Payroll tax is the largest state-administered tax most medical practices will ever pay, and it is the one they are most exposed on — not because of the staff they employ, but because of the contractors they engage. This calculator models all eight states and territories with the contractor-practitioner rules, the group thresholds and the medical relief provisions built in.
What payroll tax is, and why a medical practice pays it
Payroll tax is a state tax on the wages an employer pays. It is not income tax, it is not PAYG withholding, and it is not the Medicare levy — those are Commonwealth taxes. Payroll tax is levied by each state and territory under its own Act, with its own threshold, its own rate, and its own exemptions.
A practice pays it once its Australia-wide group wages cross the threshold in a jurisdiction where it employs. Most practices with a handful of salaried reception and nursing staff sit comfortably under every threshold and never see a liability at all.
That changes the moment the practice engages doctors under a service arrangement. The staff wages were never the problem. The doctor payments are.
The contractor-practitioner problem: deemed wages
The typical arrangement is a Service Facility Agreement. The practice bills Medicare in its own name, collects the benefit, retains an agreed service fee, and remits the balance to the doctor. On paper the doctor is a contractor with an ABN, so it looks like a business-to-business payment between two independent entities.
Following Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue, the revenue offices treat the amount remitted to the doctor as wages for payroll tax purposes. The statutory label is deemed wages. The practice is, in effect, treated as the employer of its own contractors.
Two things about that catch practices out. First, the deemed wage is the amount remitted to the doctor, not the gross billings — smaller than the headline numbers suggest, but still very large. Second, it is added to the practice's staff wages and tested against the same threshold, so a practice that was never close to the threshold can be pushed over it by its doctors alone.
The revenue offices do not draw the edges of this identically. Some apply the relevant contract provisions to any practitioner working under the practice's facilities; others look harder at whether the doctor is genuinely in business on their own account. That is why the same arrangement can produce different answers in different states, and why the calculator asks you to model the exempt portion explicitly rather than assuming it.
The relief provisions are not uniform — and they are not all exemptions
Between 2024 and 2026 every jurisdiction except Tasmania, Western Australia and the Northern Territory introduced some form of medical-specific relief. They are not the same shape, they do not cover the same practitioners, and they do not all work the same way.
Queensland exempts GP wages outright, with no bulk-billing condition and no cap. Victoria, South Australia and the ACT exempt the bulk-billed proportion of GP payments, so the relief scales with how much of the practice's work is bulk billed. NSW does not exempt anything at all — it grants a post-liability rebate that you only reach if at least 80% of GP services are bulk billed in metropolitan Sydney, or 70% elsewhere.
That last distinction matters more than it looks. An exemption reduces taxable wages before tax is calculated. A rebate is calculated after the tax has been assessed and then reduces the amount payable. The two produce different numbers in a multi-state group, and the NSW rebate is a cliff rather than a slope: at 79% bulk billing in metropolitan Sydney a practice receives nothing, at 80% it receives the full amount.
Every one of these provisions is scoped to general practitioners. Dentists, physiotherapists, psychologists, non-GP specialists and other allied health practitioners sit within the relevant contract provisions in every jurisdiction, with no relief available at all. A practice that assumes its exemption covers the whole clinical team is wrong in all eight jurisdictions.
The comparison table below is built from the same rule registry the calculator consults, so the position it describes cannot drift from the figures the tool produces.
Grouping and the Designated Group Employer
Grouping is where the expensive mistakes happen, and it has nothing to do with how the practice is structured for income tax. Businesses are grouped for payroll tax when they are related — common control, common directors, related bodies corporate, or entities that share employees — and every member of the group is treated as a single employer for threshold purposes.
Only one entity in the group may claim the threshold. That entity is the Designated Group Employer, or DGE. Every other member of the group pays payroll tax from the first dollar of wages, with no threshold at all.
Two consequences follow. First, failing to nominate a DGE is not a neutral omission — the revenue office will nominate one, and it may not be the entity you would have chosen. Second, the choice of DGE is a genuine planning decision, because a threshold is worth the most where the wage base is largest.
Medical practices group constantly without realising it. A practice company, a service entity, a family trust holding the rooms, and a second practice owned by the same practitioner are frequently a single group. If any two of those pay wages, the grouping rules apply.
Registration and lodgement
Registration is triggered by crossing the threshold, not by the end of the financial year. Every jurisdiction requires registration within about 7 days of exceeding its threshold (or the equivalent monthly threshold), and the obligation arises whether or not you expect to owe anything.
Returns are then monthly in every state, but the deadlines are not all the same. Seven of the eight jurisdictions require the monthly return by the 7th of the following month; the Northern Territory requires it by the 21st. Annual reconciliation falls in late July — the 21st in Queensland, Western Australia, Tasmania and the Northern Territory, and the 28th in NSW, Victoria, South Australia and the ACT.
Victoria adds a medical-specific reporting obligation: since 1 July 2025 the bulk-billed portion of GP wages must be reported separately as exempt GP wages at annual reconciliation. Claiming the exemption without that disclosure is not a complete claim.
Penalties for not registering are calculated on the tax that should have been paid, with interest and penalty added, and they can be assessed for years in which the practice believed it was below the threshold. The amnesties that accompanied the medical relief provisions have largely closed, and the revenue offices now hold several years of practice billing data to compare against.
How this calculator handles the rate structure
Each jurisdiction is modelled on its own statutory rules: NSW's flat rate, Victoria's regional rate and stacked surcharges, Queensland's diminishing deduction and tier uplift, WA's wide taper, SA's sliding scale, Tasmania's two tiers, the ACT's banded rates and the NT's large-employer rate.
Where a rate could not be confirmed from the administering revenue office's published material, it is flagged rather than guessed. Every figure carries a verification date and a source, and a rate that has not been verified is marked on the page rather than presented as current.
What this calculator does not do
It does not determine whether a particular contractor arrangement creates deemed wages. That turns on the facts of the arrangement — who controls the work, who provides the facilities, who bears the commercial risk — and it is the question most likely to be disputed on review.
It does not apply a state's medical relief automatically to a group that spans states, because the provisions differ in scope and in whether they are an exemption or a rebate. Model the exempt portion explicitly.
It is an estimation tool for planning and sense-checking. Confirm your position with the administering revenue office and a registered tax agent before lodging.
This calculator provides general information only and is not tax advice. It does not account for your individual circumstances. Confirm figures against the relevant legislation or with a registered tax agent before relying on them for a lodgement.