Payroll Tax: Qld Ruling assists medical practices

21 September 2023

The Qld State Revenue Office (Qld SRO) has issued a significant ruling that will result in a large number of Qld medical practices not paying payroll tax[1].

The ruling issued on 19 September 2023 replaces an earlier ruling issued by Qld SRO on 22 December 2022[2]. The earlier ruling had significantly increased the risk of payroll tax being payable by a large number of medical practices (other than GP’s covered by a separate amnesty).

It’s a massive win for the medical industry as a whole since it applies to all medical practices including dental clinics, physiotherapy practices, radiology centres and similar healthcare providers.

What prompted this ruling?

In my view the new ruling was prompted by 2 main drivers.

Firstly, the pressure that the public, the medical industry and medical colleges have placed on the Qld State Government about how the imposition of payroll tax on medical practitioners will negatively impact on the public and the delivery of medical services.

Secondly, the original ruling was largely based upon the NSW Supreme Court decision of Thomas and Naaz[3] (our article on that Supreme Court decision can be found here.

Whilst the medical practice lost on appeal and still had to pay payroll tax, the upper Court made an important observation of circumstances when payroll tax would not be payable.   Our article of this appeal decision can be found here ,which was subsequently appealed to the NSW Court of Appeal.

In that article we asked the question: “is this the silver bullet medical practices have been looking for to not trigger payroll tax?”

We can now say the answer is a resounding YES in Qld!

What is that silver bullet?

The Qld SRO has conceded that the flow of funds will be instrumental to whether payroll tax is payable.

If patient fees/Medicare payments are paid by the patient to the medical practice, the medical practice deducts its service fee and remits the balance to the doctor – payroll tax is probably payable on that latter amount.

However, if patient fees/Medicare payments are paid by the patient directly to the doctor and then the doctor pays the medical practice for its services, there should be no “wages” for the Qld SRO to impose payroll tax upon.

Are there tricks and traps?

Like everything, it’s not a simple matter of changing the flow of funds and payroll tax will not be payable.  There are a number of hidden tricks and traps that you need to cover off including having your entire arrangement and agreement properly reviewed.  One example is that the positive payroll tax outcome will not apply where the patient pays an intermediary (like a doctor controlled company or trust) and then the doctor[4], so it’s imperative that the medical practice have a say on the entities doctors use moving forward.

What about other States and Territories?

Although every State and Territory has been a party to a payroll tax harmonisation protocol since 2010, there’s no guarantee other States and Territories will follow Qld’s lead.

An example is when Qld and SA both announced an amnesty for GP’s, but none of the other States and Territories followed.  Another example is the fact that WA does not have legislation similar to other States and Territories, so these types of service agreements are not specifically contemplated in the WA legislation and the WA Treasurer has outwardly indicated that WA has no intentional on changing their legislation[5].

However, the fact that NSW, Victoria and SA all issued rulings similar to the first ruling by Qld[6] (and the fact the Court decision was in NSW), it is hard to see the other States and Territories (other than Western Australia) not following suit.  However, there are doubts how quickly they will respond[7].

What about past wrongs?

Each State and Territory has made it clear that they have not changed the legislation, and only given guidance on how it will be interpreted.  Therefore, unless you are a GP that has applied for and obtained the amnesty (our article on this around be found here), then this ruling will only protect you from an adverse payroll tax assessment moving forward.

The commercial team at Mahoneys is experienced in payroll tax legislation within the medical practice industry in all States and Territories. If you would like us to provide further advice about the implications of this ruling, whether you are a GP deciding whether to apply for the amnesty or if you would like us to review your existing or implement new agreements, please contact Mahoneys commercial Partner, Antony Harrison, or lawyer Sabrina Austin on (07) 3007 3777 or or


[1] Qld Public Ruling PTAQ000.6.2

[2] Qld Public Ruling PTAQ000.6.1

[3] Thomas and Naaz Pty Ltd (ACN 101 491 703) v Chief Commissioner of State Revenue [2022] NSWCATAP 220.

[4] See Example 16 of Qld Public Ruling PTAQ000.6.2 at para 64

[5] Confirmed by the WA Treasurer in a letter to RACGP

[6] South Australia June 2023 and NSW and Victoria in August 2023

[7] Noting NSW’s and Victoria’s first ruling is only a month old