---
title: GP Contractor Tax Advice & Setup | Verity Advisory
description: Starting GP contracting? Get clarity on service agreements, PSI, GST, tax instalments, super and borrowing. Tax-led advice for Australian GPs.
---

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For GP contractors and locums

# Starting GP contracting? Get the tax foundations right.

A service agreement, patient billings and tax you manage yourself can make the move from employment less straightforward than it looks. We help GPs understand their income arrangements, tax obligations, super and borrowing decisions before problems build up.

[Discuss your contractor setup](https://meetings.hubspot.com/verityadvisory/15-min-phone-call)[Explore tax and structure advice](http://www.verityadvisory.com.au/what-we-do/tax-advice/?hsLang=en-au)

Based in Brisbane, advising GP contractors across Australia.

Your first 90 days

## The questions worth answering early

You may be confident clinically and still have unanswered questions about the business side of contracting. These are common turning points—not a fixed legal timetable.

Before startingWhose billings are they, and what does the clinic charge?Understand the service agreement, who supplies the medical service, how patient fees flow, the clinic's service fee and the tax consequences. Have the legal terms reviewed by a solicitor where needed.

First monthHow much of each payment is really yours?Without salary withholding in a typical independent practice arrangement, a healthy bank balance can conceal an upcoming tax bill. Estimate your tax and set cash aside from the outset.

First quarterWho is responsible for super, GST and BAS?GST-free medical services can still count towards registration turnover. Super depends on the actual contractual arrangement. Review these before assuming the clinic or the ATO will sort them out.

Before borrowingWill contracting change your home-loan options?Income evidence and trading history can affect how lenders assess you. Consider the timing of tax returns, financial statements and borrowing before locking in another structure or commitment.

**Note:** The 90-day sequence is a planning guide. Registration, tax, super and contract deadlines depend on your circumstances.

## Starting GP contracting: what to address first

Moving from employment to an independent GP arrangement changes how money reaches you and which obligations you manage. The sequence below is a practical first-90-days framework, not a substitute for the actual dates and requirements in your contract or ATO notices.

### Before your first session: understand the service agreement

Don't rely on the word “contractor” alone. Establish who is providing the medical services to patients, who is entitled to the patient fees, who receives those fees, and how the practice charges for rooms, staff, administration and facilities. Check the service fee, invoicing or recipient-created tax invoice arrangements, GST treatment, notice periods and what happens when you leave.

The agreement and how the practice operates in reality can affect tax, super and other obligations. We assess the financial and tax implications and recommend legal review of the contract terms where appropriate.

### Your first month: prevent an unexpected tax bill

In a common independent billing arrangement, income tax is not withheld from your patient billings as it would be from employee wages. Estimate your annual income, allowable expenses, other taxable income and any study-loan repayment liability, then establish a regular tax set-aside from the first receipts.

Do not assume a PAYG instalment notice will arrive immediately. The ATO may automatically enter you into instalments based on a later return, and voluntary entry may be available sooner. We can assess the appropriate instalment approach and review it as your billings change.

### During the first quarter: sort out GST, BAS and records

Medical services are often GST-free where the legal conditions are met. **GST-free does not mean excluded from GST registration turnover.** The usual compulsory registration threshold for an enterprise is $75,000 of GST turnover, subject to the statutory calculation rules. If you are the supplier making GST-free medical supplies, those sales generally count towards that threshold.

A clinic's charges for rooms, administration or facilities may have different GST treatment from your medical services to patients. Whether input tax credits can be claimed depends on the arrangement and applicable rules. Record patient billings, clinic service fees, GST, other expenses and tax set-asides in a way that supports your BAS and income tax return.

For current ATO guidance see [registering for GST](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/registering-for-gst).

### Before taking on more debt: consider borrowing and protection

Changing to contractor income can affect which evidence a lender requests, how trading history is assessed and the timing of a home or investment purchase. Lender policies differ, including for medical practitioners. Consider your borrowing plans before changing entities or committing surplus cash elsewhere.

Review how time away from work would affect household income, debt repayments and other commitments. Depending on your circumstances, that may mean an emergency reserve, income protection advice or other financial planning—not necessarily purchasing another product.

## Four technical questions GP contractors should not overlook

### Does a company or trust reduce tax on clinical income?

Not automatically. Income mainly generated by your own professional effort or skill may be personal services income (PSI). The PSI rules, personal services business tests and other income-splitting rules can restrict what can be achieved through an entity. A company or trust can still be appropriate for a genuine business or ownership purpose, but that is a different question from simply lowering tax on your personal consultations. See our [tax and structure advice](http://www.verityadvisory.com.au/what-we-do/tax-advice/?hsLang=en-au).

