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This page gives information about payroll tax for the medical services industry.
Quick access
- View Revenue Ruling PTASA004 - Payroll Tax Relief for Medical Practices
- View Revenue Ruling PTASA005 - Medical Practitioners contracted by regional local health networks to deliver medical services in rural and regional hospitals
- View Revenue Ruling PTA041 - Relevant Contracts - Medical Centres
- View Information Circular 106 - Payroll Tax Amnesty for Medical Practices
- View the 2024-25 Guide to Legislation
- View the Payroll Tax Regulations 2025 on the South Australian Legislation website
Background
Medical practices (including medical practice groups) are liable for payroll tax on the wages they pay to both employee and contractor general practitioners (GPs) engaged in the provision of medical services in South Australia when the total Australia-wide taxable wages exceed the annual South Australian threshold.
In the past, a lack of awareness or misinterpretation of the application of the relevant contract provisions in the Payroll Tax Act 2009 among medical practices has resulted in some employers not declaring the payments made to GPs engaged under relevant contract arrangements.
Medical practices should seek professional advice regarding the correct application of the relevant contract and employer grouping provisions in the Payroll Tax Act 2009. If you're uncertain about your obligations, consult a qualified taxation expert to review your arrangements and ensure accurate reporting.
On 22 June 2023, the Treasurer approved a payroll tax amnesty measure in relation to payments made to contracted GPs up until 30 June 2024, to incentivise and support medical practices to self-review and attain compliance with their payroll tax obligations, if certain conditions were met.
Additionally, changes to the Payroll Tax Act 2009 and the Payroll Tax Regulations 2025 include provisions to:
- provide a bulk billing exemption on the wages paid or payable by medical practices to both employee and contractor GPs for bulk billed services from 1 July 2024, and
- retrospectively exempt, between 1 July 2019 and 30 June 2024, undeclared wages of contracted medical practitioners (i.e. excluding employee GPs) for those medical practices registered for the amnesty, and
- retrospectively exempt, between 1 July 2019 and 30 June 2024, undeclared wages of contracted medical specialists and dentists where the medical or dental practice was registered as an employer prior to 1 July 2024.
On 22 June 2023, the Treasurer approved a temporary payroll tax amnesty in relation to payments made to contracted GPs between 1 July 2018 and 30 June 2024, being the following financial years:
- 2018-19
- 2019-20
- 2020-21
- 2021-22
- 2022-23
- 2023-24
Registration for the amnesty closed on 30 November 2023 and medical practices were required to register for payroll tax by 30 June 2024.
Medical practices that successfully applied for the amnesty, met the eligibility criteria, and registered for payroll tax within the specified timelines are not required to pay payroll tax on payments made to contracted GPs during the amnesty period; however, they may still have a tax liability arising from other wages.
Note: If your organisation registered for payroll tax and your Australia-wide taxable wages do not exceed the payroll tax threshold, you will still need to lodge an annual reconciliation for the 2024-25 financial year.
Medical practices that were not eligible or who did not register for the amnesty are liable to pay payroll tax on payments made to general practitioners engaged under a relevant contract during the amnesty period and from 1 July 2024. Penalty and interest may apply.
The Payroll Tax Regulations 2025 make provisions to retrospectively exempt, between 1 July 2019 and 30 June 2024, undeclared wages of contracted medical specialists and dentists where the medical or dental practice was registered as an employer prior to 1 July 2024, being the following financial years:
- 2019-20
- 2020-21
- 2021-22
- 2022-23
- 2023-24
No relief will be provided to practices engaging contractor medical practitioners (excluding GPs) or dentists from 1 July 2024.
Medical and dental practices that registered for payroll tax by 30 June 2024 or were already registered for payroll tax automatically qualified for the exemption; however, they may still have a tax liability arising from other wages. The exemption does not apply to medical or dental practices that registered for payroll tax after 30 June 2024.
