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NSW, Victoria prescribe GP payroll tax without amnesty sweetener


UPDATED: State revenue rulings clarify that medical centres will be liable for the levy under service fee arrangements.

By Philip King 10 minute read

Medical centres across Victoria and NSW have been left exposed to payroll tax after the states failed to follow Queensland and South Australia in offering temporary amnesties.

Two near identical rulings from the NSW and Victorian state revenue authorities, both released on Friday, recognise a landmark court decision last year that changed the game for GPs working at medical centres.

With Western Australia going its own way, the other four mainland states were aligned on the issue, said William Buck health specialist director Belinda Hudson – except in one crucial respect.

“Both Queensland and South Australia, however, have announced amnesties for practices but nothing has been announced from Victoria or NSW, nor do we believe it will be likely as both states have previously said they would not be going down this path.”

“This effectively leaves practices in Victoria and NSW exposed. Add that to the recent announcement in Queensland about the amount of expected payroll tax to be collected over the next few years and it is a real risk that practice owners cannot ignore.”

The Queensland arrangement, announced in April, offers an amnesty on payments made to contracted GPs until 30 June 2025 provided the centre registers by 29 September.

“An amnesty operates differently to an exemption,” the Queensland Revenue Office said. “Under an amnesty, a liability for tax still exists, but certain amounts relating to the tax may not actually have to be paid. Because of this, you may have to provide records so we can assess your liability, even though tax may not have to be paid under the amnesty.”

South Australia announced a similar amnesty in July. The Queensland Treasurer has said the revenue foregone under the amnesty was about $100 million a year.

The Royal Australian College of General Practitioners said it would lobby the Victorian and NSW governments to offer amnesty periods like Queensland and South Australia.

"General practices operate on thin margins and if they face an additional payroll tax bill for their GPs working under independent agreements, they will be forced to pass the costs on to patients and some may close," the RACGP said. "This threatens access to essential GP care for communities across NSW and Victoria."


The tax obligation was confirmed by Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2021] and hinges on what constitutes and employee and a “relevant contract”.

William Buck health specialist director Gil Abras said the Victoria and NSW rulings confirmed there was no change in legislation and they were merely providing clarity to their longstanding position.

“Historically, typical service fee arrangements where medical centres collect patient fees and then deduct a service fee to cover administration services (billing, room rental, staff costs, etc), were considered by many to be outside the payroll tax regime,” he said.

“After the conclusion of the Thomas & Naaz and Optical Superstores cases which both found in favour of the state revenue bodies, these practices have been highlighted as requiring change.”

“Many practices have been sitting and waiting for this moment to enact change in their processes and agreements – this should be the call to action.

“We are currently aware of audit activity across the states which increases the risk.

“Whatever the next steps are for practices, we are concerned this may ultimately lead to an increased cost of healthcare in Australia as practices deal with the impact of increased payroll tax.”

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Philip King

Philip King


Philip King is editor of Accountants Daily and SMSF Adviser, the leading sources of news, insight, and educational content for professionals in the accounting and SMSF sectors.

Philip joined the titles in March 2022 and brings extensive experience from a variety of roles at The Australian national broadsheet daily, most recently as motoring editor. His background also takes in spells on diverse consumer and trade magazines.

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