### Does the practice have to pay my super?

It depends on the actual arrangement. In some genuine service-fee arrangements, the GP needs to plan their own super contributions. Under other contracts, super guarantee may be payable where an individual is engaged wholly or principally for their labour, even if they have an ABN. Your contract and working arrangements need to be assessed; the PSI rules do not determine super obligations.

### What about Queensland payroll tax?

For qualifying Queensland medical practices other than hospitals, wages paid to eligible GPs—whether engaged as employees or contractors—have been exempt from Queensland payroll tax from 1 December 2024. The exemption does not automatically extend to other types of practitioners or businesses. Payroll tax is generally a practice-level question, but it can become directly relevant when you consider ownership or review your service arrangements. See the [Queensland Revenue Office guidance on exempt GP wages](https://qro.qld.gov.au/payroll-tax/exemptions/wages/).

### What changes when I consider buying into the practice?

Owning part of the business introduces separate questions about valuation, sustainable practice profit, tax structure, debt, ownership rights and exit arrangements. Being able to borrow does not by itself make a buy-in worthwhile. See our [practice buy-in advice](http://www.verityadvisory.com.au/doctors/practice-buy-in-advice/?hsLang=en-au).

## How Verity helps GP contractors

We begin with the arrangement you actually have—not an assumption that every contractor needs a company, trust or complicated financial plan.

1. Step 1
   
   Understand your agreement and income
   
   Review the service arrangement, expected billings, current records, other income, debts and important decisions ahead.
2. Step 2
   
   Prioritise the tax and cashflow setup
   
   Identify applicable registration, PSI, GST, instalment, super and record-keeping questions and explain where specialist legal or financial advice is needed.
3. Step 3
   
   Set the next actions and review points
   
   Agree the relevant scope, fees and practical steps. Revisit the position as your income, borrowing needs or practice ownership plans change.

## Questions GP contractors ask us

Do I need an ABN when I become a GP contractor?

An ABN may be appropriate where you are genuinely carrying on an enterprise, but an ABN and a contractor label do not, by themselves, establish your legal status. We review the arrangement and the relevant obligations before deciding on registrations or structure.

Do I need to register for GST if my medical services are GST-free?

Often yes. GST-free medical supplies generally count towards GST turnover for registration purposes. The usual compulsory registration threshold is $75,000 of GST turnover, calculated under the rules. Some supplies and fees can have different GST outcomes, so the actual arrangements need to be reviewed.

How much should I set aside for income tax?

There is no safe universal percentage. It depends on estimated taxable income, deductions, other income, tax offsets and any study-loan repayments. We estimate the position and establish a cash reserve and instalment approach that can be adjusted as your billings change.

Should I set up a company or family trust for contracting?

Not for the tax rate alone. Income mainly from your own clinical work may be personal services income, and other integrity rules may also apply. Entities can have legitimate business or investment purposes, but we compare those benefits with costs, complexity and the actual tax treatment.

Will the practice pay super for me?

Not necessarily, but it is not safe to assume the answer is always no. Some contracts with individuals who work wholly or principally for their labour can attract super guarantee obligations even where they use an ABN. We examine the arrangement and then plan any personal contributions appropriately.

Does Queensland payroll tax apply to GP contractor payments?

Queensland introduced an exemption from 1 December 2024 for qualifying wages paid to eligible GPs by medical practices other than hospitals. Whether payments are covered depends on the relevant rules and facts. It is generally the practice's issue, particularly important for prospective practice owners.

Can moving into contracting affect my home-loan borrowing?

Yes. The income evidence, trading history and documents required can differ from employee lending. Medical practitioner policies may help, but lender criteria change and eligibility is not automatic. We can consider borrowing plans alongside your tax and financial position.

What should I bring to an initial discussion?

A copy or summary of the service agreement, your expected billings and clinic service fee, information about other income and existing debts, plus the key question you want resolved. We will explain how to share any confidential records securely.

Do you help GP contractors outside Brisbane?

Yes. Verity is based in Bowen Hills, Brisbane, and can work with GP contractors elsewhere in Australia using phone and online meetings, subject to the applicable service and engagement requirements.

## Starting contracting or reviewing your setup?

A short conversation can help identify whether the pressing issue is your service agreement, tax cashflow, GST, super, a structure review or an upcoming borrowing decision. We'll discuss what needs attention and the scope of further work before an engagement begins.

[Book a 15-minute discovery call](https://meetings.hubspot.com/verityadvisory/15-min-phone-call)

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