Note: If your organisation registered for payroll tax and your Australia-wide taxable wages do not exceed the payroll tax threshold, you will still need to lodge an annual reconciliation for the 2024-25 financial year.
Payroll Tax and the GP Bulk Billing Exemption education webinar
This dedicated webinar for designated medical practices will provide updates for users who attended previous webinars concerning the introduction of the bulk billing exemption for general practitioner wages, with a particular focus on the areas unique to medical practices for annual reconciliation lodgement and the screens that have been modified in the RevenueSA Online system.
Watch the recorded education webinar
Bulk billing exemption
The Payroll Tax Regulations 2025 prescribe a bulk billing exemption on the wages paid or payable by medical practices to employee and contractor GPs for bulk billed services from 1 July 2024.
The nature of the exemption is such that it is directly proportional to the rate of bulk billing that occurs in a medical practice compared to the total number of medical services provided by the medical practice.
The exemption will be available to all medical practices that offer the services of GPs regardless of how they are engaged or employed, including GP registrars, registered or on a pathway to registration as a specialist GP with the Medical Board of Australia.
The percentage of wages that are exempt wages is determined according to the following formula:
Where -
- A = the percentage of wages declared to be exempt.
- B = the total number of bulk billed services* provided by general practitioners engaged by the designated medical practice during the prescribed period.
- C = the total number of medical services* provided by general practitioners engaged by the designated medical practice during the prescribed period.
*Other than services of a kind referred to in Schedule 1 Part 3 Division 3.2 of the Health Insurance (General Medical Services Table) Regulations 2021 (Cwlth).
Note: If your organisation registered for payroll tax and your Australia-wide taxable wages do not exceed the payroll tax threshold, you will still need to lodge an annual reconciliation for the 2024-25 financial year.
Example calculations of percentages of exempt wages
The below examples are fictional and are intended for illustrative purposes only.
Healthy Life Pty Ltd is a designated medical practice that engages employee and contractor GPs to provide medical services.
All medical services provided by the GPs at this practice are bulk billed.
For the 2024-25 financial year, the total number of bulk billed services provided to patients was 60,000. The total number of medical services provided to patients was 60,000.
Applying the bulk billing exemption formula, the percentage of GP wages that are to be exempt and deducted from the total taxable wages is:
- Total number of bulk billed services (60,000) ÷ total number of medical services (60,000) × 100 = 100%
As such, Healthy Life Pty Ltd is entitled to a full exemption (100%) from payroll tax on the wages paid to the GPs (but may still have a tax liability arising from other wages).
Smith Medical Services Pty Ltd is a designated medical practice that engages employee and contractor GPs to provide medical services.
This practice has a mixed billing policy, whereby not all patients are bulk billed.
For the 2024-25 financial year, the total number of bulk billed services provided to patients was 30,000. The total number of medical services provided to patients was 60,000, meaning 50% of the medical services provided over the year were bulk billed.
Applying the bulk billing exemption formula, the percentage of GP wages that are to be exempt and deducted from the total taxable wages is:
- Total number of bulk billed services (30,000) ÷ total number of medical services (60,000) × 100 = 50%
As such, Smith Medical Services Pty Ltd is entitled to a 50% exemption from payroll tax on the wages paid to the GPs (but may still have a tax liability arising from other wages).
Example annual reconciliation scenario for designated medical practices
As part of the annual reconciliation, organisations must declare the following wage components, if applicable:
- Employee salaries / wages
- Contractor wages / payments
- Other wage components (e.g. bonuses / allowances, fringe benefits, employer super payments, commissions, directors fees, shares and options, and termination payments)
Service fees for contractor arrangements
Medical service contracts between medical practices and contractor general practitioners often include provisions for a service fee to be paid to or retained by the medical practice in exchange for the provision of facilities and administrative services.
For the purpose of the bulk billing exemption, the service fee is not included when reporting contractor wages / payments.
