The 2025 Payroll Tax Guide for Medical & Allied Health Practices Across Australia
For practice owners and managers across Australia, navigating the complexities of payroll tax has become increasingly challenging. Since the initial Thomas and Naaz decision, where the NSW Civil and Administrative Tribunal (NCAT) found that payments made to contracted medical professionals under the standard service fee model could attract payroll tax liability, uncertainty has loomed over the industry.
With amnesties either ending this year or already expired, and limited guidance from relevant authorities on how payroll tax will be assessed moving forward, practices, especially specialist, dental and allied health practices, face significant concerns regarding their future payroll tax obligations.
Whilst payroll tax laws across states and territories are relatively harmonised, the revenue offices in each jurisdiction have taken their own approaches. For example, each state has implemented differing exemptions, thresholds and amnesties. Below we have put together a state-by-state breakdown of the current payroll tax landscape as of July 2025 and what it means for practice owners.
This article is intended to be a rough guide and starting point for practices - specific legal advice should be sought, as it’s an evolving landscape and varies based on each practice’s circumstances.
Queensland
Despite having relatively harmonised legislation with other states, Queensland has taken a distinct approach to payroll tax in relation to General Practices. As of 1 December 2024, wages paid by a medical practice to a GP (as a contractor or employee) are exempt from payroll tax, under ruling PTAQ014.1.1.[1]
Key takeaways
This exemption applies to both employed and contracted GP’s, as well as general practice registrars.
There are no bulk billing thresholds attached to this exemption.
Non-GP allied health professionals and other medical practitioners (not in general practice) are not included in this exemption.
Queensland’s payroll tax threshold is $1.3 million.
Victoria
On 3 December 2024, the State Taxation Further Amendment Act 2024 (VIC) introduced an exemption into the Payroll Tax Act 2007 (VIC) from payroll tax for wages paid or payable to contractor and employee GP’s in relation to bulk billed consultations from 1 July 2025.
Victoria’s payroll tax threshold has also just increased to $1,000,000 from 1 July 2025, an increase from the previous $900,000.
Key takeaways
For the period up to the 30 June 2025, if you operate a GP business, you may be able to receive relief on contractor GP payments for 2024-25, provided you have not previously been advised by the State Revenue Office that payroll tax applies to your practice.
Other medical professionals and allied health practitioners, including dentists, physiotherapists and psychologists are not included in this exemption.
South Australia
The South Australian Government has legislated an exemption to the Payroll Tax Act 2009 (SA) which means that GP are not required to pay payroll tax on any payments to doctors in respect to bulk billed services from 1 July 2024.
Key takeaways
This exemption only applies to bulk billed services provided by general practitioners.
A temporary exemption was previously granted for contracted medical specialists registered with the Medical Board of Australia and dentists registered with the Australian Health Practitioner Regulation Agency, provided they were registered for payroll tax before 30 June 2024.
The South Australian payroll tax threshold is $1.5 million.
New South Wales
The NSW Revenue Office previously placed a 12 month ‘pause’ on payroll tax audits for GPs, which ended on 4 September 2024. During this pause, Revenue NSW were not able to conduct any audits in relation to payment to GPs and interest or penalty tax was not applied to unpaid payroll tax.
Now, effective from 4 September 2024, there is a rebate available under the bulk billing support initiative, if the practice meets certain bulk billing thresholds:
Metropolitan Sydney: 80% of GP services must be bulk billed.
Other areas: 70% of GP services must be bulk billed.
*This relief applies to contractor GPs but does not extend to specialists or allied health professionals.
The NSW payroll tax threshold is $1.2 million.
Australian Capital Territory
To support medical practices, the ACT Government provided a further temporary payroll tax amnesty (to the one provided in 2023), which exempted GP clinics from payroll tax until 30 June 2025. However, practices needed to have registered with the ACT Revenue Office before February 2024, registered for MyMedicare and bulk billed at least 65% of GP attendances.
Ongoing relief was recently announced in the ACT’s most recent budget, with the ACT government confirming that an exemption for bulk billed GP services exists from 1 July 2025.
The payroll tax threshold in the ACT is $2 million per year. As of the 1 July 2025, large businesses, whose Australia-wide wages are above $50 million, must pay an additional surcharge.
Northern Territory
The Northern Territory has not issued any public guidance on their stance towards payroll tax for medical practices. Their position remains unclear.
However, the payroll tax rate in the NT is 5.5%, with a $2.5 million threshold. This is an increase from $1.5 million on the previous financial year (July 2024 to June 2025).
Tasmania
Tasmania had previously remained silent on their stance towards payroll tax for medical practices. However, ahead of their most recent election, both the current government and opposition pledged that payroll tax would not be imposed on contracted GPs. With the existing government returned to power, the sector is awaiting any official updates to follow through on these commitments.
Despite this, Tasmania is a party to the Harmonisation Agreement suggesting any future changes to its legislation are likely to follow patterns already seen in other states.
Tasmania’s current payroll tax-free threshold is $1.25 million.
Western Australia
Western Australia’s payroll tax legislation differs from the other states, particularly in its treatment of contractors.
Key takeaways
Rather than rigidly applying the ‘relevant contract’ test, the government assesses payroll tax obligations based on the totality of the relationship between the medical practice and the practitioner. This ‘common law approach’ requires medical practices to ensure their service agreements clearly establish a genuine contractor relationship.
WA maintains a $1 million payroll tax-free threshold meaning that many small and medium-sized practices are not affected or subject to payroll tax.
The WA government has indicated no intent to change existing provisions.
Next Steps for Medical Practices
Given the evolving payroll tax landscape, it is crucial that medical practice owners take proactive steps to assess their risk and ensure compliance. We would recommend to:
Review your current contracts and agreements;
Assess your eligibility for exemptions (Note: if you engage allied health professionals, dentists or specialist doctors, most of the exemptions do not extend beyond GPs, and in some instances, beyond bulk billed services); and
Seek professional advice.
If you require further guidance on payroll tax in your State or Territory, we offer a streamlined fast-track solution that you can purchase here. Our team has extensive experience in providing advice and insights into best practices for your business. To discuss payroll tax, or anything else, contact our team here, and we will put you in touch with the best person in our team for your needs.
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