Healthcare and MedicalBusiness Advisory

Payroll tax update for medical practices

Adam Murray
28 May 2024
4 min read

On Wednesday 22nd May, Victorian Treasurer Tim Pallas announced that the Victorian Government would exempt all general practices from assessment of contractor payments for payroll tax up to 30 June 2024. There will be a further exemption for practices up to 30 June 2025, “or any general practice business that has not already received advice and begun paying payroll tax on payments to their contractor GPs on this basis.”

This is an extremely positive move as Victoria was previously an outlier amongst QLD, NSW, SA and Vic in not offering an amnesty for payroll tax issues identified in recent rulings in Commissioner of State Revenue v The Optical Superstore Pt Ltd and Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue as well as recent New South Wales, Queensland, and South Australian payroll tax amnesties.

These rulings meant that potential liability will arise where independent contract doctors are deemed as employees and, by association, payments to these independent doctors are taken to be remuneration under various payroll tax acts.

Whether or not an independent doctor is included in a medical practices payroll tax calculation is determined by several factors, including but not limited to:

  • Contracts between contract doctors and medical practices

  • Who the contract doctors offer their services to

  • The amount of time their services are provided to medical practice

  • What services the medical practice provides to the contract doctors

  • Who has control of patient relationships and records.

Also announced on 22nd May, the Victorian Government would exempt clinics from payroll tax for contractor GPs and employee GPs for bulk-billed consultations. This exemption will come into place from 1 July 2025.

“We’ve worked closely with the primary care sector on how we can best support them – and we’re making these long-term changes to provide certainty to general practice businesses and support more bulk-billing for Victorians,” Mr Pallas said.

The same day, South Australian Treasurer Stephen Mullighan announced that the SA Government would exempt bulk-billed GP wages (including payment received as contractors) as an incentive for practice to continue to bulk-bill. This will come into place from 1 July 2024.

“The new tax cut will be welcome news for GPs who provide bulk-billing services and follows the more than $4.4 billion of additional funding we have put into the state’s health system, and the announcement in last year’s Federal Budget to triple the bulk billing incentive.” Mr Mullighan said.

This effectively means that for 1 July 2024 in SA and from 1 July 2025 in Victoria, any bulked billed MBS items performed by a general practice will be exempt from payroll tax in those states.

There are now calls from other states such as NSW and QLD to follow suit.

While the new rules are welcomed, it is extremely important to note that these rules at present only apply to general practices and not to other medical practices. Furthermore, the ongoing exemption from payroll tax only applies to wages or contractor payments paid in relation to bulk billed in income. The different rules for different billing times and staggered dates of different types of amnesties and exemptions mean that it must be monitored well by general practices.

Findex payroll and health industry experts can assist doctors and practices in reviewing their current structure and work alongside the medical practices’ lawyer to achieve the best possible outcomes. Contact our industry experts today.

The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the thought or position of Findex.

Author: Adam Murray | Partner

Adam joined Findex in 2013 having previously worked in Melbourne for over nine years where he gained considerable experience in business advisory. Adam provides advice and guidance to businesses so that they can achieve their goals and full potential.