If you own an allied health practice in Queensland, you probably cheered when the State Government exempted GP practices from payroll tax. Here’s the bit nobody put in the headlines: that exemption is for GPs only. Physios, psychologists, OTs, podiatrists, dietitians, speechies and chiros are not covered.
So if your practice pays contractors and your total wages bill is creeping up, allied health payroll tax in Queensland is something you need to understand now, not when the Queensland Revenue Office (QRO) sends a letter.
What actually changed for medical practices
Queensland passed legislation in February 2025 making payments by medical practices to general practitioners exempt from payroll tax and the mental health levy, backdated to 1 December 2024. Before that, an amnesty covered contracted GP payments from 1 July 2018.
The amnesty specifically excluded “other medical doctors or allied health professionals.” The permanent exemption is written around GPs too. If your clinicians aren’t GPs, the old rules still apply to you in full.
Allied health payroll tax basics in Queensland (2026-27)
- Threshold: $1.3 million a year in Australian taxable wages (about $108,333 a month)
- Rate: 4.75% if your Australian wages are $6.5 million or less, 4.95% above that
- Deduction taper: the $1.3 million deduction reduces by $1 for every $7 of wages above it
- Mental health levy: applies on top for employers with wages over $10 million
The 2026-27 Queensland Budget made no changes to these rates or thresholds.
“Wages” is broader than most practice owners think. It includes salaries, super, bonuses, allowances, fringe benefits and, importantly, some payments to contractors.
How contractor payments become “wages”
Queensland, like the other states, has “relevant contract” rules. If your practice pays someone to perform work, that payment can be treated as wages for payroll tax even if the person has an ABN, sends you invoices and calls themselves a contractor.
This is exactly how medical centres got caught. Revenue offices and tribunals looked at arrangements where the practice collected patient fees, took a service fee and paid the rest to the practitioner. The finding was that the practice was effectively paying the practitioner to provide services to the practice’s patients. That’s a relevant contract.
Plenty of allied health clinics run the same model. If that sounds like yours, keep reading.
The exemptions (and why they’re narrower than you hope)
There are exemptions designed to carve out genuine independent contractors. Broadly, a payment may be exempt where:
- the contractor ordinarily provides those services to the public generally in that financial year, not just to your practice
- the services are performed for 90 days or less in a financial year
- the services are of a kind you ordinarily require for less than 180 days a year
- the Commissioner has made a determination for that arrangement
The catch is that QRO looks at what actually happens, not what your contract says. A physio who works four days a week in your rooms, using your reception, your booking system, your branding and your patient list, is going to have a hard time arguing they serve “the public generally” independent of you.
The grouping trap
Lots of practice owners think they’re well under $1.3 million. Then they find out about grouping.
If you own more than one business (say, a service company, a property trust and the clinic itself, or two clinic locations in separate entities), QRO can group them. Wages are added together and only one threshold is shared across the group. Two clinics on $800,000 each look fine on their own. Grouped, you’re $300,000 over.
Allied health payroll tax in real numbers
Say your Brisbane allied health practice pays $1.8 million a year across employed admin staff and contracted clinicians, and the contractor payments don’t fit an exemption.
- Your deduction drops to about $1,228,571 (that’s $1.3 million less one seventh of the $500,000 above it)
- Taxable wages are around $571,429
- Payroll tax at 4.75% is roughly $27,100 a year
Now picture QRO reviewing five years at once, plus interest and penalty tax. That’s the scenario the GP practices were in, and why they lobbied so hard.
Allied health payroll tax: what to do now
You don’t need to panic. You do need to look. Here’s where we’d start:
- Add up your Australian wages properly. Include super, contractor payments and every entity you or your family control.
- Map how money flows. Who collects patient fees? Who sets prices? Whose name is on the receipt? This matters more than the contract title.
- Test each contractor against the exemptions. Do they genuinely work elsewhere? How many days a year are they in your rooms?
- Review your service agreements. Older templates written for GP clinics may not hold up for allied health.
- Get advice before you restructure. Some fixes create new problems with GST, super or Medicare billing.
If you’re already over the threshold and haven’t registered, a voluntary disclosure to QRO usually lands better than waiting for them to find you.
The honest bit
Most allied health owners didn’t set up their practice expecting an allied health payroll tax bill. Nobody told them. But “nobody told me” isn’t a defence QRO accepts, and the GP exemption has made it easy to assume the whole health sector got a pass. It didn’t.
We work with allied health practices across Brisbane and Queensland, and we’ll tell you where you actually stand, not what you’d like to hear. If you want a straight answer on your payroll tax exposure, book a chat with us.
You might also find these useful:
- Accounting for allied health practices
- Medicare, NDIS and tax: what allied health practice owners often get wrong
- Payroll services for Brisbane small businesses
This article is general information only and isn’t personal advice. Payroll tax outcomes depend on your specific arrangements, so please get advice before acting.