Agency vs direct billing for locum GPs
Which model pays more in 2025-26, why the Medicare tripling moved the economics, and what actually ends up in your bank. Guidance, not advice.
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Three work models, three economics
A locum GP in 2025-26 typically splits work across three models:
- Agency-placed: an agency finds the shift, you sign a labour-hire contract, the agency pays you after PAYG, the agency handles super. You are a contractor to the agency; the host practice pays the agency.
- Direct billing: you have a contract with the practice, bulk-bill the patient (or the practice does), and pay the practice a service fee. You keep the net, run your own tax and super.
- PAYG / hospital bank: you are an employee for each shift. The hospital or health service pays you PAYG, super on ordinary-time earnings. No GST, no PSI.
The three produce very different numbers on the same patient workload. The right question is not "which pays more per session" but "which lands the most in your bank once tax, super, and GST are run".
Agency economics: headline minus overhead
A typical 2025-26 agency GP day-rate lands at $1,400 to $2,000 in metro work, $1,800 to $2,400 in regional, $2,200 to $3,000 in rural. Add 12% super on top (the agency pays this under s12(3) SGAA in most labour-hire patterns), PAYG tax deducted at source, indemnity usually covered by the agency, travel and accommodation often covered on remote work.
What looks simple has overhead hidden in it. The agency keeps 25-40% on top of what you see. You have less control over who the host practice is, when cancellation risk lands, and whether the shift gets reclassified (remote rate downgraded to regional because the agency and host disagreed on MMM tier). Agency work removes admin load but adds rate compression.
Direct billing economics: post-November 2025
From 1 November 2025, the bulk-billing incentive tripled for most GP consultations, not just children and concession holders. Direct-billing gross billings per session rose. A typical 6-hour session that previously grossed $1,100-$1,400 in a bulk-billing practice now grosses $1,400-$1,700 before service fee.
Service fees moved up from 30-35% to 40-50% in many practices to cover payroll tax exposure under the relevant-contract rules (see the Thomas and Naaz explainer). Several states have since added GP-specific relief, mostly tied to bulk-billing: Victoria (from 1 July 2025), NSW (a rebate from 4 September 2024), Queensland (a permanent exemption from 1 December 2024), South Australia (from 1 July 2024), and the ACT (from 1 July 2025). Where a practice genuinely bulk-bills and qualifies, the payroll-tax driver on the service fee is reduced, so a GP there is better placed than one at a practice still pricing in the exposure (for example in WA, NT, or TAS, which have no GP-specific scheme). Verify the practice's state and relief position rather than assuming.
You are also responsible for your own super. If you make a $30,000 concessional contribution, the personal tax saving at a 30% marginal rate is $9,000, but the $30,000 is locked into super. The post-tax, in-hand amount is smaller than the headline rate implies.
PSI exposure varies by portfolio, not by model
PSI rules (see the PSI diagnostic) apply when more than 50% of your income comes from your personal skills. For locum GPs that is almost always true. The concern is whether you pass a Personal Services Business test: results test, unrelated clients, employment, and business premises. If you do, normal small-business tax treatment applies. If you do not, PSI attribution means the income is taxed at your personal rate with tight deduction limits.
The 80% rule bites when 80% or more of income comes from a single client. The client is the agency (or the practice) that pays you, not the patient. A GP who works exclusively through one agency is at 80%+ concentration with that agency, triggering the need for an ATO PSB determination. A GP who mixes agency work across 2-3 payers, plus direct-billing at one or two practices, is usually at worst 40-60% concentrated and cleanly in PSB territory.
How Sessional compares them side by side
When you add a shift, Sessional asks for the income source (agency, direct patient billing, percentage-of-billings, event medical, mine-site, public hospital casual, aeromedical, cruise, other). Each source triggers different flags:
- Super treatment: "likely owed" (agency), "covered via PAYG" (hospital bank), "not applicable" (direct patient billing).
- PSI signal: "helps the unrelated-clients test" (direct billing), "hurts the test" (agency), "diagnostic" (direct contractor).
- GST treatment: GST-free medical (direct), input-tax-credit on agency fee, mixed-supply flags for event and mine-site.
- Payroll tax exposure: tagged per workplace for Thomas and Naaz awareness.
The earnings dashboard then aggregates the three models into a single take-home view so you can see which is actually paying best in your portfolio, not just on paper.
Common questions
Which model pays more per session?
Direct billing usually pays more per session on paper, but the gap narrowed after the November 2025 Medicare bulk-billing incentive tripling. Agency work often comes with super paid under s12(3) SGAA, which is 12% on top of the headline rate, plus PAYG tax deducted at source. Direct billing gives you a bigger pre-tax number but you run your own tax, super, and GST. Sessional models both side by side per shift.
What did the Medicare tripling change?
From 1 November 2025 the bulk-billing incentive applied to all patients, not just children and concession holders, for GP consultations. For a direct-billing GP, gross billings per session rose meaningfully. The economics of the service-fee contract changed alongside: practices had more income to share or more payroll tax to pay under Thomas and Naaz. Whether the net to the doctor rose depends on how the practice adjusted the service fee.
Does the agency owe me super?
In the typical labour-hire arrangement, yes. SGR 2005/1 and the Personnel Contracting High Court decision treat most agency-placed contractors as "wholly or principally for labour", which engages s12(3) SGAA. The agency is the payer, not the host practice. Sessional's super-guarantee tracker flags agency shifts as likely owed and shows the 12% amount alongside each shift.
Does the practice owe me super under direct billing?
Usually no. When Medicare pays you and you pay the practice a service fee, the practice is not a payer for labour purposes. No s12(3) SGAA. You are responsible for your own concessional contributions up to the $30,000 cap if you want the tax deduction. Sessional marks direct-billing shifts as "not applicable" on the SG tracker.
What is my PSI exposure on each model?
PSI exposure depends on portfolio concentration, not the model. The 80% rule triggers when 80% or more of your income comes from one client. An agency shift with Agency A counts Agency A as the client; a direct-billing shift at Practice X counts Practice X as the client. A GP who works only for one agency will hit the 80% rule and needs a Personal Services Business Determination. A GP split 50/50 across two agencies is in a different position. Sessional's PSI diagnostic runs the check across your whole portfolio in one place.
Does PAYG employment (hospital bank or emergency) behave differently?
Yes. PAYG work has tax deducted at source under the regular employment rules, super paid by the employer on ordinary-time earnings, and no GST implications for you. It is outside the PSI framework because you are an employee, not a contractor. Sessional models PAYG shifts separately in the earnings dashboard: they do not contribute to your tax reserve because tax is already deducted.
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