Key Highlights

  • Shadow health minister Georgie Crozier says a Liberal government would abolish GP payroll tax.
  • Labor has not matched the Liberal pledge.
  • Victoria's current bulk-billing exemption determines which clinics pay the tax.
  • The 2024 relief for GP clinics came about after earlier pressure.

Payroll tax on general practice has become an election issue in Victoria, 24 days before voters go to the polls on 28 November. The Coalition's shadow health minister has said a Liberal government would "absolutely" abolish Payroll Tax on GPs, while Labor's Health Minister has not matched the pledge. For clinic owners, the answer could decide whether payments to contractor doctors stay partly taxable or are taken out of the system altogether.

The promise is a proposal. Current rules, which give practices a partial exemption linked to bulk billing, continue to apply.

What the parties said

Medical Republic reported on 3 November that the pledge was made at an election debate hosted by the RACGP and AMA Victoria on the preceding weekend.

Georgie Crozier, the Liberal shadow health minister, said a Liberal government would "absolutely" abolish GP payroll tax, the outlet reported. Health Minister Ingrid Stitt did not back the call.

The Greens' Sarah Mansfield, a former GP, seconded it. One Nation's state deputy leader, Colleen Harkin, said she would take more advice before committing.

Melbourne GP Dr Mukesh Haikerwal, who attended, said Crozier was "quite forceful and clear that the Liberal-National coalition believed that it was an impediment to business". He added: "I think it was very reassuring that all parties sent a representative".

The election promise tracker, updated on 4 November, lists repealing "taxes on visits to the GP" among the Coalition's tax commitments. Neither report gives a cost for the promise, and it is not clear whether it would extend to other private medical practices.

The GP pledge sits within a wider Coalition tax platform. The policy tracker also lists promises to cut payroll tax generally and to repeal payroll tax on schools, alongside a pledge of no new or increased taxes and a cash surplus by 2032. Each repeal reduces state revenue, so the cost of the GP promise will matter to how the rest of the platform adds up.

Background: how payroll tax reached GP clinics

Many GPs are not employees of the clinic where they work. They operate as contractors, typically paying the practice a service fee for rooms, staff and administration.

Payroll tax laws in each state include "relevant contract" provisions, which can treat payments to some contractors as taxable wages. Revenue offices, including Victoria's State Revenue Office, have applied those provisions to medical practices, so that money flowing to contractor GPs can be counted for payroll tax.

That alarmed practice owners, who faced the threat of retrospective audits and back-dated assessments. Medical colleges, the AMA and practice owners lobbied the government for relief.

The amnesty and the current exemption

On 22 May 2024 the Victorian government announced relief, in a release issued by the Treasurer at the time, Tim Pallas, and the Health Minister at the time, Mary-Anne Thomas.

  • Up to 30 June 2024: all general practice businesses were exempted from outstanding or future payroll tax assessments on payments to contractor GPs, using the Treasurer's ex gratia powers.
  • 1 July 2024 to 30 June 2025: a further 12-month exemption for practices that had not already received advice and started paying payroll tax on contractor GP payments.
  • From 1 July 2025: an exemption for payments to contractor and employee GPs for bulk-billed consultations.

AMA Victoria said the ongoing exemption covers wages for "fully-funded" services, which it described as including bulk-billed consultations and services funded through veterans' entitlements, the Transport Accident Commission and workers' compensation. It applies to the proportion of total payments made for those services.

AMA Victoria called the changes a significant improvement but not a complete solution. Specialists in private practice were not covered by the GP changes. In late 2024 the association also said it was raising practical questions with the State Revenue Office, including how a "day of work" is defined and whether doctors who work in both public and private settings qualify under the "providing services to the general public" clause.

Hypothetical example: a mixed-billing clinic

Hypothetical example: a suburban clinic pays $2 million a year to its contractor GPs. Sixty per cent of the services are fully funded, mostly bulk-billed consultations.

  • Exempt share: 60% of $2 million = $1.2 million.
  • Share that may still be counted as wages: 40% of $2 million = $800,000.

Whether the clinic actually pays payroll tax on that $800,000 depends on its total Victorian and national wages, including receptionists and nurses, and on the annual threshold deduction. A clinic that bulk-bills every patient would in theory have no payroll tax on its GP contractor payments.

Under the Coalition's proposal, as reported, the $800,000 would no longer be taxed as GP wages. Until the detail is published, it is unclear how that would be achieved or what it would cost.

Why it matters for bulk billing

The government framed the 2025 exemption as a way to encourage more bulk billing. The design means the tax treatment of a clinic's GP payments depends on its billing mix: the more services that are fully funded, the smaller the share that can be counted as wages.

That is the key difference between the two major parties. Labor has kept the bulk-billing link in place, while the Coalition's promise, as reported, would remove payroll tax on GPs regardless of how patients are billed.

The issue also has a federal dimension. Federal Health Minister Mark Butler had pressed the states in 2024 to remove the payroll tax threat, which he said undermined federal Medicare investments, Medical Republic reported at the time.

RACGP president Dr Nicole Higgins said then that the principle of no retrospectivity was the most important part of the relief.

What to watch

  • Saturday 28 November 2026: Victorian state election. The caretaker period has already started.
  • Whether the Coalition releases a cost for the GP payroll tax promise, and whether it would be legislated as a full exemption for GP wages.
  • Whether Labor changes its position before polling day.
  • Any Parliamentary Budget Office costing of the promise if the Coalition requests and releases one.
  • Any further State Revenue Office guidance on how practices calculate the fully funded proportion.