The Victorian and South Australian Governments recently announced updated information on how they intend to treat payments made to General Practitioners (GPs) for payroll tax assessment purposes.
What We Know - Victorian Announcement
A 12-month exemption up to 30 June 2025 for General Practices who are yet to begin paying payroll tax on payments to GPs.
An exemption for these practices from retrospective assessment on payments to GPs up to 30 June 2024.
An exemption for payments to GPs that relate to bulk billed consultations from 1 July 2025.
What We Know – South Australian Announcement
An exemption for payments to GPs that relate to bulk billed consultations from 1 July 2024.
The exemption will apply to all GP practices, regardless of whether their GPs are engaged as employees or deemed contractors.
Key Points - Our Understanding
Only payments to contractors and employee GPs related to fully bulk-billed consultations will be considered exempt.
Consultations that are not completely bulk billed are not considered exempt – we believe this will apply to the whole consultation fee not only the private gap payment.
It is unclear in Victoria at this stage as to how private and non-bulk billed payments that are paid directly from the patient to the GP’s own bank account will be treated – we advise a cautious approach and suggest that these will remain taxable.
Both State's approaches differ from the current guidance in Queensland where, generally, payments that flow from patients to the GP directly will not be considered taxable wages.
How to Estimate Exposure – (based on the South Australian method)
The calculation for payroll tax liability is not straightforward and involves various thresholds and reducing offsets, however, a simple methodology to estimate your potential payroll tax exposure is below:
Calculate Payments to GPs
Calculate monthly patient income (per doctor)
Exclude GPs that fit one of the exempt classifications
Multiply the patient income amount by the relevant “payment” percentage (calculated as 1 - Service Fee %)
e.g. 1- 30% = 70% “payment” percentage
Calculate Exemption Percentage
Calculate the total number of bulk billed items as a percentage of total number of all billed items
Apply Exemption Percentage
Apply the exemption percentage calculated to the payments to GPs
Apply Payroll Tax Rate
Multiply the above amount by the relevant current payroll tax rate in your state
Victoria – 4.85%
Victoria Regional – 1.2125%
South Australia – 4.95%
Result
The result will approximate your estimated monthly payroll tax liability in relation to GP payments
*Note that we are yet to receive full information on the implementation of the newly announced exemptions. The above methodology is for informational purposes only. For an accurate calculation involving your specific circumstances, state threshold and rates please reach out to your accountant, or to us at GrowthMD.
Tools to Assist
Information relating to non-bulk billed GP consultations can be obtained from your Practice Management System.
For those practices currently using Cubiko , you will easily be able to access the information required to calculate your payroll tax exposure directly from your Cubiko dashboards.
Important Considerations & Actions
Commence planning for your practice’s future. We suggest modelling the financial benefits of bulk billing (with the associated benefit of the exemption), versus private billing (where GPs can set commensurate, viable fees for the care and service they provide).
For many practices, these exemptions will not substantially impact their position on bulk billing or payroll tax moving forward.
Remember that not all non-bulk billed payments to GPs will necessarily be taxable wages for payroll tax purposes. You will need to consider the structure of your practice, current agreements with GPs, the nature of your business operation and any relevant contractor exemptions that may apply.
We greatly caution practices and GPs against making knee-jerk changes such as altered billing policies, restructures, banking arrangement changes etc without obtaining professional advice.
It is imperative to understand all the information when it becomes available and once passed as law. This may not be for some time.
How GPs are engaged with a practice or service entity not only impacts payroll tax exposure but also other areas such as superannuation and personal income taxation. Before making any changes to arrangements seek advice as to the wider taxation and employment landscape.
How GrowthMD can assist
We strongly encourage you to talk to your current accountant and legal adviser to obtain advice about how these changes may affect your practice. Alternatively, you can contact the team at GrowthMD to provide insights on these changes, along with other specialist advice for your practice.