Dentists & Payroll Tax

Relevant contract exemptions that may apply

These are the harmonised exemptions under the relevant contract provisions. Each is a factual test on the specifics of your arrangement — verify with your adviser before relying on any of them.

• Services provided to the public generally — if the dentist ordinarily performs dental services for other practices or patients in their own right, the payments may fall outside the relevant contract provisions.
• Services performed by two or more persons — if the dentist engages others (e.g. a dental assistant or hygienist) to perform part of the work, this exemption may apply.
• Services provided for 90 days or fewer in the financial year — a locum dentist engaged for a short period may satisfy this exemption.
• Services of a kind ordinarily required for fewer than 180 days a year — if the dental service is episodic or seasonal rather than ongoing.

Why dentistry falls outside every relief provision

Every medical payroll tax relief introduced between 2024 and 2026 is scoped to general practitioners. Dentists are not general practitioners, so none of the provisions reach them — not the Queensland full exemption, not the Victorian, South Australian or ACT bulk-billed exemptions, and not the NSW rebate.

That is not a drafting accident. The provisions were built around the bulk-billing incentive structure in general practice, where the Commonwealth pays an incentive on top of the Medicare benefit. Dentistry sits largely outside that structure, so the relief that follows bulk billing simply does not attach to a dental practice.

Where a dental practice is actually exposed

The exposure is the relevant contract provisions. Where a dental practice bills in its own name and remits the balance to a dentist under a service arrangement, the remitted amount is treated as deemed wages in every jurisdiction except Western Australia, and is added to the practice's employed staff wages for the threshold test.

A practice with $600,000 of staff wages and $1,200,000 remitted to dentists has $1,800,000 of taxable wages in NSW — $600,000 above the threshold, taxed at 5.45%. Because no relief applies, the only levers available are the threshold apportionment, the choice of Designated Group Employer, and whether the arrangement in fact creates a relevant contract at all.

What a dental practice should establish

Three questions determine the position. First, does the arrangement create deemed wages — which turns on whether the practice bills and remits, or whether the dentist bills in their own right and pays the practice. Second, is the practice grouped with a related entity, which determines whether it has a threshold at all. Third, is the practice operating in Western Australia, where the analysis is common-law rather than contractual.

The evidence is the service agreements, the billing and remittance records, and the group structure. Because no relief applies to dentistry in any jurisdiction, the analysis is about the character of the arrangement and the threshold, not about negotiating a rate.

Building the deemed wage in a dental practice

The deemed wage in a dental practice is the amount remitted to the dentist: the gross billings the practice collects, less the service fee it retains. A practice billing $180,000 for a contractor dentist and retaining a 35% service fee records a $117,000 deemed wage, calculated practitioner by practitioner and added to employed staff wages for the threshold test.

The figure depends on who bills. Where the practice bills in its own name and remits the balance, the remitted amount is the deemed wage; where the dentist bills in their own right and pays the practice a room or service fee, the analysis changes and may produce no deemed wages at all. That single structural question usually decides the outcome.

A worked dental scenario

Take a Victorian dental practice with $500,000 of employed staff wages and $1,000,000 remitted to contractor dentists. Adding the two, the taxable wages come to $1,500,000. Victoria's $1,000,000 threshold applies in full because the group's national wages are below the $3,000,000 phase-out start, leaving $500,000 taxable at 4.85% — $24,250.

Because dentistry has no relief in any jurisdiction, that liability cannot be reduced by a bulk-billing exemption or rebate. The only levers are the threshold's apportionment across the group, the choice of Designated Group Employer, and whether the arrangement in fact creates deemed wages at all.

Where corporate dental groups are exposed

Corporate and multi-site dental groups carry the largest exposure, because each site's remittances accumulate into a single taxable wage base once the entities are grouped. A group operating several practices can find its combined wages far above the threshold in every jurisdiction in which it operates, with no relief available in any of them.

The grouping question is also where the shelter is won or lost. Only the Designated Group Employer claims the threshold, so a group that leaves the nomination unmade, or holds the wage base in the wrong entity, pays from the first dollar in every non-DGE member. For a multi-site dental group the group structure is the single largest determinant of the payroll tax outcome.

The apportionment of the threshold adds a second layer for a group that operates in more than one state. Each state's threshold is claimed separately and apportioned by that state's share of national wages, so a dental group that is large nationally can find every state's shelter reduced at once. Because no relief applies to dentistry anywhere, there is nothing to offset the loss, and the group's combined taxable base can exceed the threshold in each jurisdiction it operates in.

A second dental scenario and the group lever

Take an NSW dental practice with $400,000 of employed staff wages and $900,000 remitted to contractor dentists, giving $1,300,000 of taxable wages. After the $1,200,000 threshold, $100,000 is taxed at 5.45% — $5,450. Because dentistry has no relief, that figure cannot be reduced by a bulk-billing exemption or rebate.

The number that does move it is the threshold, and the threshold is a group entitlement. If the practice is grouped with a related service entity nominated as the Designated Group Employer, the practice may hold no threshold at all and pay 5.45% on the whole $1,300,000 — $70,850. The difference between $5,450 and $70,850 is decided entirely by the group structure, not by the clinical arrangements.

That is why a dental practice's first exercise is to map its group and confirm where the threshold sits. For a cohort with no relief available in any jurisdiction, the group is the only significant lever.