How payroll tax on contractor doctors affects a practice loan, where NSW, Victoria, Queensland and SA stand in October 2026, and what lenders ask to see.
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Payroll Tax · Medical Practice · Lender File
For years, payroll tax on contractor doctors was a job for the accountant at year end. Since the contractor rulings it sits on the credit desk too, because an unpriced back-year exposure is a debt the lender has not been told about. Here is where each state stands, and the file that answers the lender's questions.
Quick Answer
Payroll tax on contractor practitioners is now a credit question: New South Wales, Victoria, Queensland and South Australia each give GP practices their own relief, dental, specialist and allied health practices carry the full exposure, and lenders want the position in writing before approving a practice loan. The positions below are as at October 2026, read from each revenue office, and the practice finance guide covers the wider lending picture for medical, dental and vet owners.
Also called: GP payroll tax, medical centre payroll tax. "GP payroll tax" usually means the state exemptions and rebates for general practice; "medical centre payroll tax" is the wider relevant contract question, which also reaches dental, specialist and allied health practices.
Why does payroll tax on contractor doctors now matter to a practice loan?
Payroll tax on contractor doctors matters to a practice loan because a practice that may owe tax on years of practitioner payments is carrying a debt nobody has put a number on, and lenders do not lend against numbers they cannot see. For a long time the question sat with the accountant at year end. It moved to the credit desk once revenue offices and tribunals started reading ordinary service and facility arrangements as relevant contracts.
Two decisions did most of the work. In Thomas and Naaz, a New South Wales medical centre was found liable for payroll tax on amounts paid to the GPs working from its rooms, even though the doctors billed patients in their own names. In Optical Superstore, the Victorian Supreme Court reached a similar result for optometrists working in a retail practice. Neither case changed the law. Both showed that the way patient fees flowed, and who the patients really belonged to, could turn a contractor arrangement into deemed wages.
For a lender, that creates a contingent liability on the credit file: a possible assessment, with interest and penalties, covering several back years, that may never be raised or may land in the middle of the loan term. In practice, the lender is not trying to rule on the tax question. It wants to know whether the exposure exists, how big it could be, and whether the practice has dealt with it. If you are on the buying side, the medical practice acquisition loan post covers how the same rulings play out in due diligence and the sale contract. This post is about the practice you already run.
When are payments to contractor doctors, dentists and allied health practitioners treated as wages?
Payments to contractor doctors, dentists and allied health practitioners are treated as wages for payroll tax when the arrangement is a relevant contract and none of the exclusions applies. The relevant contract rules are largely harmonised across the states. They catch payments made to a contractor who supplies services to, or for, the practice in connection with its business, which is wide enough to cover a practitioner seeing patients in the practice's rooms under a service or facility agreement.
Each revenue office publishes its own ruling on how the rules apply to medical centres, and the reasoning runs along similar lines: who controls the patient list, who sets fees and hours, whose name the patient relationship sits in, and whether the money genuinely flows from patient to practitioner before any service fee comes back to the practice. That is the relevant contract read, and it is the part of the file a lender will ask your accountant to confirm in writing.
Under the harmonised rules, the exclusions most often tested in medical practices are these, as at the time of writing:
- Short engagements. Services provided to the practice for no more than 90 days in a financial year can fall outside the rules, which matters for some locum arrangements.
- Services to the public generally. A practitioner who ordinarily renders the same services to the public generally, often shown by working across unrelated practices in the same year, may be excluded.
- Practitioners who employ others. Where the contractor ordinarily engages two or more people to help deliver the services, the payment can fall outside the rules.
Each exclusion carries conditions, and some states require an application or a declaration from the practitioner. None of them is something a lender will accept on a practice owner's say-so.
What is a tenant doctor model, and does it remove the exposure?
A tenant doctor model restructures the arrangement so the practitioner rents rooms and buys services from the practice, collects patient fees directly, and pays the practice a fee set on commercial terms, rather than the practice collecting fees and paying the practitioner a share. Patient fee flow models aim at the same result by changing which entity receives the money first. Whether either structure holds up depends on the facts and the paperwork, and that is a question for your tax lawyer or accountant, not your broker. What a lender looks for is evidence that the change was made properly, with new agreements, separate banking and an adviser's sign-off, rather than a relabelled version of the old arrangement.
Where does each state stand on payroll tax for medical practices in 2026?
Each state has settled its own position on payroll tax for medical practices, and they do not match. The common thread is that relief has gone to general practice, usually tied to bulk billing, while the relevant contract rules continue to apply in full to everyone else. The table below is the state scoreboard, as at October 2026, read directly from each revenue office. It records positions as they stand, not where they may go.
