How Practice Finance Works for Medical, Dental and Vet Owners
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Practice Acquisition · Goodwill Funding · Practice Numbers
Practice finance is not one loan. It is several different exposures wearing one label, and each behaves differently once a lender has to decide what it can secure and what cash flow survives the change of ownership. This guide follows the buyer's real sequence: price and goodwill, 100 per cent funding, contract and lease conditions, credit assessment, settlement, provider setup and the working capital needed for day one.
Quick Answer
Practice finance is commercial lending used to buy into, buy out or build a medical, dental or veterinary practice, split across goodwill, equipment, fitout and premises. The purchase price, the value a lender accepts and the amount it will actually approve are three different numbers, which is why what value is genuinely transferable matters more than the headline figure.
What is practice finance, and what are the four things you are actually borrowing for?
Practice finance is commercial lending against four separate things, and the label hides the fact that they are not interchangeable. When a buyer says they need to borrow to buy a practice, what they actually need is funding across goodwill, equipment, fitout and premises. A lender does not assess that as one number. It assesses four exposures with four different security positions, and the mix is what determines whether the deal is straightforward or difficult.
Also called: practice acquisition finance, professional practice finance, medical practice loans, practice purchase finance.
Who this is for: owners and prospective owners of medical, dental, veterinary, optometry and allied health practices. The mechanisms below are the same across all of them, only the equipment and billing specifics differ, and those are covered in the linked guides.
Who this is not for: this guide is about financing a practice as a business. It does not cover patient or consumer treatment finance of any kind.
That distinction matters because the four layers do not behave the same way as collateral. Equipment can be identified and registered against. Premises can be valued and mortgaged. A fitout is attached to somebody else's building. Goodwill, which is often the largest line in the purchase price, is an intangible part of the business rather than a standalone asset a lender can simply repossess and resell. Every awkward feature of practice lending, from the security a lender can register to the guarantees it asks for, follows from that single fact.
The market this sits in is substantial and growing. Australia had 959,858 registered health practitioners at 30 June 2025, a 4.3 per cent increase on the previous year, according to Ahpra's annual report release of 14 November 2025. A meaningful share of those practitioners will at some point buy into, buy out or establish a practice, and almost all of them will meet the four-layer structure below on the way through.
| Layer | What you are funding | How the exposure is usually supported |
|---|---|---|
| Goodwill | The value of the operating practice above its separately identifiable assets, including the custom and systems that are expected to continue after the seller leaves. | Goodwill cannot be detached from the business and repossessed like equipment. Lenders may still describe the facility as secured against goodwill, but the legal security package usually reaches the practice entity or ownership interest and its personal property, with guarantees and, for some specialist facilities, required life or income protection. |
| Equipment | Chairs, imaging, sterilisation, surgical, diagnostic and other identifiable movable assets. | The equipment itself can support asset finance and a security interest can be registered over personal property. Asset age, condition and useful life matter because they affect both value and term. |
| Fitout | Partitioning, plumbing, cabinetry, lighting and compliance works that turn a tenancy into a clinic. | The works sit in premises the practice often does not own, so the lease term and options become part of the credit story. A lender may also rely on the practice entity, guarantees and other available security. |
| Premises | The clinic property itself where the owner buys rather than leases the rooms. | A registered mortgage over the property, with the property valued and assessed under commercial property lending policy. |
Read across that table and the shape of a practice deal becomes obvious. The layers with real security are the easy part. The layers without it, goodwill above all, are where the structuring effort goes, and where a deal is won or lost.
What should you work out before making an offer on a practice?
Work out five things before you make an offer, not after. They are what the practice can service after ownership changes, how much of the price is transferable goodwill, whether the lease protects the period you need, which liabilities travel with the entity, and how much cash you will still have after settlement. Those five answers tell you whether you are looking at a financeable practice or simply an attractive asking price.
Australian government guidance on buying an existing business puts valuation and due diligence before the final offer, and dental industry guidance adds a cash-flow forecast, financing requirement and break-even analysis before deciding what type of practice you can afford. For a practice buyer, that sequence matters because the purchase price, the debt and the first months of trading are one decision, not three.
| Question to answer first | Why it changes the finance | Evidence to get before you commit |
|---|---|---|
| Can the practice service the debt after ownership changes? | The lender assesses the income that remains after the vendor's billings and drawings are removed, not just the historical profit. | Reconciled financials, billings by practitioner, service agreements, add-back workings and a cash-flow forecast under the new ownership structure. |
| How much of the price is transferable goodwill? | A price dominated by value tied personally to the departing owner is a weaker credit story than value tied to location, systems, staff and recurring practice relationships. | Independent valuation advice, billings concentration, patient or client rebooking patterns, restraint terms and the seller's handover plan. |
| Does the lease last long enough? | A short or non-transferable lease can undermine both the fitout and the location-based goodwill before the loan is repaid. | Lease term, options, assignment clauses, landlord consent requirements, permitted use and any bank guarantee required under the lease. |
| Are you buying assets or the entity? | An entity purchase can carry historical liabilities into the borrower a lender is about to secure. | Tax, payroll tax, employee entitlement, contract and security-interest diligence with your accountant and solicitor. |
| How much cash is left after settlement? | A practice can be profitable on paper and still miss payroll or a loan repayment if the first receipts arrive after the first bills. | Settlement costs, first payroll, rent and outgoings, suppliers, insurance, tax and super obligations, billing lag and any opening receivables that actually transfer. |
Will the lender value the practice, and what happens if the valuation is lower than the purchase price?
Not every practice lender requires a separate independent valuation, but the price you agree with the seller is not automatically the value a lender will accept for credit. If the lender or its advisers support a lower value, or if its policy caps funding by reference to an accepted value rather than the contract price, the approved debt can be lower than the amount needed to settle.
Keep three numbers separate from the start: the negotiated purchase price, the valuation or supportable business value, and the amount the lender is prepared to approve. Australian government guidance says there is no single valuation method and recommends considering professional advice, financial history, future profit, tangible assets and goodwill. APES 225 applies when an Australian accounting professional provides an estimate of value for a business, ownership interest, security or intangible asset. Current healthcare-finance guidance also shows that a formal lender-commissioned valuation is not universal, because some transactions can proceed where the lender is satisfied with accountant due diligence and the rest of the credit evidence.
What usually changes the value of a medical, dental or veterinary practice?
- Sustainable earnings after the seller leaves. Historical profit is less useful if a large part of it depends on the departing principal's personal billings or relationships.
- How transferable the goodwill is. Location, systems, staff, referral sources, recurring patient or client relationships, brand and the handover plan matter because the buyer is paying for earnings that must survive the ownership change.
- The lease and restraint position. A valuable location with a short lease, weak options or no effective transition protection can support less debt than the same practice with a secure operating runway.
