How Do IMG GPs Get Paid and Taxed in Australia: Contractor or Employee?
Most GPs in Australia are paid as independent contractors who bill Medicare under their own provider number and pay the practice a service fee (a percentage of billings), rather than as salaried employees. That choice drives how your tax, superannuation, GST and income ceiling work. This guide explains the two models by mechanism — and points you to the official ATO pages that hold the current rates, because those numbers change.
A reminder for newly arrived IMGs: your visa can override your choice of model. On an employer-sponsored 482 visa you are generally tied to one sponsoring employer, which usually means an employee arrangement. See the 482 visa for UK GPs.
Contractor vs employee — the core difference
| Employee | Independent contractor | |
|---|---|---|
| How you're paid | Salary or sessional rate from the practice | You bill Medicare/patients; practice keeps a service-fee % |
| Who withholds tax | Practice (PAYG withholding) | You — via your own tax return and PAYG instalments |
| Superannuation | Practice pays super on top of salary | You fund your own super (with exceptions — see below) |
| GST | Not your concern | May need to register for and manage GST |
| Leave | Paid annual/sick leave | None — you self-fund time off |
| Income ceiling | Capped by salary | Scales with patients seen and items billed |
| Admin burden | Low | Higher — ABN, BAS, insurances |
Neither model is automatically "better." Contractor arrangements typically offer a higher income ceiling and more control; employee arrangements offer simplicity, paid leave, and employer-funded super. The right choice depends on your visa, risk appetite, and how the practice is structured.
The service-fee (percentage split) model
In a contractor arrangement, you bill Medicare under your provider number and the practice retains a service fee — a percentage of your billings — in exchange for premises, reception, billing systems, and support staff. The split varies by practice and region. Your gross income then scales with patient volume and the item numbers you bill, including after-hours loadings.
Crucially, what you can bill Medicare for — and where — is governed by Medicare billing privileges and the section 19AB rules, not by your pay model. A contractor split does not exempt you from the geographic restrictions.
Do GPs need an ABN?
If you operate as a contractor, you generally need an Australian Business Number (ABN) to invoice the practice for your services. An ABN is the identifier the Australian Taxation Office uses for businesses and sole traders. Employees do not need an ABN — the practice runs PAYG withholding on their behalf. Apply for and learn about ABNs at the ATO — Australian Business Number page (registration is via the Australian Business Register).
Income tax
Australia uses progressive marginal tax rates for individuals, plus the Medicare levy. The mechanism is the same whether you are an employee or a contractor — the difference is who pays it to the ATO and when:
- Employees: the practice withholds tax from each pay (PAYG withholding) and you reconcile at year end via your tax return.
- Contractors: you generally pay PAYG instalments through the year and reconcile via your return; nothing is withheld for you.
Current individual tax brackets, the tax-free threshold, and the Medicare levy are published at ATO — Individual income tax rates. Rates change between financial years, so always read them off the ATO rather than relying on a figure quoted in any guide.
Superannuation (retirement)
Superannuation is Australia's compulsory retirement-savings system. The mechanism differs by model:
- Employees: the practice must pay the Super Guarantee into your nominated super fund, on top of your salary, at the legislated rate.
- Contractors: you generally fund your own super by making personal contributions, which may be tax-deductible. Note an important wrinkle — under super law, a contractor paid wholly or principally for their labour can be treated as an employee for super purposes, meaning the practice may owe Super Guarantee even on a contractor. Whether this applies depends on the contract terms.
The current Super Guarantee rate, contribution caps, and the labour-contract rule are set out at ATO — Super for employers and ATO — Super for the self-employed.
GST
Goods and Services Tax is a broad consumption tax. Most medical services that attract a Medicare benefit are GST-free, so a GP's Medicare billings are typically not subject to GST. However, the service fee a practice charges a contractor doctor, and some non-clinical or non-Medicare income, can be a different matter — and contractors whose turnover meets the registration threshold may need to register for GST and lodge Business Activity Statements. Check current GST registration rules and the medical-services treatment at ATO — GST. Get tailored advice; GST treatment of service-fee arrangements is a known area of complexity.
Payroll tax context
Payroll tax is a state and territory tax paid by businesses, not by individual doctors. It matters to IMGs only indirectly: several states have issued rulings on whether payments to contractor GPs working under a practice's billing arrangements can be caught by payroll tax. This has prompted some practices to restructure their contractor agreements. It does not change your personal tax position, but it can affect the service-fee percentage a practice offers. Payroll tax is administered by each state revenue office (for example, Revenue NSW — Payroll tax), not the ATO.
Putting it together — take-home pay
Your take-home pay is your gross billings (or salary), minus the practice service fee (contractor only), income tax, the Medicare levy, your own super contributions (contractor), insurances, and any GST obligations. Because the contractor model removes employer-funded super and paid leave from the headline figure, a contractor's gross needs to be compared to an employee's total package (salary + super + leave), not just to the salary line. For worked Sydney-vs-UK comparisons, see GP salaries in Sydney vs the UK, and model your own numbers in the income estimator.
This is general information, not tax advice. Tax, super and GST outcomes depend on your specific contract and circumstances. Engage a registered tax agent or accountant, and confirm every rate on the ATO before relying on it.
Sources: ATO — Individual income tax rates · ATO — Get an ABN · ATO — Super for employers · ATO — GST