Queensland moved first among the larger states. The Queensland Revenue Office's GP amnesty and exemption page sets out the amnesty that covered contracted GP payments to 30 November 2024 and the exemption that has applied to GP wages, contractor or employee, from 1 December 2024, which the Revenue Legislation Amendment Bill 2024 made permanent.
| State | Contractor position | GP relief and its start date | Who the relief excludes | What to show the lender |
|---|---|---|---|---|
| New South Wales | Relevant contract rules apply; audits of medical practices recommenced on 4 September 2024 after a twelve month pause. | Bulk Billing Support Initiative rebate on payments to contractor GPs from 4 September 2024, where at least 80 per cent of the centre's GP services (metropolitan Sydney) or 70 per cent (elsewhere) are bulk billed. | Employed GPs, non-GP specialists, allied health, dentists and other staff. | Payroll tax registration, returns showing the rebate claimed, and the bulk billing report behind it. |
| Victoria | Relevant contract rules apply under the State Revenue Office's medical centres ruling. | From 1 July 2025, wages paid by a GP medical business to employee and contractor GPs are exempt when they relate to fully-funded items of GP work. | Allied health and dental practices. | The exemption workings, the billing data behind them, and the accountant's position on earlier years. |
| Queensland | Relevant contract rules apply; an amnesty for contracted GP payments ran to 30 November 2024. | From 1 December 2024, wages paid by a medical practice to a GP, as a contractor or employee, are exempt; the change is permanent. | Other medical doctors and allied health; contracted dentists are dealt with on a separate revenue office page. | Amnesty registration where it was used, and how non-GP practitioner payments are treated. |
| South Australia | Relevant contract rules apply; registration for the GP amnesty closed in 2023. | From 1 July 2024, a share of GP wages is exempt in proportion to the practice's bulk billed GP services. | Contracted specialists and dentists, who received retrospective relief for 1 July 2019 to 30 June 2024 only if the practice registered before 1 July 2024, and no relief after that. | The bulk billing calculation, registration date and the treatment of specialist and dental payments. |
| Other states and territories | Not covered in this table. | Check the relevant revenue office. | Check the relevant revenue office. | The accountant's written position for that state. |
Sources: Revenue NSW, Bulk Billing Support Initiative and Payroll tax and the medical services industry, both last updated 17 March 2026. State Revenue Office Victoria, Medical industry, payroll tax, last updated 22 October 2026. Queensland Revenue Office, Payroll tax amnesty for contracted general practitioners, last updated 3 October 2025. RevenueSA, Payroll tax and the medical industry. All read 22 October 2026.
Two things follow for a borrower. First, relief is not automatic everywhere: some states need registration, a claim on the return or a bulk billing calculation, so a GP practice that qualifies but never claimed can still look exposed on paper. Second, a practice operating in more than one state needs the position for each state, not just the one where the head office sits.
Do the GP exemptions cover dental, specialist and allied health practices?
The GP exemptions do not cover dental, specialist or allied health practices in any of the four states read for this post. Victoria's exemption expressly excludes allied health and dental practices. The New South Wales rebate is limited to contractor GPs. South Australia gave contracted specialists and dentists relief for past years only, and nothing from 1 July 2024. Queensland's exemption is for GPs, with dentists handled separately.
That means a dental group, a specialist rooms practice, or a physio or psychology clinic built on contractor practitioners carries the full relevant contract exposure, and its lender file has to answer the question from scratch. The allied health practice loans post covers how that plays into a clinic loan for physios and other allied health owners. For a Victorian practice, the medical practice loans in Melbourne post sets the state rules against the other things that change a Melbourne loan.
A mixed practice, for example a GP clinic with a psychologist and a podiatrist working from the same rooms, can sit on both sides of the line. The GP payments may be covered while the allied health payments are not. Lenders see this more than owners expect, and it is one of the reasons the accountant's letter needs to deal with each practitioner group by name.
How does a payroll tax provision or back-year assessment change profit, valuation and serviceability?
A payroll tax provision or a back-year assessment lowers the profit a lender assesses, and it can lower the value a buyer or a lender puts on the practice. Where an accountant raises a provision for possible back years, it comes off profit in the year it is raised. Where an assessment has already landed, the tax, interest and any penalty sit as a liability on the balance sheet until paid.
Lenders work from normalised profit after provision. If the practice now pays payroll tax going forward, that cost is part of ongoing expenses and reduces the income available to service debt, which flows straight into serviceability. A one-off provision for past years may be added back if the lender is satisfied it will not recur, but only with the accountant's explanation and a clear line between the back-year amount and the new ongoing cost.
The exposure window (back years) matters as much as the annual figure. Revenue offices can generally look back several years, and an unresolved period carries interest that keeps building. A lender sizing a facility will ask how many years are open, whether any were covered by an amnesty or waiver, and whether a voluntary disclosure has been made or is planned. A voluntary disclosure, made before an audit starts, usually reduces penalties, which is why lenders often read it as a sign the practice is managing the issue rather than hiding it.
For a sale or a buy-in, the same arithmetic hits the valuation: buyers price ongoing payroll tax into maintainable earnings, and an unresolved exposure becomes a warranty, an indemnity or a retention from the sale price. The goodwill figure is usually where the gap shows up.
What do lenders ask about payroll tax, and how do you build the file that satisfies them?