- The rights attached to the interest being bought. A one-third share with limited control is not the same asset as 100 per cent ownership, even if both are calculated from the same whole-practice value.
The useful question is therefore not just "what is the practice worth?" It is what value is transferable to me, what value will the lender accept, and how much debt can the post-sale cash flow actually carry? The goodwill definition explains the intangible part of that calculation.
How does a lender secure a practice loan when most of the price is goodwill?
A lender can fund a goodwill-heavy practice purchase, but it does not recover goodwill the same way it can repossess equipment or sell mortgaged property. Goodwill is legally inseparable from the business it belongs to. The security package therefore focuses on the practice or ownership interest, the personal property around it, the people giving guarantees and the cash flow that keeps the business operating.
The ATO's Taxation Ruling TR 1999/16, following the High Court in FCT v Murry, describes goodwill as one indivisible item of property that attaches to a business and cannot be dealt with separately from that business. That legal characterisation does not mean a lender cannot make a secured goodwill loan. It means the lender is securing a broader business or ownership position rather than treating goodwill like a machine with a standalone resale value.
Goodwill is one whole, attaches to a business and is inseparable from the conduct of that business.
ATO, Taxation Ruling TR 1999/16, paragraph 12, paraphrased for readabilityWhat the security package usually reaches
Depending on the transaction and lender, that package can include a general security agreement over the practice entity and its personal property, a security interest over the buyer's partnership or ownership interest, security over identifiable equipment, directors' or principals' guarantees and, where required by the lender, assigned life or income protection cover. The PPSR recognises security interests over both tangible and intangible personal property, including general property and general intangibles.
That is why the buyer should distinguish what the facility is funding from what the lender can enforce if it fails. A lender may market a product as being secured against goodwill, and that can be commercially accurate, while the enforcement package in the legal documents is broader than the goodwill line in the purchase-price allocation.
From our broking, qualitative
The goodwill percentage matters because it tells the assessor how much of the purchase value depends on the practice continuing to trade successfully after the seller leaves. As that share rises, the questions become less about asset resale and more about revenue continuity, practitioner concentration, restraints, handover, lease security and the strength of the people giving the guarantees.
Qualitative only, based on practice transactions we see. This is not a quote, an offer or an assessment of approval likelihood. Security documents and lender policy vary by facility and transaction.
Our goodwill glossary entry explains the asset itself, while the security glossary entry explains the difference between what a loan funds and what a lender can actually take security over.
Can doctors, dentists and vets really get 100 per cent finance to buy a practice?
Yes. Some specialist healthcare lenders currently publish options to finance up to 100 per cent of the purchase price of an eligible established practice or partnership share. The important qualification is that 100 per cent of the purchase price is not the same thing as 100 per cent of every dollar you need to complete the transaction and start trading.
Current published specialist-lender terms show that full purchase-price funding can be available without using the family home as additional security, subject to credit approval and profession, practice and structure criteria. The lender still assesses serviceability, the transferability of the goodwill, the lease, the buyer's financial position and the security and guarantee package. Full funding is a credit-policy outcome, not an entitlement attached to being a clinician.
What is real, and what is not
Two things get conflated here constantly. What is real is a lender's own credit policy: some funders genuinely price and structure practice lending differently because their portfolio data supports it, and they compete on exactly that. What is not real is a regulatory concession. No Australian prudential standard prescribes better capital treatment because a borrower is a doctor, dentist or vet.
APRA's Prudential Standard APS 112, the standardised approach to credit risk, assigns risk weights by exposure classification: residential property, corporate, small and medium enterprise, commercial property and so on. Occupation does not appear as a classification anywhere in it. Banks using internal models operate under APS 113, which prescribes no occupation-based outcome either, leaving rating criteria to each institution's own internal rating system subject to APRA approval. Occupation may legitimately feature in a lender's own model. It never becomes an entitlement handed down by the regulator.
Two further points keep this honest. Professional package concessions and lenders mortgage insurance waivers for practitioners are residential home loan features and do not carry across to commercial practice lending, which is what a practice purchase is. And business-purpose credit sits largely outside the consumer credit protections: ASIC states that the law provides the lowest level of protection to commercial loans, including loans to small businesses, with AFCA's small business definition covering a primary producer or other business with fewer than 100 employees. A generous-sounding commercial offer is not backed by the protections a home loan borrower is used to.
The capital rules behind the claim
Source: APRA, Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk, Attachment A Tables 3 and 4 and Attachment B Table 12, read 14 August 2026. A revised APS 112 was released for consultation on 29 June 2026 with submissions closing 7 September 2026. These are capital rules that apply to the lender, not pricing rules that apply to you. They are not interest rates, they do not indicate what any lender will offer, and they are general information only. Reviewed at least every 90 days.
| Cost or requirement | Does 100% purchase-price finance automatically cover it? | What to do with it |
|---|---|---|
| The agreed practice purchase price | Potentially, for an eligible deal where the lender is prepared to fund the full price. | Confirm the approved amount against the final contract and price allocation, not the headline marketing limit. |
| Legal, conveyancing and duty costs | No. Some specialist lenders publish separate ways to fund transaction costs, but they are not automatically part of a 100 per cent purchase-price approval. | List them separately in the funding request before you sign and confirm which costs the facility will actually reimburse or pay. |
| Working capital after settlement | No. A practice can have its purchase price fully funded and still start with too little cash for payroll, rent, suppliers and the first debt repayment. | Size the cash buffer or line of credit against the billing lag and first operating cycle rather than assuming the acquisition loan solves it. |
| Lease bank guarantee or security deposit | Not usually as part of the purchase price itself. | Confirm the landlord's requirement while the lease assignment is being negotiated, because it can be a material day-one cash use. |
| Insurance and lender conditions | No. Required cover may be a condition before drawdown and an ongoing cost afterwards. | Start underwriting early and budget the premium separately from the purchase price. |
That distinction answers the deposit question more accurately than a single percentage. A buyer may have a zero-deposit purchase and still need cash or another facility for transaction costs and the first operating cycle. The next section deals with the funding gap when the approved amount, the contract price and the day-one cash requirement do not line up. For the cash side of that distinction, use the working capital guide.
- Current market evidence: specialist healthcare lenders publish up to 100 per cent purchase-price funding for eligible established-practice purchases and partnership shares.
- Important distinction: purchase-price funding does not automatically include legal costs, duty, lease security, insurance or post-settlement working capital.
What if the lender will not fund the whole practice purchase?
