Payroll tax is the reason service fees moved. It is a liability on the workplace, not on you, but it reshaped contracts, pushed service-fee percentages up, and changed what a session is worth. It also works differently in every state, and one state does not use the framework at all.
This is the position for the 2026-27 financial year. It is general information, not advice, and the liability discussed here sits with the medical centre rather than the individual practitioner.
Why this happened
State payroll tax acts contain "relevant contract" provisions. They can deem payments made under a contract for services to be wages, which drags contractor payments into a workplace's payroll tax base.
The New South Wales Court of Appeal confirmed in Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 that a typical medical centre arrangement, where the centre collects patient fees, retains a service fee and remits the balance to the practitioner, can be caught. Most states then applied the same reasoning, and most later layered GP-specific relief on top.
Thresholds and rates for 2026-27
| State | Tax-free threshold | Rate |
|---|---|---|
| NSW | $1,200,000 | 5.45 per cent |
| VIC | $1,000,000 | 4.85 per cent, 1.2125 per cent regional, plus surcharges above $10m and $100m |
| QLD | $1,300,000 deduction | 4.75 per cent, 4.95 per cent above $6.5m, plus the mental health levy |
| SA | $1,500,000 | Variable 0 to 4.95 per cent between $1.5m and $1.7m, then 4.95 per cent |
| WA | $1,000,000, tapering to nil at $7,500,000 | 5.5 per cent |
| TAS | $1,250,000 | 4 per cent to $2,000,000, then 6.1 per cent |
| ACT | $1,750,000 | 6.75 per cent, rising in bands above $20m |
| NT | $2,500,000 | 5.5 per cent, or 6.5 per cent at $100m Australia-wide wages |
Two of these changed on 1 July 2026. The ACT threshold moved to $1,750,000 with an entry rate of 6.75 per cent, and the Northern Territory introduced a two-tier rate, charging 6.5 per cent only where Australia-wide wages reach $100 million.
Western Australia is the exception
WA never adopted the harmonised relevant-contract deeming rules. The Thomas and Naaz reasoning does not carry across, and RevenueWA states plainly that it "is not harmonised with the other jurisdictions regarding the treatment of contractors".
Instead, a payment to a contracted practitioner is taxable only where the arrangement independently satisfies the ordinary common-law tests of employment: control, integration, the ability to delegate, and so on. There is no GP exemption in WA, because there is no deeming rule needing relief.
If you work in WA and a workplace tells you its service fee reflects payroll tax risk under the relevant-contract provisions, that framing does not fit the state you are standing in.
GP relief, state by state
Relief exists in five jurisdictions, and it is structured differently in each. All of it is GP-specific.
New South Wales runs the Bulk Billing Support Initiative, which is a rebate rather than an exemption, for wages paid on or after 4 September 2024. It is conditional on bulk-billing at least 80 per cent of GP services in Metropolitan Sydney, or 70 per cent elsewhere in the state.
Victoria exempts GP wages in proportion to fully funded items, so relief tracks the practice's bulk-billing share rather than passing or failing a single gate.
Queensland made its GP exemption permanent. Wages paid by a medical practice to a general practitioner are excluded from payroll tax and the mental health levy.
South Australia exempts a percentage of employee and contractor GP wages from 1 July 2024. The percentage is measured on bulk billed GP services, and importantly it also counts prescribed Department of Veterans' Affairs and Return to Work Act services, not only ordinary Medicare bulk billing.
The ACT exempts designated medical practices on GP wages from 1 July 2025.
If you are not a GP
This is where the picture is least comfortable, and it is often glossed over.
The relevant-contract provisions are not profession-specific, but the relief is. Specialist rooms, dental practices, physiotherapy clinics, psychology practices and radiology centres sit under the same deeming provisions with no equivalent carve-out.
Queensland is the clearest illustration. Its GP exemption was made permanent, but the separate dentist amnesty was not, and it ended on 30 June 2025. From that date, dental clinics comply on payments to contracted dentists unless another exemption applies.
South Australia is similar: relief for non-GP practitioners was retrospective only, and from 1 July 2024 RevenueSA provides no equivalent ongoing relief for contractor medical practitioners other than GPs, or for dentists.
Tasmania and the Northern Territory have not published medical-centre specific rulings at all, so exposure there is assessed under the general contractor provisions.
What it means for your rate
You do not pay this tax. You feel it through the service fee.
Three things follow:
- A service fee is a number you can ask about. If a workplace prices payroll tax risk into it, the state and the bulk-billing mix are what drive that risk, and both are knowable.
- Bulk-billing share matters to your negotiation in NSW, VIC, SA and the ACT, because it changes the workplace's actual liability.
- Non-GP practitioners should expect less relief, not more, and should be wary of a service fee justified by a GP exemption that does not apply to them.
Sessional records the state and profession at workplace level and surfaces the exposure signal per workplace, so the picture is specific rather than general. See how direct billing works and the Thomas and Naaz explainer.
Sources
- Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40.
- Payroll Tax Act 2007 (NSW) sch 1 cl 1; sch 2 div 2A cll 10A to 10D (Bulk Billing Support Initiative).
- Payroll Tax Act 2007 (Vic) sch 1 cl 1; sch 2 cl 19B (GP medical businesses).
- Payroll Tax Act 1971 (Qld) s10 and s14(2)(m); QRO mental health levy guidance.
- Payroll Tax Act 2009 (SA) sch 1; Payroll Tax Regulations 2025 (SA) rr 4 and 5; RevenueSA Ruling PTASA004 (version 3).
- Pay-roll Tax Assessment Act 2002 (WA) s8; Pay-roll Tax Act 2002 (WA) s5(4); RevenueWA employer guide, contractor payments.
- Payroll Tax Act 2008 (Tas) sch 1 pt 1 cl 1.
- Taxation Administration (Amounts and Rates-Payroll Tax) Determination 2026 (ACT) DI2026-151.
- Payroll Tax Act 2009 (NT) s7A and sch 1; Treasury Legislation Amendment Act 2026 (NT), No. 18, 2026.
This article is general information for Australian healthcare locums and is not financial, tax or legal advice. Payroll tax liability sits with the workplace. Figures are current for the 2026-27 financial year at the date of publication.