Physiotherapists & Payroll Tax

Relevant contract exemptions that may apply

These are the harmonised exemptions under the relevant contract provisions. Each is a factual test on the specifics of your arrangement — verify with your adviser before relying on any of them.

• Services provided to the public generally — if the physiotherapist sees their own private patients at other locations, this exemption may apply.
• Services performed by two or more persons — if the physiotherapist brings their own support staff.
• Services provided for 90 days or fewer — locum or short-term cover arrangements.
• Services of a kind ordinarily required for fewer than 180 days a year — if the physiotherapy service is episodic (e.g. post-operative rehabilitation) rather than ongoing.

Physiotherapy and the general-practitioner boundary

The medical relief provisions are drawn around general practice, and physiotherapists are on the other side of that line. None of the Queensland, Victorian, South Australian or ACT exemptions covers a physiotherapy practice, and the NSW rebate is likewise limited to GP services.

The result is that a physiotherapy practice which bills in its own name and remits a share to its practitioners has the same deemed wages exposure as any other practice, with no sector relief available. The relevant contract provisions apply in every jurisdiction except Western Australia.

It is worth stating why the boundary sits where it does. The relief provisions were drafted around the bulk-billing incentive structure in general practice, and physiotherapy sits largely outside that structure. A physiotherapy practice therefore cannot look to a medical exemption for help, however similar its billing arrangements may be to a general practice's.

Allied health scope and the mixed practice problem

The risk is sharpest in a mixed practice. A practice that employs or engages GPs alongside physiotherapists may assume its GP relief covers the whole clinical team, but the relief is scoped to the practitioner type, not to the practice. The physiotherapy cohort's payments remain fully taxable even where the GP cohort's do not.

That means a mixed practice has to keep the cohorts separable in its payroll records. Aggregating GP and allied health payments into a single service-fee line makes it impossible to apply the GP exemption correctly, and it is the kind of error that only surfaces on assessment.

Practical steps for a physiotherapy practice

The first question is structural: does the practice bill and remit, or do the practitioners bill in their own right? Where the practice collects and remits, the remitted amount is the deemed wage. Where practitioners bill directly and pay a room or service fee, the analysis is different and in some jurisdictions produces no deemed wages at all.

The second question is the group. Only the Designated Group Employer claims the threshold, and a physiotherapy practice grouped with a related entity can find its shelter reduced or eliminated. The documents to assemble are the service agreements, the billing and remittance records, and the group structure showing the DGE nomination.

Building the deemed wage in a physiotherapy practice

The deemed wage in a physiotherapy practice is the amount remitted to the practitioner: gross billings collected by the practice, less the service fee retained. A practice billing $150,000 for a contractor physiotherapist and retaining a 40% fee records a $90,000 deemed wage, calculated practitioner by practitioner and added to employed staff wages.

Whether deemed wages arise at all depends on the billing structure. Where the practice bills patients and health funds and remits the balance, the remitted amount is the deemed wage; where the physiotherapist bills in their own right and pays a room fee, the analysis changes and may produce no deemed wages. The structure, not the label the parties use, decides it.

A worked physiotherapy scenario

Take a Queensland physiotherapy practice with $400,000 of employed staff wages and $1,100,000 remitted to contractor physiotherapists. The combined taxable wages reach $1,500,000. Queensland's $1,300,000 deduction leaves $200,000 taxable at 4.75% — $9,500.

The GP exemption does not apply, because physiotherapists are not general practitioners. The practice cannot reduce the deemed wage figure through any medical relief; the only reductions are the deduction, its apportionment across a group, and the four relevant-contract exemptions.

Gym-based and multi-site physiotherapy models

Physiotherapy practices increasingly operate across multiple sites, and often through a separate corporate or franchise entity. Where the entities are under common control they are grouped, and only the Designated Group Employer claims the threshold — so a group that leaves the nomination unmade pays from the first dollar in every other member.

Gym-based and franchise models also raise the question of whether the practitioner bills the practice or the practice bills the patient. Where the practice collects and remits, the remitted amount is the deemed wage in every jurisdiction except Western Australia; where the practitioner bills directly, the analysis is different and in some jurisdictions produces no deemed wages.

Grouping is what decides the outcome in a network. Entities under common control are grouped even when they trade under different names or serve different suburbs, and only one member — the Designated Group Employer — holds the threshold. A franchise of separately owned clinics will usually not group, but a network under common ownership will, and the payroll tax difference between the two structures can be the difference between a small liability and a large one.

A second physiotherapy scenario and the group lever

Take a Victorian physiotherapy practice with $400,000 of employed staff wages and $900,000 remitted to contractor physiotherapists, giving $1,300,000 of taxable wages. The $1,000,000 threshold applies in full because the group's national wages are below the $3,000,000 phase-out start, leaving $300,000 taxed at 4.85% — $14,550.

Because physiotherapists are outside every GP-scoped exemption, that figure stands regardless of how much of the practice's work is bulk billed. The threshold is the only shelter, and it is a group entitlement: if the practice is grouped with a related entity nominated as the Designated Group Employer, it may pay 4.85% on the whole $1,300,000 — $63,050.

The practical consequence is that a physiotherapy practice's largest lever is structural. Confirming the group, nominating a DGE, and holding the wage base in the entity best placed to use the threshold can change the liability by tens of thousands without altering a single clinical arrangement.

For a physiotherapy practice the threshold and the group are the whole analysis. There is no bulk-billing relief to chase, no proportional exemption to measure and no amnesty to weigh — which narrows the work to two questions: does the arrangement create deemed wages, and where does the threshold sit?