If approved debt does not cover the purchase price and the costs of getting to day one, the gap has to be solved before the transaction becomes unconditional. The realistic choices are more buyer cash, a lower price, separate facilities for assets or property, seller-funded consideration such as vendor finance or deferred payment, an earn-out, a staged buy-in, or walking away from a structure that leaves the practice over-leveraged.
| Gap solution | What it does | Main finance risk to solve |
|---|---|---|
| Buyer cash | Reduces the amount of acquisition debt needed at settlement. | Do not use so much cash that payroll, rent and the first operating cycle are left unfunded. |
| Renegotiate the purchase price | Brings the contract price back toward the value and cash flow the transaction can support. | The seller has to agree, and the revised price allocation still needs to work for both parties and the lender. |
| Separate equipment or premises finance | Matches identifiable assets or property to facilities designed for that collateral instead of forcing every dollar into a goodwill loan. | The facilities, valuations, securities and settlement dates have to be coordinated so one lender's conditions do not block another. |
| Vendor finance or deferred consideration | Leaves part of the price owing to the seller after settlement instead of requiring all cash on day one. | Tell the senior lender before approval. If the seller also takes security, priority, consent and any subordination or intercreditor arrangements become part of the legal and credit structure. |
| Earn-out | Makes part of the final price depend on agreed post-settlement performance rather than paying the full amount upfront. | The performance measure, payment timing and dispute mechanics need precise drafting, and the lender still has to understand the future cash obligation. |
| Staged buy-in | Buys a smaller ownership interest now and leaves later tranches for future dates or milestones. | The buyer needs clear governance, valuation and future-purchase mechanics so the next tranche does not become a new dispute or funding shock. |
Vendor finance is not invisible equity. It is still an obligation of the buyer, and if it is secured it can compete with another secured party for the same personal property. The PPSR's priority rules are why a senior lender may require the seller's security to rank behind its own or be dealt with under a separate priority arrangement. The exact documentation is a legal question for the parties and their advisers.
Also keep the acquisition gap separate from the working-capital gap. A structure can technically settle and still be unsafe if the buyer has no liquidity left for wages, super, rent and suppliers. For the wider debt structure, see the business loans guide.
Should you sign a practice purchase contract before finance is approved?
You can sign before finance is fully approved, but only after your solicitor has made the contract protect the conditions your finance and settlement actually depend on. If you sign an unconditional purchase contract first and the lender later requires a longer lease, a different entity, additional security or another condition you cannot satisfy, the finance problem can become a contract problem as well.
Current Australian healthcare acquisition guidance treats term sheets, exclusivity, due diligence, conditions precedent, leases, employee transfers, subject-to-finance conditions, deferred payments and vendor finance as parts of the same purchase process. The practical reason is simple: the lender's approval is often conditional on documents the sale contract is trying to complete.
What is the safest order from offer to settlement?
- Indicative offer or heads of agreement. Agree the commercial outline, but have your solicitor identify any clauses that are already binding, including exclusivity, confidentiality, costs or deposit mechanics.
- Valuation and due diligence. Test the earnings, goodwill, liabilities, lease, employees, contracts, permits and the seller's handover before the price and structure harden.
- Sale contract with the right conditions. Put the correct purchaser entity in the document and deal with finance, lease consent or variation, material diligence items and other completion dependencies as your solicitor advises.
- Formal credit assessment. The lender verifies the practice numbers, ownership structure, valuation position, security, lease and any insurance or other conditions.
- Loan documents and conditions precedent. Approval is not the same as funds being available. The lender's final conditions, signed documents, releases and third-party consents still have to be satisfied.
- Settlement and operational handover. The sale completes only after the money, securities, lease, releases and day-one operating items are ready to move together.
Conditional approval means "yes, if". Settlement-ready finance means the "if" items have actually been satisfied and the lender is able to release funds. That distinction is why the finance date in the sale contract should be set from the real critical path, not from the day an indicative approval email arrives.
| Issue | Why the lender cares | How the contract usually deals with the risk |
|---|---|---|
| Finance approval | An indication or conditional approval can still carry valuation, lease, security, insurance and document conditions that must be satisfied before funds are available. | Your solicitor can advise whether a finance condition or other completion condition is appropriate, what evidence is required and what happens if the condition is not satisfied by the finance date. |
| Lease assignment, renewal or extension | The lease protects the location, the fitout and part of the practice goodwill. A short or non-transferable lease can shorten or block the facility. | Completion can be made conditional on landlord consent and any lease variation the finance requires. |
| Entity and ownership structure | The borrower, asset owner, guarantor and recipient of clinical income need to line up with the structure being funded. | Set the acquisition structure with your accountant and solicitor before the contract hardens around the wrong purchaser. |
| PPSR and existing lender releases | The incoming lender does not want to fund assets or an entity while an outgoing secured party still has an unresolved claim over them. | Settlement mechanics should identify the registrations and releases that must occur before or at completion. |
| Material diligence findings | A payroll tax exposure, employee liability, permit problem or financial discrepancy can change both price and serviceability. | Your legal and accounting advisers can decide whether the issue is a price adjustment, warranty, indemnity, condition or reason not to proceed. |
This is legal territory, not a lender drafting exercise. Have the contract reviewed before signing and make sure the finance date, lease timetable and settlement date are realistic together. Our whitecoat finance sequencing guide explains why overlapping facilities and security conditions need to be ordered before settlement rather than solved at the end.
General information only: contract rights depend on the actual sale agreement and jurisdiction. A finance clause is not a generic permission to walk away from a purchase. Your solicitor should advise on the wording, dates, evidence and termination rights before you sign.
What security and guarantees does a practice lender take?
A practice lender can combine security over the business or ownership interest, identifiable assets and property with personal guarantees and other credit conditions. The exact package depends on which layer is being funded and on the lender's documents. A goodwill-heavy facility is not unsecured simply because the family home is not mortgaged.
Security a lender may be able to take
- Security over the practice entity and its present and after-acquired personal property
- A security interest over the buyer's partnership, share or ownership interest where the structure permits it
- Identifiable equipment and other financed personal property
- A registered mortgage where clinic premises or outside property are offered
- Directors' or principals' guarantees
- Assignment or evidence of required life and income protection cover where the lender's policy requires it
Value that is harder to realise independently
- The practice's goodwill apart from the business that produces it
- Patient or client relationships that depend personally on a departing practitioner
- Health records, which are regulated information and not ordinary saleable collateral
- A fitout fixed to premises the practice does not own
- Clinical income that is earned outside the borrowing entity
- Future referrals or billings that disappear if the handover fails
The practical point is to read the guarantee and security documents as seriously as the interest rate. A personal guarantee can move a business failure into the principal's personal balance sheet. An insurance requirement can be an ongoing condition for the life of the facility. And a lease bank guarantee can use liquidity even when the acquisition itself is fully funded. Our security glossary explains the terminology before you reach the letter-of-offer stage.
What protects a guarantor, and when does it apply?
