The Victorian Parliament is expected to pass legislation today (Thursday 28 November 2024) exempting wages paid to contractor and employee general practitioners (GPs) from payroll tax under the Payroll Tax Act 2007 (Vic) for “fully-funded” services.

These services include bulk-billed consultations, as well as payments relating to veterans’ entitlements, the Transport Accident Commission (TAC), and workers’ compensation schemes. This exemption will take effect from 1 July 2025.

This legislation follows the Government’s May 2024 announcement of a full payroll tax exemption for general practices that have not yet begun paying payroll tax on payments to contractor GPs. Covering the period up to 30 June 2025, this exemption provided much needed clarity and averted the immediate risk of retrospective tax liabilities that could have otherwise forced many practices to close. Without this relief, practices unknowingly accruing payroll tax liabilities over several years could have faced significant retrospective tax bills. These financial shocks would have been catastrophic for many practices, leading to closures, job losses, and reduced access to care for patients.

Additionally, in the same May 2024 announcement, the Government confirmed that ex-gratia relief may be available for Victorian general practices with outstanding assessments for periods up to 30 June 2024, providing further financial reprieve.
 

AMA Victoria advocacy

AMA Victoria has persistently advocated on this issue over recent years, engaging extensively with government, opposition, and crossbench members and leveraging media to amplify the issue.

We recognise that, while these exemptions- secured through our advocacy- represent a significant improvement over the potential for full payroll tax liability, transitioning to this revised model will still require substantial adjustments for many Victorian general practices.

 In the months ahead, and leading up to 1 July 2025, we will work closely with our tax and accounting partner, the Bongiorno Group, to help members navigate the legislation’s practical implications and ensure as smooth a transition as possible.
 

Supporting non-GP specialists in private practice

In the period ahead, we will continue advocating on behalf of specialist practices, who are not affected by these changes. AMA Victoria is actively engaging with the State Revenue Office (SRO) to clarify payroll tax rules for private specialists. Key issues under review include:

• How a “day of work” is defined (e.g., calendar day vs. day billings are generated).
• Whether practitioners working in both public and private settings qualify for exemptions under the "providing services to the general public" clause.

Based on feedback, we will assess the need for further representations to government to address these and other concerns.
 

Ongoing advocacy

Our immediate focus remains on ensuring the Government adheres to its assurances to GPs, including providing ex gratia relief to practices already facing payroll tax bills and ensuring the full exemption from payroll tax for GPs continues until July 2025.

Members can rest assured that we will continue working to advance the interests of all our affected members- GPs and non-GP specialists in private practice alike- in the period ahead.

Summary: payroll tax for general practices

1. Ex gratia relief for past liabilities: Practices with payroll tax liabilities for contractor GPs up to June 30 2024 will receive relief.
2. Additional exemption for 12 months: From July 1 2024, to June 30 2025, all eligible practices (i.e. those who haven’t already received advice and begun paying payroll tax) are exempt from payroll tax for contractor GPs.
3. Ongoing partial exemption from July 1 2025: After this date, an exemption will apply to services that are bulk-billed or funded through specific schemes, such as veterans’ entitlements, workers’ compensation, and the TAC. This is a partial exemption, based on the proportion of total payments that are for fully funded medical services. This exemption applies to both contractor and employee GPs.

Further reading:

• State Taxation Further Amendment Bill 2024 - Victorian Legislation
• Supporting more bulk billed consults for Victorians - Premier.vic.gov.au
• Payroll Tax and the Medical Industry - State Revenue Office
• Payroll tax reform: a positive result for Victorian General Practice | AMAV Hub (22 May 2024)