Historically, many medical practices operated under the assumption that contractor doctors—who invoice the clinic but work independently—did not trigger payroll tax obligations. However, the SRO’s interpretation of ‘relevant contracts’ has shifted.

The 2023 release of PTA‑041, a ruling on medical centre contracts, clarified that in many cases, payments made to contractor GPs or specialists do meet the criteria for payroll tax, depending on how those arrangements are structured.

If your clinic receives patient fees and then pays a practitioner—even if they’re invoicing you—it may be captured under payroll tax legislation. This reclassification could result in significant retrospective tax bills if not managed carefully.

To reduce the immediate impact on clinics and support bulk-billing services, the Victorian Government has introduced interim relief and a phased approach.

• Ex-Gratia Relief (Until 30 June 2025):
  Clinics will not be retrospectively taxed for payments made to contractor GPs up to this date.
  
• New Exemption from 1 July 2025:
  From this date, payments to both employee and contractor GPs will be exempt from payroll tax—but only for services that are fully bulk billed.
  
• Bulk Billing Proportion Matters:
  The exemption will apply based on the percentage of total GP services that are bulk billed, not just individual consultations.
  
• Specialist Clinics:
  This exemption does not automatically apply to specialists who rarely bulk bill. If you’re a surgeon, dermatologist, cardiologist, or similar, you may remain fully liable for payroll tax unless other exemptions apply.
  

If you're a GP clinic, this offers much-needed breathing room—but also a tight compliance window to act before 1 July 2025.

If you're a specialist practice, you need to review your contractor arrangements immediately. The bulk billing exemption likely won't apply, and the SRO may consider your arrangements as ‘relevant contracts’ triggering payroll tax.

Even if you believe your model is low risk, the $1,000,000 payroll tax threshold—the lowest in Australia—means even modest-size practices can be liable.

1. Conduct a Contract Review:
Assess whether your current agreements reflect independent contractor status or expose you to payroll tax risks. Key considerations include control over hours, patient fees, branding, and payment flows.

2. Clarify Your Bulk Billing Mix:
Start tracking what percentage of services across your clinic are fully bulk billed. This data will be critical for claiming exemptions from July 2025.

3. Plan for Reconciliation Requirements:
From 2025, you'll need to report “Exempt GP wages” in your annual payroll tax reconciliation. This must be calculated accurately, with supporting documentation.

4. Engage a Specialist Tax Adviser:
Due to the complexity of the rules, a general accountant may not be enough. A medical tax specialist can guide structuring, eligibility, and risk management with clarity.