The 2025 Banking Code of Practice applies only to subscribing banks. It contains commitments around prospective guarantors and, in relevant circumstances, selling a guarantor's primary place of residence. A specialist non-bank is not automatically bound by those Code obligations, so do not assume the protections behind one offer are identical to another. Read the guarantee and take legal advice either way.
The same logic explains why lenders care about the seller's restraint, handover period and the durability of the remaining practitioner base. Those things do not create collateral, but they protect the cash flow that supports a goodwill-heavy loan. Our business loans guide covers how commercial borrower protections differ from consumer credit.
What do lenders read in your practice numbers?
An assessor reads a practice's numbers for one thing above all others: whether the income survives the change of ownership. Everything else on the file is subordinate to that question, and it is why two practices with identical profit can be assessed very differently.
Take a three-practitioner clinic where one principal generates most of the billings and is the one selling. On paper the practice is profitable and the numbers support the debt. In practice, the assessor is looking at whether that revenue walks out the door at settlement, and the file has to answer it: what the fee split arrangements say, whether patients are contracted to the practice or to the individual, what the restraint covers, and what the remaining practitioners bill on their own. This is where a well-prepared submission separates itself, and where most of the assessment time actually goes.
| What the assessor reads | What it is testing | What it is not reading |
|---|---|---|
| Billings mix by practitioner | Concentration risk. How much of the revenue depends on one person, and whether that person is staying. | Headline turnover on its own. |
| Fee split and service agreements | Whether the income the loan is serviced from actually accrues to the borrowing entity, and whether the agreement creates a payroll tax exposure. | What the practitioners take home personally. |
| Patient or client list dependency | Whether relationships transfer with the business or with the departing principal. | The list itself as an asset. It is not security. |
| Reconciled financials, three to five years | That the tax returns, activity statements and management accounts tell the same story. | A projection or a forecast presented without history behind it. |
| Add-backs and owner benefits | Whether adjusted earnings are defensible line by line, or assembled to reach a number. | An adjusted earnings figure supplied without the workings. |
| Receipt timing on billings | How long the gap runs between service and payment, and whether working capital covers it. | Accrual profit as a proxy for cash. |
| Lease term against loan term | Whether the tenancy protecting a fitout outlasts the facility funding it. | The quality of the fitout itself. |
| Serviceability after the purchase | The combined position with the new debt, an assessment buffer applied, and the vendor's drawings removed. | Historic serviceability under the vendor's structure. |
Do practice lenders use EBITDA, gross billings or future maintainable earnings?
They use different measures for different jobs, so they should not be treated as interchangeable. Gross billings shows the scale and concentration of revenue. Normalised earnings or future maintainable earnings is used to judge the profit likely to survive the ownership change. EBITDA is a lending or valuation input in some healthcare credit policies, particularly for larger clinics or groups. Serviceability then tests whether the borrower can meet the proposed debt after expenses, owner drawings and the lender's own buffers.
- Gross billings: useful for practitioner concentration, revenue mix and trend analysis, but not enough on its own to prove debt capacity.
- Normalised earnings or future maintainable earnings: adjusts the historical result for sustainable post-sale trading and defensible add-backs.
- EBITDA: can be used as a leverage or valuation reference in some healthcare lending segments. A published multiple is a policy input, not a promise that the same multiple applies to every practice.
- Serviceability and cash flow: the final repayment test after the proposed debt, timing of receipts and the buyer's wider obligations are included.
Independent verification is the part buyers most often skip. The federal government's own guidance on buying an existing business puts it directly: you need to independently collect and check the financial information, examining the past three to five years including tax returns, business activity statements, accounts receivable and payable, balance sheets, profit and loss records and cash flow statements. A lender will do exactly that. Doing it first is how you find the problem while you can still price it into the contract.
Where the practice's billings sit behind Medicare or health fund processing, the receipt lag is a working capital question rather than a profitability one, and it is usually solved separately from the acquisition facility. Our invoice finance guide covers that layer, how a clinic line of credit absorbs the billing gap covers the facility that usually solves it, and our entry on how the loan to valuation ratio is calculated covers the position where property is involved.
Does payroll tax on contractor practitioners affect your practice loan?
It can, and it reaches the loan through the entity rather than through the borrower. Where a practice pays contractor practitioners under a service agreement, state revenue offices may treat those payments as wages under the relevant contract provisions. An unquantified exposure of that kind is a contingent liability sitting on the entity a lender is about to take a general security agreement over, and it can also change whether the income the loan is serviced from accrues to the borrowing entity at all.
This is the single most common thing a practice buyer has not looked at and an assessor has. It is not a tax footnote. It is a how serviceability is assessed input and a diligence item, and it is the strongest argument for the structure question in the next section.
Where the law sits
Payroll tax is administered by each state and territory revenue office, not the ATO. Two appellate decisions, in the Optical Superstore and Thomas and Naaz matters, established that money collected by a practice and passed to practitioners can be an amount paid for payroll tax purposes even where the practitioner was always beneficially entitled to it. From 2023 the harmonised states issued rulings on that basis, and then diverged sharply through different amnesties, exemptions and relief measures.
A further appeal concerning the contractor provisions is before the High Court of Australia, following the grant of special leave on 4 December 2025. It will be the first time the court has considered those provisions, and because they are largely harmonised outside Western Australia the outcome will apply well beyond the case itself. The position below is the position as at the review date on this page and is a live area. Confirm it with your accountant and the revenue office in your state before relying on it.
| Jurisdiction | Where the position sits | What it means for a practice buyer |
|---|---|---|
| New South Wales | Ruling issued in 2023 in line with the harmonised states, an audit pause that has since ended, and a rebate for practices meeting a bulk billing proportion that is set higher for metropolitan Sydney than for regional areas. | Rebate eligibility turns on the practice's own billing mix, so it is a number to verify from the practice's records rather than assume. |
| Victoria | A relevant contracts ruling for medical centres, ex gratia relief for prior assessments, then an exemption for fully funded general practice services calculated by formula. | The lowest tax-free threshold in the country means Victorian practices reach the tax sooner than most. |
| Queensland | A full exemption for wages paid by a general practice to general practitioners, by amendment to the Payroll Tax Act, with patient fees paid directly to the practitioner outside the net. | The exemption depends on how the money actually moves. Routing patient fees through an interposed entity can put the arrangement back inside. |
| South Australia | An amnesty that closed, after which most applicant practices were told their arrangements are relevant contracts, plus an exemption for bulk billed consultations and retrospective relief for specialists and dentists that stopped at a cut-off date. | Whether a practice registered before the cut-off changes its historical exposure materially. Ask, and get the answer in writing. |
| Western Australia | Outside the harmonised contractor provisions. The test looks at the totality of the relationship, closer to the common law employee test. | Service agreements have to reflect how the practice and its practitioners actually operate, not just how the document is labelled. |
| Tasmania | No ruling and no concession announced, but Tasmania is party to the harmonisation agreement and its legislation carries a relevant contract definition. | Silence is not an exemption. Treat the exposure as open rather than resolved. |
| Australian Capital Territory | An amnesty tied to a bulk billing target, with the target requirement subsequently waived. | Check whether the practice actually registered, because eligibility generally depended on it. |
| Northern Territory | No medical specific guidance published, with the highest tax-free threshold in the country. | Many smaller practices sit under the threshold entirely, which is a different question from being exempt. |
In New South Wales the payroll tax rate is 5.45 per cent on Australian wages above an annual tax-free threshold of $1,200,000, and Revenue NSW publishes the same rate and threshold for 1 July 2026 to 30 June 2027 as for the year before. Where contractor practitioner payments are drawn into the wages figure, they are counted before that threshold is applied, which is why a practice can move from paying nothing to paying on a substantial base without hiring anyone.
