This webpage provides guidance on navigating payroll tax for those in the medical industry. Businesses in the medical industry provide a broad range of services to the community, therefore it is important to understand the different payroll tax obligations that may exist.
The industry includes medical practices that engage general practitioners (doctors), dental clinics, physiotherapists, podiatrists, osteopaths, psychologists and other allied health professionals.
Government announcement May 2024
On 22 May 2024, the Victorian Government announced the following changes in relation to the application of payroll tax for Victorian general practice (GP) businesses:
For the period up to 30 June 2024
All Victorian GP businesses can obtain relief from any outstanding or future assessment issued for payroll tax on payments to contractor general practitioners, for any periods up to, and including, 30 June 2024.
A general practitioner (GP) is defined as any of:
- A Specialist General Practitioner per the National Law (i.e. Health Practitioner Regulation National Law (Victoria) Act 2009).
- Prescribed Medical Practitioners (as defined in MBS Note AN.7.1) who predominantly provide general practice medical services of the type ordinarily provided by specialist general practitioners.
- Medical practitioners on an accredited general practice training pathway in accordance with section 1.1.3 of the Health Insurance (General Medical Services Table) Regulations 2021.
Other useful definitions include:
- A ‘Victorian general practice business’ is a medical practice in Victoria at which medical services are provided by general practitioners, but does not include hospitals.
- ‘Outstanding assessments’ are any assessments which are not yet paid, or the unpaid component of any partly paid assessments.
- ‘Future assessments’ are assessments issued after 22 May 2024.
For Victorian GP businesses with an outstanding assessment for up to 30 June 2024, we will reach out directly by 15 December 2024 regarding the availability of ex-gratia relief. Should you wish to get in touch sooner, please contact your relevant SRO contact (if you are engaged in an investigation or objection process), or email us.
Other medical professionals and allied health professionals are encouraged to review their wage disclosures for the period up to 30 June 2024 to ensure they are correct.
For the period up to 30 June 2025
Victorian GP businesses may also be eligible for relief from payroll tax for payments to contractor GPs for the 2024-25 year. This will apply to GP businesses which have not already received advice by 22 May 2024 or have not paid payroll tax on payments to their contractor GPs on this basis.
‘Received advice’ is defined as having received advice by 22 May 2024 that payroll tax was payable on their payments to contractor GPs from the SRO (e.g. through a private ruling or assessment), or a lawyer or accountant.
The relief for the periods ending 30 June 2024 and 30 June 2025 will be provided through the Treasurer’s ex-gratia powers.
It is important to note that these changes only apply to GP businesses and do not apply to other medical professionals or allied health professionals.
From 1 July 2025
Legislation has been introduced into Parliament which, if passed, will introduce an exemption into the Payroll Tax Act 2007 (Vic) (PTA) from payroll tax for wages paid or payable to contractor general practitioners and employee general practitioners in relation to bulk-billed consultations from 1 July 2025.
Next steps
We are updating the PTX Express portal so that GP practices, when either registering for payroll tax or lodging their 2024-25 annual reconciliation, can disclose information about their GP wages and claim ex-gratia relief. More information about these processes will be available by the end of February 2025.
We will also deliver a customer education campaign, including webinars and an instructional video, to assist GP practices in submitting their annual reconciliations.
For Victorian GP businesses with an outstanding assessment for up to 30 June 2024, we will reach out directly by 15 December 2024 regarding the availability of ex-gratia relief. Should you wish to get in touch sooner, please contact your relevant SRO contact (if you are engaged in an investigation or objection process), or email us.
To receive regular updates about payroll tax matters, join our email subscriber list.
Engagement of practitioners
If practitioners are engaged as employees under common law principles, their wages are subject to payroll tax.
If practitioners are not engaged as employees under common law principles, the ‘relevant contract’ provisions contained in Division 7 of Part 3 of the Payroll Tax Act 2007 (Vic) (PTA) may apply to deem the practitioners to be employees. In this case, payments made to the practitioners are deemed to be wages subject to payroll tax.
Medical and healthcare practices sometimes overlook, or are not aware, that payments to practitioners who are not employees under common law principles may be deemed to be wages under the relevant contract provisions.
These 2 cases confirmed that the relevant contract provisions can apply to arrangements between medical and healthcare practices and practitioners, in situations where the practitioner provides services both to the principal (the medical or healthcare practice) and to patients:
- Commissioner of State Revenue (VIC) v The Optical Superstore Pty Ltd [2019] – VSCA 197
- Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue (NSW) [2023] – NSWCA 40
The Commissioner has also explained his position in relation to these matters in the following revenue rulings:
- Revenue Ruling PTA041: Relevant Contracts – Medical Centres – provides guidance about the application of relevant contract provisions in the PTA for an entity that conducts a medical centre business.
- Revenue Ruling PTA038: Determining whether a worker is an employee – provides guidance about employment relationships to help employers and advisors determine whether workers are common law employees.
Contractor exemptions
There are numerous exemptions available under the relevant contract provisions contained in the PTA. More information about these exemptions can be found on our Contractors webpage.
The 3 exemptions most likely to apply to a contract between a medical or healthcare practice and a practitioner are:
- services provided for less than 90 days
- contractor who ordinarily provides services to the public
- services are performed by 2 or more persons.
Medical practice structures
Revenue Ruling PTA041: Relevant Contracts – Medical Centres states that a contract between an entity that conducts a medical practice and a practitioner is a relevant contract under section 32 of the PTA if all the following apply:
- the practitioner carries on a business or practice of providing medical-related services to patients;
- in the course of conducting its business, the medical practice:
- provides members of the public with access to medical-related services;
- engages a practitioner to supply services to the medical centre by serving patients on its behalf;
- an exemption under section 32(2) of the PTA does not apply.
Revenue Ruling PTA-041 also states that if a medical practice engages a practitioner to practice from its medical centre, or holds out to the public that it provides patients with access to medical services of a practitioner, it is likely the relevant contract provisions will apply to the contract with the practitioner unless an exemption applies.
Under a typical medical practice structure, the totality of the performance by the practitioner of valuable contractual promises can amount to the performance of services to a medical practice, see paragraph 45 of Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40.
The practitioner’s attendance at a practice’s premises in order to provide medical services to patients is an important aspect of the practice’s business, and generates the practice’s income. The practitioners’ contractual promises to provide medical services to patients at the practice’s premises and to follow the practice’s protocols also add value to the practice’s business.
A typical medical practice structure that would be subject to the relevant contract provisions, whereby the practitioner provides services to both patients and to the practice, is as follows:
What you need to do
Resources to assist with the Victorian GP ex-gratia process will be available soon. Please monitor this page or join our email subscriber list for updates.
For Victorian GP businesses with an outstanding assessment for up to 30 June 2024, we will reach out directly by 15 December 2024 regarding the availability of ex-gratia relief. Should you wish to get in touch sooner, please contact your relevant SRO contact (if you are engaged in an investigation or objection process), or email us.
Other medical professionals and allied health professionals are encouraged to review their wage disclosures to ensure they are correct.
Register for payroll tax
If you are liable for payroll tax, you must register with us. Registering is simple, although you will need your payroll records handy to help you. Penalties and interest may apply if you do not register.
Paying is easy
Once registered, use our secure online system Payroll Tax Express (PTX Express) to lodge monthly returns, pay your tax, complete your annual reconciliation, apply for a refund and update your records.
Private rulings
If you need further guidance on whether your business is liable for payroll tax, you can seek a private ruling. Learn more about private rulings.
We’re here to help
If you require more information, contact our Customer Education team for further assistance.
