maintained its stance, saying no legislation has changed and payroll tax is applied the same across all industries.

With Victoria having the lowest tax-free threshold for payroll tax ($700,000, set to increase to $900,000 from 1 July 2024) 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 it the relationship between doctor and practice is a genuine contractor relationship and not subject to payroll tax. There are of course a number of other factors which 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.

To ensure that your exposure is minimised and your contracts are reflective of what’s necessary, please contact your local William Buck health advisor.

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