Source: Revenue NSW, Payroll tax thresholds and rates, read 14 August 2026. Thresholds and rates differ in every jurisdiction and are apportioned where wages are paid across more than one. General information only, not tax advice. Reviewed at least every 90 days.Why an unresolved exposure is bigger than the tax
Three features turn a payroll tax question into a number worth arguing about in the contract. First, the reassessment window reaches back years rather than months, so a practice that has never been assessed is not a practice with no exposure. Second, penalty tax and interest sit on top of the primary tax, and revenue offices publish materially reduced penalties for a voluntary disclosure made before an investigation starts, which means the timing of when the position is raised changes what it costs. Third, grouping provisions can make group members jointly and severally liable, so a practice joining or forming a group inherits an exposure it did not create.
None of that is settled by reading a service agreement and deciding it looks fine. It is quantified by an accountant against the practice's actual arrangements and the rules in its own state, and then it is either priced into the contract, held back at settlement, or dealt with by changing the structure of the purchase.
The lending consequence is simple to state and easy to miss. A practice with an unresolved payroll tax position is a practice whose true wage cost is unknown, which means its adjusted earnings are unknown, which means the serviceability calculation you and the lender are both relying on is built on a number that has not been settled. Get it settled in diligence. This is general information only and not tax advice, so confirm the position for the specific practice with your registered tax agent.
Should you buy the assets or the entity?
Buying the assets generally leaves the vendor's history behind, and buying the entity generally brings it with you. That is the practical difference that matters for finance, because it decides whether an unresolved liability such as a payroll tax exposure, an employee entitlement or a disputed contract becomes yours at settlement. It is a legal and tax decision rather than a lending one, and the resulting borrower structure then flows into the commercial credit assessment, but it changes what a lender is being asked to secure, so it belongs in the finance conversation early.
| Question | Buying the assets and goodwill | Buying the shares or units in the entity |
|---|---|---|
| What you receive | Named assets: goodwill, equipment, fitout, and the benefit of contracts that are assigned to you. | The entity itself, with everything it owns and everything it owes, known and unknown. |
| Historical liabilities | Generally stay with the vendor, subject to the contract and to employee entitlement rules. | Generally travel with the entity, which is why warranties and indemnities do the heavy lifting. |
| Contracts and registrations | Need to be assigned or renegotiated, including the lease, which needs landlord consent. | Usually continue undisturbed, unless a change of control clause is triggered. |
| What the lender secures | A general security agreement over your new entity and its clean asset base. | A general security agreement over an entity carrying history, so diligence quality matters more. |
| Duty on the transfer | Some jurisdictions impose duty on a transfer of business assets, which can extend to goodwill, so the split you negotiated earlier has a settlement cost attached. | Duty treatment differs again and turns on what is being transferred and where, including landholder rules where property sits inside the entity. |
| Where the tax question sits | Apportionment of the price across the layers, and the vendor's capital gains position. | The cost base of the interest acquired, and any liabilities already inside the entity. |
Neither route is right in the abstract. Entity purchases are common and often unavoidable, particularly on a buy-in where you are acquiring an interest in something that already exists. The point is that the two routes create different diligence obligations and different security positions, and a buyer who has not made the choice deliberately has usually made it by default.
This is squarely a question for your solicitor and your accountant, and it should be settled before heads of agreement rather than after. Bring the answer to the finance conversation, because it changes the structure a lender can offer and it is the point at which the payroll tax exposure in the section above either becomes your problem or does not.
How does the funding differ if you buy in, buy out or start from scratch?
Buying a share is a control problem, buying the whole practice is a transition problem, and building from nothing is a history problem, and lenders treat those three risks completely differently. Two practitioners can take on the same amount of debt in the same suburb and meet entirely different conditions for that reason alone.
| Route | What you are actually funding | What the lender wants to see | Where the risk sits |
|---|---|---|---|
| Buying in to an existing practice | A share of goodwill, and usually a share of equipment and fitout, bought from the existing owners. | A clearly documented ownership interest, the practice financials and a security position the lender is willing to accept. The exact package depends on whether the interest is a partnership share, company shares, units or another structure. | Control and transferability. A part-owner may not control distributions, strategy, future capital calls or the timing of an eventual exit. |
| Buying out the whole practice | All four layers at once, weighted heavily towards goodwill in most established clinics. | Trading history that survives the vendor leaving: restraints, handover, contracted patient relationships, remaining practitioner billings. | Transition. The value bought is the value that must still be there in twelve months. |
| Starting from scratch | Fitout, equipment, working capital and premises if bought. No goodwill line at all. | A credible ramp-up plan, personal capacity to service through the build phase, and usually more tangible security or a stronger contribution. | History. There are no financials to assess, so the assessment falls back on the practitioner. |
For the non-goodwill layers, the finance quickly separates into the assets themselves: use the equipment finance guide for clinical assets and the commercial property guide if the premises are being bought as well. The next section deals specifically with the legal interest being acquired when the transaction is only a share of the practice.
How does practice finance work when you are buying only a share of a practice?
Yes, a minority buy-in can be financed, and specialist healthcare policies currently publish funding of up to 100 per cent for an eligible partnership share. The lender first has to understand exactly what legal interest you are buying and what security it can take over that interest. Buying 30 per cent of a practice is not simply a smaller version of buying 100 per cent of it.
| Ownership form | What the buyer is acquiring | Finance and diligence questions |
|---|---|---|
| Partnership interest | A contractual and economic interest in the partnership under the partnership agreement and applicable law. | What share of income and liabilities belongs to the buyer, what rights attach to the interest, whether the interest can be transferred or secured, and how a future exit or larger buy-in is valued. |
| Company shares | Shares in the company that owns or operates the practice. | Voting rights, dividend or distribution rights, transfer restrictions, existing company debt and security, shareholder-agreement terms and what happens on death, disability, dispute or exit. |
| Trust units or another ownership interest | Units or other rights governed by the trust deed or transaction documents. | The rights actually attached to the units, trustee powers, transfer or security restrictions, distributions, capital calls and any existing financier position. |
The PPSR treats shares and other financial property as personal property capable of being subject to a security interest. That does not mean every buy-in can be financed the same way. The shareholder, partnership or trust documents can affect control, transfer and enforcement, and an existing practice financier may already hold security over company assets. Those documents need to be checked before anyone assumes the incoming buyer can grant the security a new lender wants.