Find out more about annual reconciliation.
Important: The definition of 'wages' in the Payroll Tax Act 2009 is broad and is not restricted to wages or salaries. Find out more about wages.
The following scenario is fictional and is intended for illustrative purposes only.
Scenario 1: Central Health Clinic
Background
Central Health Clinic, a designated medical practice in South Australia, engages general practitioners (GPs) as both employees and contractors. Additionally, the clinic employs other medical professionals, including physiotherapists and radiologists, under similar arrangements, and other non-medical staff. Central Health Clinic has a mixed billing policy, where many, but not all, medical services are bulk billed.
Central Health Clinic is ready to lodge their annual reconciliation in RevenueSA Online, including the necessary information for the system to calculate the proportion of exempt general practitioner wages.
Step 1 - Declare your organisation as a designated medical practice
When Central Health Clinic first signs into RevenueSA Online, they will answer 'Yes' to the question, 'Are you a designated medical practice, as defined by the Payroll Tax Act 2009?'
This will allow them to calculate and apply the bulk billing exemption to their general practitioner wages.
Users who answer 'No' to this question will not be able to apply the bulk billing exemption.
Step 2: Declare Taxable SA Wages
(Requires user input)
Central Health Clinic declares:
- Total employee wages: $5,500,000
- Total contractor wages: $1,500,000
- Other wage components: $2,800,000
These figures apply to all employees and contractors engaged by the clinic including GPs, non-GP medical practitioners and non-medical staff.
The total taxable wages before the bulk billing exemption: $9,800,000
Step 3: Calculate Percentage of Exempt GP Wages
(System-generated)
Central Health Clinic reports the following service data for all contractor and employee GPs:
- Total bulk billed services: 48,000
- Total medical services: 80,000
Applying the bulk billing exemption formula, the RevenueSA Online system calculates the following: (48,000 ÷ 80,000) × 100 = 60%.
Thus, 60% of wages paid to GPs are exempt from payroll tax.
Step 4: Calculate Total GP Wages
(Requires user input)
Central Health Clinic declares:
- Total employee GP wages: $4,000,000
- Total contractor GP wages: $1,250,000
- Total GP wages: $5,250,000
Important: The definition of 'wages' in the Payroll Tax Act 2009 is broad and is not restricted to wages or salaries. Find out more about wages.
Total employee GP wages include GP wages and any other payment provided to GPs for services provided while engaged by the designated medical practice.
Total contractor GP wages include GP wages and any other payment provided to GPs for services provided while engaged by the designated medical practice. It excludes any service fees paid by contractor GPs to the designated medical practice.
Step 5: Calculate Exempt GP Wages
(System-generated)
The RevenueSA Online system will now apply the exemption percentage to the total GP wages.
Applying the exemption percentage to the total GP wages, the RevenueSA Online system calculates the following: ($5,250,000 × 60%) = $3,150,000
Thus, $3,150,000 is exempt from payroll tax and will be deducted from the total taxable wages.
Step 6: Calculate Total SA Wages
(System-generated)
Now that Central Health Clinic has provided the necessary information for the RevenueSA Online system to calculate the value of exempt GP wages, the system calculates the total SA Wages as shown in the table below.
This figure ($6,650,000) is the taxable South Australian wages figure that will now be carried through for the rest of the annual reconciliation process in RevenueSA Online.
| Wage component | Amount |
|---|---|
| Salaries / Wages: (Includes $3,750,000 in employee GP wages) | $5,500,000 |
Contractor Payments: (Includes $1,150,000 in contractor GP wages) | $1,500,000 |
Other wage components: (Bonuses, allowances, fringe benefits, superannuation, etc.) (Includes $250,000 in other wage components paid to employee GPs, and $100,000 in other wage components paid to contractor GPs) | $2,800,000 |
Total taxable wages | $9,800,000 |
| Less: exempt GP wages | -$3,150,000 |
TOTAL SA WAGES | $6,650,000 |
Reporting requirements for annual reconciliation
Exempt wages are typically excluded from annual reconciliation calculations. However, there are some circumstances where employers are required to declare them, including:
- Reporting obligations: RevenueSA needs this data to fulfil reporting requirements to the State Government or other third parties.
