Accounting and Tax for GPs in Melbourne
General practice has a particular set of financial complexities that most accountants simply aren’t familiar with. The mix of Medicare bulk-billed income (which is GST-free), private billing (which may or may not attract GST), practice agreements with different ownership models, PSI implications for contracted GPs, and the ongoing CME and AHPRA registration costs all sit in a space that requires specific knowledge to manage well.
We work with Melbourne GPs across a range of practice arrangements — GPs who are practice owners, GPs who work under service agreements as contractors, GPs who bulk bill exclusively, and those who run mixed billing. Our office in Melbourne CBD is a short distance from the Parkville Medical Precinct and the concentration of teaching hospitals in that corridor, and we work with a number of GPs who began their careers there and have moved into private practice.
How GP income is typically structured
Most Melbourne GPs earn through one of three arrangements:
As an employee of a practice. The practice pays your wages, withholds PAYG tax, and takes care of BAS. Your personal tax return is relatively straightforward — though you still want to claim every work-related deduction you’re entitled to, including AHPRA registration, indemnity insurance, CME costs, and professional memberships.
As a contractor under a service agreement (percentage split model). This is probably the most common arrangement for GPs in Melbourne. You bill under your own provider number, the practice takes a service fee (typically 30–40% of billings), and you receive the net amount as ABN income. In this situation, Personal Services Income (PSI) rules almost certainly apply to your income — because the income is generated by your personal skill and effort, not by a business operation with staff and infrastructure. That limits what you can do with the income from a structuring perspective.
As a practice owner. You own or co-own the practice entity. This is a genuinely different financial situation — you have a business with its own accounts, employees, payroll obligations, Medicare bulk billing reconciliation, and potentially a lease or property interest. Practice ownership opens up structuring options that aren’t available to a contracted GP.
PSI and the GP contractor — what it actually means
If you’re working as a contracted GP and your income passes the 80% concentration test (most of your income coming from one payer), PSI rules apply to your income. This is the situation for the majority of contracted Melbourne GPs.
PSI income can still go through a company or trust — the ATO doesn’t stop you having a structure. But the income is attributed back to you personally for tax purposes, which means you can’t income-split with a spouse by paying them a salary from the company, you can’t retain profits in the company at the corporate tax rate, and your deductions are limited to what an employee could claim.
The silver lining is that AHPRA registration, indemnity insurance, CME, professional subscriptions, and travel costs between practice locations are all deductible even under PSI rules.
If you work across multiple practices or have multiple payer sources, the PSI position changes. More than 20% of income from a second payer brings you outside the 80% test. We assess this specifically for your circumstances before recommending a structure.
What GPs can claim as deductions
Always deductible (regardless of structure): AHPRA registration and renewal fees, indemnity insurance (MDA National, Avant, MPS), professional membership fees (AMA, RACGP, ACRRM), CME courses and conferences, medical journals and subscriptions, work-related travel between practice locations (keeping a logbook), and home office expenses for telehealth consultations and patient administration.
Deductible in some structures: Vehicle expenses (company car has FBT implications), additional superannuation contributions, income protection insurance premiums (outside super, personally deductible), and practice equipment and fit-out depreciation for practice owners.
Not deductible: Travel to and from home to your regular workplace, and personal expenses run through the practice (a common trigger for ATO review).
BAS for GPs
Most bulk-billed Medicare income is GST-free under the health services exemption. But even if 100% of your billings are bulk-billed, you may still need to be registered for GST if you have any non-exempt income. Your BAS will also report PAYG instalments — prepayments of your personal income tax based on your prior year income. We manage BAS preparation and lodgement quarterly, and we review your PAYG instalment rate if it’s no longer a fair reflection of your expected tax.
Related services
- Accounting and tax for doctors — full overview
- PSI rules for doctors and medical professionals
- Tax deductions for doctors
- Practice entity structuring
- Multi-doctor practice accounting
Frequently asked questions
Do PSI rules apply to all contracted GPs?
Not always, but in most cases for contracted Melbourne GPs they do. If you receive more than 80% of your income from a single practice, you almost certainly meet the PSI threshold. Working across two practices with a roughly even split changes the PSI position and opens up structuring options that are not available to the single-practice GP.
Can a Melbourne GP put their income through a family trust?
If PSI applies (which it usually does for contracted GPs), income attributed to you personally under PSI rules cannot be split with a spouse through a trust or company. However, a trust can still add value in managing investment income or assets outside the practice.
I’m a new GP starting my first contractor role — when should I set up an ABN or company?
As soon as you start earning contractor income you need an ABN. Whether you need a company depends on your income level and plans. For modest locum income alongside a salary, a sole trader ABN is often simplest. We advise on the most appropriate initial structure based on your expected earnings.
Contact us on 1300 212 663 or at our Melbourne CBD office.