Payroll tax for dental practices

How the contractor rules work

Payroll tax isn't only about employees. Every state except Western Australia has broadly similar "relevant contracts" rules that can treat payments to contractors as wages. So an associate dentist with an ABN, invoicing the practice, can still be inside the payroll tax net.

Two court cases shaped how this applies to health practices. In Optical Superstore (Victoria, 2019) and Thomas and Naaz (NSW, 2021, upheld on appeal in 2023), the courts found that payments flowing through a practice to its practitioners could be taxable wages. Each state's ruling on medical centres expressly covers dental practices.

What revenue offices look at

When an arrangement is reviewed, these are the kinds of factors that come up:

• Payment flow: who collects patient fees, the practice or the dentist.
• Facilities: how use of rooms, equipment and staff is charged (a service fee, a lease, or something else).
• Autonomy: how much independence the dentist has in running their own work.
• Patients: whether patients belong, legally and in practice, to the dentist or the practice.
• Control: how much the practice controls hours, leave and treatment protocols.

Many dentists work under a service and facilities agreement (SFA). What the SFA says matters, but so does how the arrangement actually works day to day.

Exemptions that can apply

Depending on the facts, an exemption may apply, for example:

• Engagements of 90 days or fewer in a financial year.
• Practitioners who genuinely provide services to the public generally.
• Genuine facility-provider models, where practitioners run their own independent practices and buy defined services from the clinic.

Whether any of these applies depends on the agreement and the way the arrangement works in practice. Outcomes are case by case.

Queensland: after the amnesty

• Queensland ran a payroll tax amnesty for contracted dentists, approved on 30 September 2024 and closed on 30 June 2025.
• Eligible clinics that registered and made a voluntary disclosure by the deadline were relieved of payroll tax on contracted-dentist payments for the amnesty period and the previous five years (2018 to 2025).
• From 1 July 2025, dental clinics must meet normal payroll tax obligations on payments to contracted dentists, unless an exemption applies.
• GPs received a permanent exemption, legislated in February 2025. Dentists did not.
• Queensland's payroll tax threshold is $1.3 million in annual wages.

Victoria

• There has been no amnesty or relief for dental practices.
• Victoria's relief from 1 July 2025 covers bulk-billed (fully funded) GP consultations only. Dentists and allied health aren't covered.
• The tax-free threshold rose to $1 million from 1 July 2025, and phases out for wages between $3 million and $5 million. The standard rate is 4.85%.
• Eligible regional employers may pay a reduced rate of 1.2125%, which can matter for regional dental clinics. Eligibility rules apply.
• The ADA Victorian Branch has called for an amnesty. The Victorian Coalition has pledged to remove payroll tax on health professionals, including dentists, if it wins the November 2026 election. That's a pledge, not a change in the law.

Other states

NSW, South Australia and the ACT have relief for GPs tied to bulk billing, with no dental relief announced. Tasmania and the Northern Territory haven't announced amnesties or concessions.

What's still moving

The Uber payroll tax case. In August 2025 the NSW Court of Appeal found Uber liable for about $81 million in payroll tax on payments to drivers, rejecting the argument that it was simply passing money through. The High Court gave Uber special leave to appeal in December 2025, and the appeal papers were filed in early 2026, with further filings in April 2026. As at 7 October 2026 we couldn't find a published High Court judgment. Because the contractor rules are so similar across states, the final outcome may affect how practices that collect fees on practitioners' behalf are treated. We'll update this page when the decision is published.

Reviewing your arrangements

If you want to review or fix how your associates are engaged, there are two parts:

1. The contract. We can connect you with our legal contacts, or you can use your own lawyer if you have one you use regularly. They're best placed to draft the agreement. Typical cost: $1,500 to $5,000, depending on how complex the terms are.
2. The operations and accounting. How payments, fees and records actually flow, so the arrangement works the way the contract says. This is included in our full-service packages.

Start with our payroll tax checklist to see which factors apply to you. Every arrangement is different. Read the FAQs or book a consult and we'll look at your specific situation. If you're buying a practice, check this before you sign: see buying a dental practice.