Payroll Services for Melbourne Medical Practices
A medical practice’s payroll is more complex than most businesses of equivalent size. The mix of employed reception and nursing staff, contracted practitioners on percentage billing arrangements, visiting specialists, and part-time employees creates a payroll and compliance picture that needs careful management — and one where mistakes have material consequences.
STP payroll reporting
Single Touch Payroll (STP) requires employers to report payroll information — wages, tax withheld, and super contributions — to the ATO every pay run. Phase 2 STP expanded reporting to include additional employment details. For a Melbourne medical practice, STP compliance needs to be running cleanly for all employees, regardless of how casual or part-time their arrangements are.
We set up and manage STP payroll for Melbourne medical practices using cloud-based payroll systems that integrate with your existing software (Xero, MYOB, or similar). We handle the lodgement, reconciliation, and year-end STP finalisation that replaces the old Payment Summaries.
Employee vs contractor — the most important distinction
This is arguably the biggest compliance risk in medical practice payroll. The ATO has been increasingly active in reviewing contractor arrangements in the medical sector, and the consequences of misclassification — back-paying PAYG withholding, super, and potentially payroll tax — can be significant.
Employed staff (reception, nursing, practice administration) must have tax withheld, super paid at least quarterly, and payroll processed through STP. Contracted practitioners working under service agreements and billing under their own provider numbers may be genuine contractor arrangements — but the key question is whether the arrangement, in substance and in law, is actually a contractor relationship or one that looks more like employment. The 2022 High Court decisions and subsequent ATO guidance have made this analysis more nuanced. Written contracts matter — but so does the substance of how the arrangement operates.
Payroll tax — are you liable?
Payroll tax in Victoria applies to employers whose total wages exceed the threshold (currently $900,000 per year). Medical practices often assume practitioner service fees paid to contracted doctors are not “wages” for payroll tax purposes — but the Victorian SRO has actively disputed this in relation to certain practice arrangements, and there have been significant court decisions on this point.
Whether your practice’s payments to contracted practitioners constitute wages for payroll tax purposes is a question worth getting right. We advise on payroll tax exposure and where necessary, on the right structure and documentation to support your position.
Super obligations
Superannuation at the current rate must be paid to all eligible employees at least quarterly (and from 2026, payday super will require super to be paid on each payday). For eligible contractors — particularly those you engage primarily for their labour — super must also be paid under the extended definition in superannuation legislation. We manage super obligations as part of payroll, including tracking guarantee charges that arise from late payment.
Related services
- Accounting and tax for doctors — full overview
- Medical clinic operations accounting
- Multi-doctor practice accounting
- BAS for medical practitioners
Frequently asked questions
Are our contracted GPs definitely contractors, not employees?
Not necessarily. The 2022 High Court decisions and subsequent ATO guidance put the focus squarely on the written contract and the substance of the actual arrangement. The fact that GPs invoice you does not automatically make them contractors. If you have not had a payroll or employment law review of your practitioner agreements recently, this is worth doing given the ATO focus in this area.
Do we need to pay superannuation for contracted practitioners?
For practitioners who are employees in substance, yes. For some contractor arrangements, super may also be required under the extended definition in superannuation legislation — this applies when you engage someone mainly for their labour and they are paid at an hourly or daily rate. We assess each practice’s specific arrangements.
Is our Melbourne medical practice liable for payroll tax?
Victorian payroll tax applies to employers whose total wages exceed the threshold (currently $900,000 per year). Whether payments to contracted practitioners constitute wages for payroll tax purposes is a significant question — the Victorian SRO has actively disputed certain practice structures. We advise on payroll tax exposure and appropriate documentation.
What is STP payroll reporting and do we need it?
Single Touch Payroll (STP) requires employers to report wages, tax withheld, and super contributions to the ATO on or before each payday. Any employer — regardless of size — must use STP. Year-end finalisation must be completed by 14 July each year.
Contact us on 1300 212 663 or visit our Melbourne CBD office.