Lenders ask whether the practice has a payroll tax exposure on practitioner payments, how it has been dealt with, and what it costs going forward, and they want the answer in documents rather than in conversation. Building the payroll tax file before you apply saves a round of questions that otherwise arrives after credit has started its assessment. For practices on a service or facility arrangement, the business loans for doctors post covers how that structure is read in the wider loan application.
A file that holds up usually contains the following, in this order:
- The accountant's written position. An accountant's letter stating, for each state and each practitioner group, whether the arrangements are relevant contracts, whether an exclusion or GP relief applies, and what the ongoing annual cost is expected to be.
- Registrations and claims. Payroll tax registration, amnesty or exemption registrations where they were needed, and the returns showing any rebate or exemption claimed.
- Practitioner agreements. Current service, facility or tenancy agreements, with any recent restructure documented and dated.
- Provisions and payment plans. The amount provided for back years, any assessment received, and any arrangement agreed with the revenue office, with the repayment schedule.
- Voluntary disclosure status. Whether one has been lodged, when, and the revenue office's response.
- Revenue office correspondence. Audit letters, information requests and replies, so the lender can see nothing is outstanding.
- Trading evidence. Bank statements and BAS that show patient fees and service fees moving the way the agreements say they do.
File that clears
- Accountant's letter naming each practitioner group and the state position
- Relief registrations and claims on file
- Provision or payment plan shown separately from ongoing cost
- Practitioner agreements that match how the practice operates
File that stalls
- "Our doctors are contractors" with no written position
- GP relief that qualifies but was never claimed
- Unopened revenue office correspondence
- A tenant doctor model on paper, with fees still flowing through the practice
The Whitecoat Pack lists the rest of the documents a practice loan application needs, so the payroll tax file can sit alongside it rather than being chased separately.
Can a practice fund a payroll tax assessment or a restructure to a tenant doctor model?
A practice can fund a payroll tax assessment or the costs of moving to a tenant doctor model, but the choice of funding matters as much as getting it approved. Most revenue offices will consider a payment arrangement for an assessed debt, and agreeing one early tends to limit further interest and keep the account in good standing, which a lender reads favourably.
Where a lump sum makes more sense, a term business loan can spread the cost over a fixed period, and the lender will assess it against normalised profit after the new ongoing payroll tax cost. A business line of credit suits timing gaps, such as covering a restructure while new agreements bed in, rather than funding the assessment itself, because a debt that is never repaid sits poorly on a revolving facility.
Using practice cash reserves is the simplest route, but it can leave the practice short for wage weeks, equipment repairs or a slow billing month, and lenders do look at liquidity after the payment. A restructure also has its own costs: legal fees for new agreements, changes to banking and billing systems, and a period where practitioner retention can wobble. Get the tax and legal advice first, then check eligibility for the funding once you know the number you are solving for.
Payroll tax on contractor practitioners has moved from a year-end tax item to a standard question in a practice loan. GP practices in the four states read here now have some form of relief, each with its own conditions and start date, while dental, specialist and allied health practices carry the full relevant contract exposure. Lenders do not rule on the tax. They want the exposure sized, the back years accounted for and the ongoing cost built into the numbers, all in writing. For more on financing a practice, the Whitecoat Hub brings the medical, dental and vet guides together.
Key takeaway: get your accountant's payroll tax position in writing, covering each state and each practitioner group, before you apply, not after credit asks.Frequently Asked Questions
A medical practice does not pay payroll tax where its total wages, including any practitioner payments deemed to be wages, stay under its state's threshold, or where the payments fall within an exclusion or a GP exemption. Contractor practitioners who meet one of the relevant contract exclusions can fall outside the rules altogether. Dental, specialist and allied health practices get no GP relief, which the allied health practice loans post covers for clinic owners.
GPs do not pay payroll tax themselves, but the practice that pays them may owe it on those payments under the relevant contract rules unless an exemption or exclusion applies. Several states now exempt or rebate GP payments, mostly tied to bulk billing, and the conditions differ by state. The medical practice loans in Melbourne post shows how the Victorian position feeds into a practice loan.
Payroll tax for medical practices is different in New South Wales, Victoria and Queensland, because each state has set its own relief for GP practices. New South Wales offers a rebate tied to bulk billing levels, Victoria exempts GP payments linked to fully-funded items of GP work, and Queensland exempts GP wages outright. Dental, specialist and allied health practices carry the full exposure in all three, and buyers price the difference into a practice acquisition.
How much payroll tax a medical practice pays in Australia depends on its state, because each state sets its own rate and tax-free threshold, and on whether practitioner payments count as wages. The same practice can owe very different amounts in two states, or nothing on GP payments where an exemption applies. Whatever the figure, it comes off the profit a lender uses to test serviceability.
A practice loan application can still proceed while payroll tax is under audit, but the lender will want to understand the likely size of the assessment before it approves. Expect requests for the audit correspondence, the accountant's estimate and any provision raised. Lenders are more comfortable when the practice is cooperating and has a plan to pay, and the business loans for doctors post covers how the rest of the application is read.
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