Payroll tax is a thing. It’s a state (not federal) tax paid by employers on their payroll (the total amount they pay their employees). When the payroll is over $1.5 million a year (around $28000 a week), tax is payable at around 5%. It’s not like income tax because once that $1.5 million threshold is reached, the business has to pay 5% tax on the whole of the $1.5 million – so you go from paying no payroll tax at a payroll of $1.499 million to paying $75000 of tax at a payroll of $1.5 million.


So why should YOU care? After all, tax goes to the State Budget for the betterment of all members of the State, and businesses with payrolls of over $1.5 million must be doing all right…right?

Not quite.

You can have a read of the RACGPs thoughts on this, but I’ll try to make it even easier below*.

Payroll Tax One Pager – RACGP (020223)

*I’m not a tax lawyer or an tax accountant, just a GP who owns a medical practice 😎

  1. GPs are generally self employed, they engage medical practices to provide them services and facilities so that they can provide medical care to patients
  2. Patients pay GPs, medical practices collect this money for the GP (one of the services provided), and give all of it to the GP (it’s not the practices’ money!)
  3. Therefore the GP is employed by, and paid by, the patient, not the medical practice
  4. The GP then pays the medical practice a service and facility fee (as this is a service, GST applies)
  5. Of course, the medical practice pays payroll tax if other employees payroll exceeds $1.5 million (receptionists, nurses, GPs in training, practice and office managers)
  6. Both the medical practice and GP pay all the tax they should (GST, BAS, income tax are the most common)

So where does payroll tax (remember, a tax on payroll of employees) come in. What has changed?

State Governments have decided to DEEM GPs as employees for the purposes of State Payroll Tax (not for superannuation or any other purpose). Therefore GPs billings (payments from patients to the GPs for medical services) are now DEEMED to be payroll. This leads to more tax being payable by medical practices – starting at $75000 a year and going up.

Again, why should YOU care?

You should care because:

  1. This tax would be paid out of the service and facility fee income of the medical practice
  2. The practice will need to pass this cost on because most practices do not run in such a way as to make 5%+ profit from service and facility fees
  3. Therefore someone will need to pay – and this cost will pass through to patients, probably an EXTRA $10-15 PER CONSULT
  4. Of course, it is illegal to charge extra fees when bulk billing a service for a patient
  5. And so bulk billing will become extinct, despite all the extra federal funding that came in the Budget this year
  6. This will divert patients to Emergency Departments, which are already over capacity and ramping
  7. This will cost far far more than any amount raised by this tax


There is an amnesty available in South Australia, but generally amnesties are for people and businesses that have done something wrong, and as I’ve explained above, I’m not sure the majority of General Practices are in the wrong here.

So, look after yourself and your access to General Practice!

  • like this, share this (and if you don’t like this, please comment and say why)
  • talk to your local State MP about payroll tax – find their details here!
  • encourage them to have everyone win – the tax system should work for us, not us for it


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For everyone, we believe that having a usual GP or General Practice is central to each person’s care and recommend that people with any health issues that come to the attention of other health professionals should be advised to attend their usual GP or General Practice rather than a specialised service (ie a place not providing the holistic care a specialist GP would).   If  they say that they don’t have a usual GP or general practice, they should be helped to find one and to actually attend it. Call PartridgeGP on 82953200 or make an appointment online here.

(Hat tip: Dr Oliver Frank)

(TL;DR – Get a regular GP or General Practice and use them!)

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