In a major backdown, the Victorian State Government has agreed to reduce some of the impact of the recent policy shifts towards taxing general practitioners as employees for payroll tax purposes.
Under recent cases such as Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2021] NSWCATAD 259 and Commissioner of State Revenue (Vic) v The Optical Superstore Pty Ltd [2019] VSCA 197 as well as payroll tax ruling PTA-041 Relevant contracts - medical centres – Victoria and other States have shifted to treating GPs and other medical practitioners as being employees of medical centres for payroll tax purposes under the “relevant contractor” provisions.
See our earlier articles here:
This shift results in payroll tax at rates up to 4.85% becoming payable on payments made from medical centres to GPs and other similar health practitioners.
Substantial assessments have been issued resulting in uncertainty for the industry.
Exemptions until 30 June 2025
On 22 May 2025, the Victorian State Government announced that all Victorian GP businesses will receive an ex gratia exemption from any outstanding or future assessment issued for payroll tax on payments to contractor GPs for the period up to 30 June 2024.
A further 12-month ex gratia exemption to 30 June 2025 will be available for any general practice business that has not already received advice and begun paying payroll tax on payments to their contractor GPs on this basis.
Ongoing exemptions for bulk-billing
Ongoing exemptions (likely to be legislated) will apply from 1 July 2025 for payments to contractor GPs and to employee GPs for providing bulk-billed consultations from 1 July 2025.
Other States
Also on 22 May 2025, the South Australian State Government announced a similar on-going exemption for payments to GPs (employee or contractors) for providing bulk-billed consultations from 1 July 2024.
The South Australian State Government had earlier announced in June 2023 an amnesty to GP practices for five years retrospective payroll taxes and an additional 12 months to 30 June 2024 understand their obligations and to come into compliance with them.
Queensland had an amnesty that closed on 10 November 2023. Medical practices that applied for the amnesty will pay payroll tax on payments made to contracted GPs up to 30 June 2025 and for the 5 years prior.
The Australian Capital Territory announced in August 2023 that it would waive payroll tax liabilities until 30 June 2023 for medical practices that have not previously paid payroll tax on GP payments and a two-year exemptions for bulk billing businesses making payments to GPs that:
are bulk billing 65 per cent of all patients;
have registered for MyMedicare; and
register with the ACT Revenue Office by 29 February 2024
New South Wales has merely paused audit activity for medical practices until August 2024.
Action required
It is likely that the more business types will be drawn into the application of the contractor provisions.
Therefore, it is important that all medical practices and similar businesses seek advice on the payroll tax implications of payments made to contractors.
Please contact us with any questions in relation to these proposed changes or any other State Tax issues.
Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au
Nicholas Clifton
Principal Lawyer
T +61 3 9611 0154 | M +61 401 150 955
E nclifton@sladen.com.au
Meera Pillai
Associate
T +61 3 9611 0179
E mpillai@sladen.com.au