From the buyer's side, the finance review and the governance review should happen together. Check voting thresholds, distributions, remuneration, future capital calls, restraints, transfer rights, deadlock, death or disability provisions, the valuation formula for later tranches and what happens if one owner wants out. A loan can be serviceable on today's numbers and still be a poor structure if the buyer has no workable path through those events.
For the terminology around the interest itself, see the practice buy-in glossary entry. This is general information only; the security and governance position depends on the actual partnership agreement, constitution, shareholder agreement, trust deed and finance documents.
How long can practice finance run?
Goodwill and practice-purchase loans can run for up to 15 years with some specialist healthcare lenders, while practice-premises finance can run for up to 30 years. Equipment is usually bounded by the asset's useful life, and fitout finance is constrained by the period the lease actually protects. Those are current published examples, not universal lender limits.
| Layer | What currently sets or illustrates the term | What can shorten it |
|---|---|---|
| Goodwill / practice purchase | Some specialist healthcare lenders currently publish terms of up to 15 years for eligible goodwill and practice-purchase facilities. | A high dependence on one practitioner, weak handover, short restraints, lower serviceability or lender policy for the profession and structure. |
| Equipment | The working life, age and resale profile of the financed asset. | Older equipment, fast-moving technology or assets with weak resale value. |
| Fitout | The lease term and options that protect the practice's right to occupy the premises. | An unexercised option, a lease approaching expiry or landlord conditions that leave the lender exposed beyond the protected tenancy. |
| Premises | Some specialist healthcare lenders currently publish practice-premises terms of up to 30 years. | Property type, valuation, specialised improvements, borrower serviceability and normal commercial property policy. |
The durable rule is the alignment rule: if the facility outlives the asset, lease or cash flow protecting it, expect the lender to shorten the term, ask for a different structure or require more support. The equipment finance guide and commercial property loan guide cover the two tangible layers in more detail.
What the market publishes, as at 14 August 2026: specialist healthcare funders generally publish terms of up to around 15 years on a goodwill or practice-purchase facility, and materially longer where the practice premises are being bought, because the property supports a longer amortisation than an unsecurable goodwill exposure does. We do not name or recommend individual lenders on this page. Terms are indicative only and remain subject to credit approval, profession, structure and lender policy at the time of application.
What documents does a lender need for a practice purchase?
A clean practice-finance file usually needs the sale terms, three to five years of reconciled practice financials, billings by practitioner, service agreements, the lease, an equipment schedule, the buyer's personal financial position, the proposed entity structure and evidence for any material tax or payroll-tax exposure. Missing one of those can stop the lender from testing whether the income and security actually transfer at settlement.
In practical order, have the following ready before the finance date starts getting close:
- The contract of sale or heads of agreement, including the price allocation across goodwill, equipment, fitout and any property.
- Three to five years of tax returns, activity statements and financial statements for the practice, reconciled against each other.
- Billings by practitioner and the fee-split, service or contractor agreements that explain where the income accrues.
- The lease, its options, any proposed assignment or variation and the landlord's requirements.
- An equipment schedule showing ownership, age and condition, separated from leasehold fitout.
- The restraint, handover and any post-sale employment or contractor arrangement for the seller.
- Your personal assets, liabilities, income and existing commitments, plus any outside property you do or do not intend to offer.
- The proposed purchaser and trading structure agreed with your accountant and solicitor.
- Evidence of the practice's payroll-tax position and any other material liability found in diligence.
- A cash-flow forecast that includes the acquisition debt and the working-capital gap after settlement.
Government guidance on preparing a business loan application similarly emphasises cash flow, a business plan, financial reports, lease agreements and personal financial information. The more specialised practice documents above are what let a healthcare lender test continuity rather than just historic profit. If several facilities need to settle together, our loan-pack sequencing guide covers the order problem.
How much working capital should you keep after settlement?
There is no useful universal dollar amount. Size the buffer to the largest cash deficit between settlement and the point where normal practice receipts reliably cover payroll, premises, suppliers, tax and super, insurance and the new loan repayment. The right number is therefore a cash-timing calculation, not a percentage of the purchase price.
A simple way to build it is:
The line items usually include the first payroll and super run, rent and outgoings, supplier and stock payments, insurance, software and merchant costs, professional fees, any lease bank guarantee or security deposit, tax obligations falling due, and the first scheduled debt repayment. Against those you can count only the cash and receivables the purchaser actually owns and can collect after settlement.
This is why a profitable practice can still need a separate liquidity facility. Profit measures whether the business makes money over a period. Working capital measures whether the money arrives before the bills do. Our working capital guide, business line of credit guide and clinic line-of-credit sizing guide cover the funding side once you have built the cash-flow gap.
Useful distinction: a 100 per cent practice-purchase loan can still leave the buyer undercapitalised if it funds the seller but not the first operating cycle. Budget the acquisition and the transition together.
What has to be in place before settlement so you can bill from day one?
Finance approval is only one settlement gate. The practice also needs the right lease position, released outgoing security interests, the buyer's trading and employer setup, required insurance, lawful patient-record arrangements and profession-specific billing registrations ready for the new owner. If one of those lags, the debt can start before the revenue does.
