Payroll tax has become one of the most talked-about legal and financial issues facing medical, dental, and allied health professionals in recent years. With increased scrutiny from state revenue authorities and changes in legal interpretation, doctors—whether early in their careers or well-established—need to understand how these developments could affect their practice models and income arrangements.

In this article, we focus on the evolving payroll tax landscape in Queensland and what it means for health practitioners across the state.

Why Is Payroll Tax an Issue?

Traditionally, where doctors operated under service agreements through medical centres or clinics, these arrangements were not subject to payroll tax. However, recent court decisions and updated guidance from the Queensland Revenue Office (QRO) have broadened how payroll tax laws are applied. In many cases, payments to contracted doctors are now treated as taxable “wages” under the extended “relevant contract” provisions.

This shift has raised alarm bells for practices and practitioners alike, prompting legal reviews of structures, agreements, and compliance strategies.

The Queensland Position

In Queensland, payroll tax is levied at 4.75% if a business’s annual taxable wages exceed $1.3 million.

On 22 December 2022, the QRO issued a Public Ruling (updated in February 2024), which clarified that agreements with contracted doctors—such as service agreements—may fall within the scope of taxable “relevant contracts” for payroll tax. This meant that many practices faced potential tax liabilities for payments made to independent GPs and other practitioners.

However, in a significant development, the Queensland Government passed the Revenue Legislation Amendment Bill 2024, confirming that from 1 December 2024, payments made by GP practices to general practitioners will be exempt from payroll tax—bringing welcome certainty for GPs and clinics alike.

Who Qualifies for the GP Exemption?

The exemption applies to:

• Doctors registered under the Health Practitioner Regulation National Law to practice in the specialty of general practice;
• Practitioners listed in the federal Health Insurance (General Medical Services Table) Regulations 2021 (Cwlth), schedule 1, part 1, clause 1.1.3;
• Prescribed medical practitioners who predominantly provide GP-style services.

It’s important to note that this exemption does not extend to medical specialists or allied health practitioners, who must still assess their potential payroll tax obligations.

What Doctors and Practices Should Do

While the GP exemption offers relief, compliance obligations remain complex and vary depending on your practice model, specialty, and financial thresholds.

Here’s what you and your practice should consider:

• Know the law: Understand current legislation and QRO rulings relevant to your specialty and business structure;
• Assess your threshold: Determine whether your practice is approaching or exceeding the payroll tax threshold;
• Review contracts: Revisit any service or independent contractor agreements with legal and accounting advisers;
• Check eligibility: See if you or your practice qualifies for any exemptions or amnesties—and whether disclosure is required;
• Seek advice: Don’t delay in obtaining expert legal and tax advice tailored to your specific situation.

Looking Ahead

While Queensland GPs now have greater clarity, specialists and allied health practitioners may still face uncertainty. It’s likely that further updates will emerge as state revenue offices continue to scrutinise practitioner arrangements.

Practices and individuals alike should take a proactive approach to ensure they’re not caught off guard.

Need Help?

Hillhouse Legal Partners can assist with reviewing or drafting agreements, assessing your payroll tax position, and preparing for any future audits. We also provide advice to individual practitioners seeking to understand their personal exposure or contractual risks.

For tailored advice, contact Craig Hong or Zach Sudiro, in our Corporate and Commercial Team, on (07) 3220 1144 or via email at craig@hillhouse.com.au or zach@hillhouse.com.au.