- Compliance and verification of claims: RevenueSA and the Commissioner of State Taxation require the data for compliance monitoring activities and use this information to verify exemption claims for the financial year.
- Percentage-based exemptions: If the exemption is applied as a percentage, it must be declared for accurate calculations.
Records to keep
To allow the Commissioner of State Taxation to verify the amount of any exemption claimed for a financial year, sufficient records must be kept to verify the amount of the exemption.
Examples of records that should be maintained include:
- the number of GP services* that are bulk-billed and the total number of GP medical services* provided in the financial year; and
- the GP wages for the financial year (this includes both employee and contractor wages).
*Other than services of a kind referred to in Schedule 1 Part 3 Division 3.2 of the Health Insurance (General Medical Services Table) Regulations 2021 of the Commonwealth.
Key definitions
The following definitions apply to the bulk billing exemption.
For the purposes of the bulk billing exemption, bulk billed service, in relation to a medical service provided by a general practitioner, means:
- a medical service where -
- a Medicare benefit is payable to a person in relation to the medical service; and
- under an agreement entered into under section 20A of the Health Insurance Act 1973 of the Commonwealth—
- the person assigns to the general practitioner by whom the medical service is provided the person's right to the payment of the Medicare benefit; and
- the general practitioner accepts the assignment in full payment of the general practitioner's fee for the medical service provided; or
- a medical service of a kind prescribed by the regulations for the purposes of this paragraph;
For the purposes of paragraph (2) of the definition of bulk billed service in Schedule 2 clause 17B(4) of the Payroll Tax Act 2009, the following kinds of medical service are prescribed:
- a medical service provided under the Veterans' Entitlement Act 1986 of the Commonwealth;
- a medical service provided under the Return to Work Act 2014, or under a corresponding law.
Designated medical practice means a medical practice at which some or all of the medical services provided by general practitioners who are engaged by the practice are bulk billed services.
General practitioner means:
- a medical practitioner who is registered under the Health Practitioner Regulation National Law in the specialty of general practice; or
- a medical practitioner of a kind prescribed by the regulations for the purpose of this paragraph.
For the purposes of paragraph (2) of the definition of general practitioner in Schedule 2 clause 17B(4) of the Payroll Tax Act 2009, the following kinds of medical practitioner are prescribed:
- a medical practitioner who is a general practitioner within the meaning of paragraph (b) of the definition of general practitioner in section 3(1) of the Health Insurance Act 1973 of the Commonwealth;
- a medical practitioner -
- who is not a specialist, general practitioner or consultant physician (each within the meaning of the Health Insurance Act 1973 of the Commonwealth); and
- who-
- is registered under section 3GA of the Health Insurance Act 1973 of the Commonwealth and is practising during the period and in the location in respect of which the medical practitioner is registered, insofar as the circumstances specified for the purposes of section 19AA(3)(b) of that Act apply; or
- is covered by an exemption under section 19AB(3) of the Health Insurance Act 1973 of the Commonwealth; or
- first became a medical practitioner before 1 November 1996.
General medical services table has the same meaning as in the Health Insurance Act 1973 of the Commonwealth.
Medical service means:
- a service in respect of which an item in the general medical services table applies; or
- a service of a kind prescribed by the regulations for the purposes of this paragraph.
Contact us
When contacting us please provide your South Australian Taxpayer Number (if known), ABN, and organisation name.
| payrolltax@sa.gov.au | |
| phone | (08) 8372 7534 |
| fax | (08) 8226 3805 |
| post | RevenueSA Kaurna Country GPO Box 2418 ADELAIDE SA 5001 |
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