For Medicare-billing practitioners, Services Australia requires a provider number for each place of practice. At a new location you generally need an additional provider number, and once it issues Services Australia says to wait two business days before submitting claims with the new number. GP practices can also have separate PIP, MyMedicare or Organisation Register change requirements when ownership changes, so those should be checked against the exact practice rather than assumed to move automatically.
| Item | Why it can block day one | Who normally owns it |
|---|---|---|
| Final finance conditions and lender documents | An approval can still have conditions precedent that must be satisfied before the lender will release funds. | Buyer, broker, lender and solicitor working from the final letter of offer and settlement checklist. |
| Lease assignment or new lease | The buyer needs the legal right to occupy the rooms, and the lender may require a minimum protected term before drawdown. | Buyer and solicitor with the landlord or managing agent. |
| PPSR searches and outgoing lender releases | Existing security interests over business assets or the vendor entity may need to be released as part of settlement. | The solicitors, with the outgoing lender and incoming lender where relevant. |
| Settlement statement and purchase-price adjustments | Stock, employee entitlements, prepaid expenses, receivables and other agreed adjustments can change the cash required on the actual settlement date. | Buyer and seller solicitors with the accountant, using the sale agreement and final completion statement. |
| Provider and prescriber setup for the location | A practitioner cannot claim Medicare benefits for services at a location until the required provider-number position is in place. | The practitioner through Services Australia and HPOS, started before the proposed commencement date. |
| Claiming, payment and bank-account setup | Having the right provider number does not by itself mean every claim or payment rail is pointing to the new owner's bank account or organisation. Medicare, health-fund, HICAPS, merchant and other claiming arrangements need to be checked for the profession being acquired. | Buyer and practice manager with the relevant bank, claiming platform, health fund or Services Australia process. |
| GP practice program ownership changes | PIP, MyMedicare and Organisation Register details can require ownership or organisational changes to be notified separately from the practitioner's own provider number. | The practice's authorised contacts through the relevant Services Australia process, where the programs apply. |
| Patient records and privacy | Health information is sensitive personal information. Due diligence access, custody and any post-sale transfer of records must be handled lawfully, with state or territory rules checked where they add profession-specific obligations. | Buyer and vendor with their solicitors and practice systems advisers. |
| Employees and entitlements | A sale can be a transfer of business for Fair Work purposes. The buyer needs to know who is transferring, which service must be recognised, which entitlements carry across or are paid out, and what cash adjustments are required at settlement. | Solicitor, accountant or payroll adviser, with the employment position reflected in the sale agreement. |
| Employer, payroll and workers compensation setup | The new employer needs payroll, withholding, super and workers compensation arrangements ready before the first pay run. From 1 July 2026, Payday Super also makes the timing of super payments a live post-settlement cash-flow item. | Accountant, bookkeeper or payroll adviser, plus the state or territory workers compensation scheme. |
| Insurance required by the lender and the practice | Required cover may be a condition of drawdown and professional or business cover may need to start in the new entity from settlement. | Buyer and insurance adviser, started early enough for underwriting and policy evidence. |
Services Australia currently says an additional provider number is needed when a practitioner works at a new practice location and says to wait two business days after that number issues before submitting claims with it. Fair Work says a sale can create a transfer of business and that service and entitlements do not all transfer in the same way, so employee liabilities need to be reconciled rather than assumed. The OAIC treats health information as sensitive information and requires health practices to maintain privacy processes around the records they hold. These are operational rules sitting beside the finance, and each profession can have additional state, board or claiming requirements.
The settlement principle is universal: start the operational transfers in parallel with the finance. The lender funding the purchase does not automatically transfer the lease, release old PPSR registrations, reconcile employee entitlements, move clinical records, set up payroll or make the new owner's revenue rails work. From 1 July 2026, Payday Super also means super generally needs to reach an employee's fund within seven business days after payday, subject to the rules and exceptions, so the first payroll cycle now carries a tighter cash-timing obligation. The working capital guide covers the cash consequence where one of those items pushes receipts behind the first bills.
- Medicare location rule: Services Australia says an additional provider number is needed when working at a new practice location, and to wait two business days after issue before using the new number for claims.
- Employee transfer: Fair Work says service and entitlement treatment can differ by entitlement and by whether the businesses are associated entities, so the sale agreement and settlement adjustments need the actual employment position.
- Health information: the OAIC requires health service providers to handle sensitive health information in line with the Privacy Act and Australian Privacy Principles, with additional state or profession rules checked where relevant.
- Payday Super: from 1 July 2026, super guarantee is tied to payday and generally needs to be received by the employee's super fund within seven business days, subject to the statutory rules and exceptions.
How are the four funding layers treated for tax?
The tax treatment follows what you bought, not the label on the loan. Goodwill, depreciating equipment, leasehold fitout and property can sit under different tax rules even if one approval funds them together. The table below is general information only and should be checked against your structure by a registered tax agent before you agree the purchase-price allocation.
| Layer | Broad treatment | What the buyer should confirm |
|---|---|---|
| Goodwill | Goodwill is a CGT asset rather than a depreciating asset or capital works deduction. | The amount allocated to goodwill, the legal owner of it, and how that allocation interacts with the seller's and buyer's tax positions. |
| Equipment | Identifiable equipment is generally treated as a depreciating asset, subject to the tax rules applying to the asset and taxpayer. | Which items are separate equipment rather than part of the building or fitout, their effective lives and the available deduction method. |
| Fitout | Alterations and improvements to a leased building, including shop fitouts and leasehold improvements, can fall within the ATO's capital-works rules. | Which costs are capital works and which are separate depreciating assets, plus the applicable commencement date and deduction rate. |
| Practice premises | The building component may attract capital-works treatment while land does not depreciate. | The land/building apportionment, ownership structure, GST and duty position, and whether property is being acquired inside or outside the practice entity. |
Fitout and equipment should not be treated as the same thing
The ATO's capital works guidance expressly includes alterations and improvements to leased buildings, including shop fitouts and leasehold improvements. Equipment installed inside the clinic may instead be a separate depreciating asset. That split is exactly why the purchase contract and asset schedule should not use one undifferentiated fitout number.
Borrowing costs and interest are separate questions
Loan establishment and similar borrowing expenses can have a different deduction timing from interest, and the treatment depends on the borrowing and taxpayer. Do not assume a fee paid at settlement is deductible in full in the same year merely because it is a finance cost.
Goodwill matters again when the practice is sold
Goodwill is a CGT asset, and the small business CGT concessions can become relevant where their conditions are satisfied. Those conditions are structure-specific and can involve connected entities, affiliates, turnover and net asset tests, so this page does not treat them as an automatic seller concession.
The practical point is to agree the allocation with your accountant and solicitor before the contract is finalised. The lender may finance the layers together, but tax does not collapse them into one asset. Our goodwill glossary and equipment finance guide separate the two most commonly confused components.
What gets a practice finance application declined?
Practice deals are rarely declined on the headline numbers. They are declined on the gaps between the numbers. A file that looks strong on profit and price can still fail because the lender cannot verify a claim, cannot take security over the structure, or cannot see the income surviving the handover. Almost every decline reason below is cheaper to investigate before submission than after a finance date is running. The how serviceability is assessed and what a lender can take security over tests explain why a strong headline profit can still fail once the structure is examined.
From our broking, indicative
Across the practice deals we place, the decline reasons cluster in a small number of places, and they are consistent enough to plan against. Where this commonly lands is not the price or the profit but the verification and the structure behind them:
- Practice financials that are incomplete or unreconciled, where the tax returns, activity statements and management accounts do not agree with each other and nobody has explained why.
