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Payroll tax for medical practices: a state-by-state analysis
15 March 2024 | Minutes to read: 4

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

By William Buck

The payroll tax debate and its impact on General Practices continues. Several Australian state revenue offices released payroll tax rulings last year 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 implements 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. Queensland has modified its ruling twice since its first release, so it now differs from other states.

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 allow practices to work through issues. During the pause interest or penalty tax will not be applied to unpaid payroll tax.

Northern Territory

No details have been provided from the Northern Territory.


Queensland is now on its third version of its payroll tax rulings. Issued on 21 February 2024, the Ruling expands on the second version issued late in 2023. The latest Ruling confirms the Queensland position on what will be considered taxable payment arrangements for payroll tax purposes.

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 late last year that covered the period from 1 July 2018 to 30 June 2024. RevenueSA has recently provided many practices that applied for amnesty with the outcome of the review of their arrangements with general practitioners that operate from the practice.The majority of the practices have been advised that the arrangements they have with most of their general practitioners are relevant contracts for the purposes of payroll tax These practices are expected to report and pay payroll tax from 1 July 2024.

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.


Following the recent election in Tasmania, and with no change in Government, we are waiting to see if any further announcements will be forthcoming.  Prior to the election, the current Government and opposition both confirmed that if elected payroll tax would not apply to contracted GPs.

Prior to this announcement, the Tasmanian Government had 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 expected at some point that legislation across all states would align.

Tasmania currently has a tax-free threshold of $1.25 million, meaning a number 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. At a recent meeting the Treasurer acknowledged the concerns and has formed a working group including the SRO (State Revenue Office) to provide further clarity. The Treasurer also confirmed they could utilise their ex-gratia powers to help practices affected by retrospective tax bills for payroll tax.

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 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.

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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