Non-GP Medical Specialists & 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 specialist has their own rooms and billing arrangements elsewhere.
• Services performed by two or more persons — if the specialist engages a registrar or assistant.
• Services provided for 90 days or fewer — visiting specialist arrangements covering a specific sessional day per week may or may not satisfy this test depending on counting.
• Services of a kind ordinarily required for fewer than 180 days a year — if the specialist's visits are episodic.

Non-GP specialists are expressly excluded

The Queensland exemption is the clearest example: it covers wages paid to a general practitioner or GP registrar and expressly excludes non-GP medical specialists. The other jurisdictions' provisions are drafted with the same scope, so a specialist practice has no relief to claim in any state or territory.

This is worth stating plainly because specialist practices often have the largest deemed wage figures. A practice remitting $2,000,000 a year to its specialists is carrying a substantial taxable wage base with no offsetting exemption, and the threshold is the only shelter available.

The arithmetic for a specialist practice

In NSW, a specialist practice with $800,000 of staff wages and $2,000,000 remitted to specialists has $2,800,000 of taxable wages. After the $1,200,000 threshold that leaves $1,600,000 taxed at 5.45% — $87,200. No rebate applies, because the NSW rebate is limited to GP services.

The same structure in Queensland is no better: the GP exemption does not reach specialists, so the deemed wages remain in the base and are tested against the diminishing $1,300,000 deduction, which reaches zero at $6,500,000 of Australian group wages. For a large specialist group the deduction is often already nil.

Where the leverage actually is for specialists

With no relief available, the position turns entirely on three questions: whether the arrangement creates deemed wages at all, how the threshold is apportioned across the group, and which entity is nominated as Designated Group Employer. The first is a factual question about who bills and who remits; the second and third are structural.

Because the amounts are large, the grouping analysis is usually the most valuable exercise. Moving the wage base to the entity best placed to use the threshold, and ensuring a DGE is actually nominated rather than left to the revenue office, can change the liability materially without altering the clinical arrangements at all.

The scale of specialist remittances is what makes the threshold question so consequential. A practice remitting several million dollars a year to its specialists carries a wage base that dwarfs its employed staff, so the difference between holding the threshold and losing it is measured in tens of thousands of dollars annually. For a specialist practice, no clinical decision changes the payroll tax outcome as much as where the threshold sits.

Building the deemed wage in a specialist practice

The deemed wage in a specialist practice is the amount remitted to the specialist: gross billings collected by the practice, less the facility fee retained. Specialist remittances are typically the largest of any cohort, because sessional and procedural fees are high, so the deemed wage base builds quickly.

What decides whether a deemed wage exists is the invoicing arrangement. Where the practice bills Medicare and health funds and remits the balance, the remitted amount is the deemed wage; where the specialist invoices in their own right and pays a sessional facility fee, the analysis changes and may produce no deemed wages.

A worked specialist scenario

Take a Victorian specialist practice with $1,000,000 of employed staff wages and $3,000,000 remitted to contractor specialists. The combined taxable wages reach $4,000,000. Victoria's threshold phases out between $3,000,000 and $5,000,000 of Australian group wages, so at $4,000,000 the deduction is $500,000, leaving $3,500,000 taxable at 4.85% — $169,750.

No relief applies: the GP exemptions in Queensland, Victoria, South Australia and the ACT are scoped to general practitioners, and the NSW rebate is limited to GP services. For a specialist practice the threshold and the group structure are the only levers.

Visiting and sessional specialist arrangements

Visiting and sessional specialists raise the 90-day and 180-day relevant-contract exemptions in a way that is specific to this cohort. A specialist attending one sessional day per week for 46 weeks totals 46 days — under the 90-day threshold — because each day on which any service is performed counts as one day, not each hour.

That counting rule can remove a visiting specialist's payments from deemed wages entirely, but it is a factual test that depends on the pattern of attendance, and it should be verified against the jurisdiction's ruling before it is relied upon. Where the specialist attends more frequently, or performs services across a longer part of the year, the exemption may not be available.

The arithmetic of the test is worth working through, because it is easy to misjudge. A specialist attending one session a week for forty-six weeks has forty-six service days and sits comfortably under the ninety-day threshold; one attending three days a week over the same period has 138 days and falls outside it altogether. Because the count is of days rather than hours, the practice should keep a record of attendance days and test them against the threshold rather than rely on the pattern the agreement describes.

A second specialist scenario and the group lever

Take a Queensland specialist practice with $600,000 of employed staff wages and $1,600,000 remitted to contractor specialists, giving $2,200,000 of taxable wages. Queensland's $1,300,000 deduction leaves $900,000 taxed at 4.75% — $42,750. The GP exemption does not reach specialists, so none of that is relieved.

The deduction is a group entitlement. If the practice is grouped with a related entity nominated as the Designated Group Employer, it may pay 4.75% on the whole $2,200,000 — $104,500. Because specialist remittances are large, the swing between holding and losing the threshold is correspondingly large.

For a specialist practice the group structure is therefore the single most valuable thing to get right, and it is also the most commonly overlooked. Ensuring a DGE is actually nominated, rather than left to the revenue office, is the first step.