- A patient list or billings claim that cannot be independently verified from the practice's own records.
- A lease term shorter than the loan term on a leasehold fitout, with no exercised option and no renewal agreed.
- A buy-in structure where the lender cannot obtain an acceptable security position over the interest being acquired or the wider transaction.
- An unresolved payroll tax position on contractor practitioner payments, which leaves the practice's real wage cost, and therefore its adjusted earnings, unsettled.
- Credit file damage from shopping the deal directly to several lenders, where the enquiry count itself becomes an assessment issue before anyone has looked at the merits.
Qualitative only, based on practice deals we have placed and on the decline reasons we see repeat. No figures, bands or timeframes are given here because they vary too widely by lender, structure and profession to be indicative of anything useful. This is not a quote, an offer, an assessment of your likelihood of approval, or financial advice. Actual terms and outcomes depend on lender policy and your circumstances at the time of application.
The last item on that list is the one buyers cause themselves, and it is worth understanding why it happens. The specialist funders in this market all publish attractive headline offers, so the natural move after reading three of those pages is to enquire with all three. Each enquiry can leave a mark, and a later assessor reads a cluster of them as a deal that has been declined elsewhere, whether or not it has. One conversation that goes to the right funder first is worth more than three that go everywhere at once.
Everything else on the list is preparation. Reconcile the financials before you submit. Get the billings claim evidenced from the practice's own records. Settle the lease before you fund works attached to it. Settle the payroll tax position in diligence. Agree the entity structure with your solicitor and accountant before credit sees it. Practices that arrive at a lender in that condition are assessed on their merits, which is all a good practice needs.
Practice finance only makes sense once you stop treating it as one loan. Goodwill, equipment, fitout and premises are different exposures with different security positions, terms and tax consequences, and the purchase price is only the first number to test. The value a lender accepts, the debt the post-sale cash flow can service and the cash required to reach day one can all be different.
That is why full purchase-price funding can be real while still carrying guarantees and, in some policies, insurance or other conditions. Before the transaction becomes unconditional, test the transferable earnings, valuation, lease, ownership structure, any funding gap and the working capital left after settlement. Then run the finance and the operational handover in parallel.Key takeaway: do not ask only how much a lender will advance. Ask whether the practice value, security structure and post-settlement cash flow all support the same transaction.
Frequently Asked Questions
An eligible established-practice purchase can require no cash deposit because some specialist healthcare lenders currently publish finance for up to 100 per cent of the purchase price. That does not mean every buyer qualifies, or that 100 per cent of the price covers legal costs, duty, lease security, insurance and working capital. The required contribution depends on the practice cash flow, goodwill share, borrower strength, profession, transaction structure and lender policy. Work out the post-settlement cash requirement as well as the purchase-price contribution.
Often no. Some specialist healthcare lenders currently publish practice-purchase facilities that do not require the family home as additional what a lender can take security over. That is not the same as an unsecured loan. The lender can still take security over the practice or ownership interest and relevant personal property, require personal guarantees, and in some structures require life or income protection cover. Read the actual security documents before treating a no-home-security offer as low recourse.
It can be a lender condition. Some specialist healthcare lenders currently state that borrowers or principal practitioners must provide life and income protection cover sufficient for loan balances secured by how goodwill is defined. The requirement, amount, policy type and assignment mechanics vary by lender and facility. If it is a condition, start it early because underwriting can become part of the settlement timetable.
Neither structure is automatically better. An asset purchase lets the buyer choose the assets and contracts being acquired and can reduce exposure to some historical liabilities, while buying the entity preserves the existing company or trust position but can bring its history with it. The choice affects tax, payroll tax, employees, contracts, licences, lender what a lender can take security over and settlement mechanics, so settle it with your solicitor and accountant before the purchaser named in the contract is locked in.
Goodwill as a legal concept is a CGT asset, so a gain on its disposal can be subject to capital gains tax. Small business CGT concessions may apply where their conditions are satisfied, but they are not automatic and depend on the taxpayer, asset, connected entities and the relevant turnover or net-asset tests. The buyer and seller can also have opposing preferences about how the purchase price is allocated, so obtain tax advice before the contract fixes the goodwill amount.
Ownership rules depend on the profession, entity, state law and the clinical and billing arrangements, so there is no single Australia-wide lending answer. From a finance perspective the lender needs to know who owns and controls the borrower, who earns the clinical income, who can grant what a lender can take security over and who can give guarantees. Confirm the permitted structure with your lawyer and accountant before asking a lender to approve finance around it.
An unpaid or unassessed payroll-tax exposure can change both the price and the earnings a lender is relying on. On an entity purchase the historical liability can remain inside the entity being acquired, while on any structure the correct payroll-tax treatment can change the practice's normalised wage cost and how serviceability is assessed. Quantify the position during diligence with your accountant and relevant revenue office before the finance and sale become unconditional.
Yes, a practice sale can be structured so part of the price is paid later to the seller, but the senior lender needs to know about it before approval. It is still a buyer obligation, and if the seller takes what a lender can take security over its ranking against the incoming lender becomes part of the credit structure. Expect consent, priority or subordination arrangements, and expect the lender to test whether the practice services both obligations. Do not use it to make an unaffordable purchase look fully funded.
Sometimes, but do not assume a 100 per cent purchase-price loan automatically covers those costs. Some specialist healthcare lenders publish separate products or additional funding for legal, conveyancing and duty costs. Working capital is often sized separately because it depends on the timing gap between settlement, payroll and the first normal receipts. Put every transaction and day-one cost into the funding request before the contract dates start running.
If you will provide Medicare-claimable services at a new place of practice, you generally need the provider-number position for that location in place before claiming there. Services Australia says a provider number is required for each place of practice and, after an additional provider number issues, to wait two business days before submitting claims with it. GP practice ownership can also trigger separate PIP or Organisation Register/MyMedicare changes at the practice level. Our guide to business loans in Australia covers how lenders assess a borrowing entity.
There is no reliable market-wide approval time because the critical path is usually the file rather than the credit queue. Reconciled financials, a clear purchase structure, lease consent, evidence of billings, insurance conditions and resolved diligence all shorten it. Missing documents, or a contract date that lands before those items are ready, turn an approval into a settlement problem. Work backwards from settlement and set the finance condition with your solicitor. Our guide to business loans in Australia covers how a borrowing entity is assessed.
For a start-up, greenfield or materially changed practice, expect a lender to want a business plan and cash-flow forecast because there is limited or no trading history under the proposed model. For an established acquisition historical financials carry more weight, but expect a forecast showing the new debt, owner drawings and what happens when the seller's income leaves. Australian government guidance says lenders usually want a business plan when assessing business finance. Our guide to business loans in Australia covers how a borrowing entity is assessed.
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