Ask a practice owner what keeps them up at night in 2026 and payroll tax will be near the top of the list. In the past few years, state revenue offices have started treating some payments to contractor GPs as wages, which can make a practice liable for payroll tax on money it only ever passed through to its doctors. The RACGP has called it a threat to practice viability and campaigned hard for relief. It is one of the biggest financial questions in Australian general practice right now, and it has landed squarely on one desk in particular: the practice manager’s.

If you are thinking about a career in practice management, this is worth understanding, because it is a clear example of what the role is really about. Not booking appointments, but keeping a business compliant and viable while the rules shift underneath it. Here is what the payroll tax issue is, and why it puts a skilled practice manager at the centre of a modern clinic.

For decades, most general practices ran on a simple arrangement. Doctors worked as independent contractors, not employees. The practice provided the rooms, staff, software and billing and took a service fee, while the doctors billed Medicare in their own right and kept the rest. Because the doctors were contractors, practices generally assumed payroll tax, a state tax on employee wages, did not apply to them.

A run of tribunal and court decisions challenged that assumption. The most cited is Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue in New South Wales, where a medical practice was found liable for payroll tax on payments to its contractor GPs. The reasoning turned on how the money actually flowed. Where the practice collected the Medicare benefit and then paid the doctor their share, revenue authorities argued those payments looked enough like wages to fall inside the payroll tax net, even though the doctor was a contractor on paper.

That single shift in interpretation changed the maths for thousands of practices. A tax nobody had budgeted for could suddenly apply, potentially backdated across several years. For a sector already under pressure from flat Medicare rebates and rising costs, the prospect was serious enough that the RACGP made it a headline advocacy issue, describing the flow-through effect on patients as a “patient tax”.

What makes payroll tax hard to manage is this: it is a state and territory tax, so there is no single national rule. Each jurisdiction sets its own thresholds, its own rates, and its own position on contractor GPs, and those positions have kept changing.

Broadly, states have responded in different ways. Some have introduced amnesties covering past periods, giving practices a window to get their arrangements in order without being pursued for historical liabilities. Some have legislated exemptions for the wages tied to bulk-billed GP services, so that the more a practice bulk bills, the more of its GP payments fall outside payroll tax. Others have taken a broader approach to exempting contracted GP payments altogether. The exact mechanism, and whether it applies to your practice, depends on which state you are in and what the current rules say.

The practical upshot is that a practice manager in Queensland, one in Victoria and one in New South Wales can be working to three different sets of rules for the same kind of arrangement. Because the settings keep moving, the reliable move is always to check the current position with your own state or territory revenue office and your practice’s accountant, rather than assume the rule you remember still holds.

This is where the role earns its keep. Payroll tax is not something a practice can solve once and forget. It sits across contracts, billing, record-keeping and accreditation all at once, and holding those threads together is practice management work.

In practice, a capable manager is usually the person who:

• Understands how the practice’s service agreements are structured, and can explain to the owners where those arrangements sit relative to the current state rules.
• Keeps clean documentation of how doctors are engaged and how money flows, so the practice can substantiate its position if a revenue office ever asks.
• Tracks the numbers that matter, including the practice’s bulk-billing rate, because in several states the payroll tax exemption is tied directly to bulk-billed services.
• Works closely with the practice’s accountant and, where needed, its lawyers, translating professional advice into day-to-day systems the front and clinical teams can actually follow.
• Watches for change, so a new ruling or a new exemption is picked up and acted on rather than missed.

It also connects to the wider compliance picture. The definition of a “contractor” at the heart of the payroll tax question is the same one that shapes how a practice reads the RACGP Standards, structures its staffing and engagement models, and handles its Medicare billing. Get the engagement model right and several problems get easier at once. Get it wrong and the same mistake shows up in several places.

None of this means a practice manager needs to be a tax lawyer. It means being the person who understands the business well enough to ask the right questions, keep the right records, and make sure expert advice actually gets implemented.

Payroll tax is a useful window into the modern practice manager’s job because it shows the level the role now operates at. A clinic is a small business with tight margins, real regulatory exposure and a team of clinicians who need to be free to focus on patients. Somebody has to hold the operational and compliance side together, and that somebody is now, more often than not, a qualified, professional practice manager rather than whoever happened to be at the front desk longest.

That is the skill set the HLT57715 Diploma of Practice Management is built around. It covers the finance, operations, human resources, compliance and quality foundations that let a practice manager step into exactly these situations with confidence, from billing and business systems to workplace policy and risk. It will not turn you into a tax specialist, and it does not need to. It gives you the grounding to run a healthy practice and to know when and how to bring in specialist advice.

Practice management also travels well. The same core skills apply across general practice, specialist rooms, allied health, dental and beyond, and career changers are welcome, because the diploma teaches the role from the ground up.

This article is general information about the practice manager’s role and is not tax, financial or legal advice. Payroll tax rules differ by state and territory and change over time. Practices should confirm their obligations with their own state or territory revenue office and their accountant.

Sources: Royal Australian College of General Practitioners (RACGP) payroll tax advocacy and resources; Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue (NSW); state and territory revenue office guidance on payroll tax and medical practices.

TalentMed Pty Ltd, RTO 22151. Course information is current at the time of writing. For current fees, intakes and entry requirements, see the course page.