In the last few days, the Victorian Treasurer and the South Australian Treasurer have made announcements regarding the treatment of payroll tax on doctors in medical centres in Victoria and South Australia.

In essence, from 1 July 2024 in South Australia and from 1 July 2025 in Victoria, bulk billing payments made to doctors in medical centres will be exempt from payroll tax.

What the announcements seem to indicate are that:

1. the exemption will only apply to Medicare bulk bill payments and not private patient fees;
2. the agreements between the medical centre and the independent contractor doctor are still ‘relevant contracts’ that are otherwise subject to payroll tax on fees other than Medicare payments; and
3. there will be limited to no application of the exemption to allied health services such as physiotherapist, dentists and optometrists.

A number of further questions arise: If bulk billing payments are exempt, what about payments where a private patient payment is made and a Medicare rebate is given to the patient? Is an amount equivalent to the rebate exempt?

Much will be revealed in the next few weeks. However, it is clear that this is not a full-scale exemption of contracted doctors from payroll tax.

This article was written by John Caravousanos, Partner.