NSW Payroll Tax and 80% Bulk Billing

Payroll tax in NSW is a tax on wages paid by employers. If a business’s total wages exceed the threshold of $1.2 million in total annual wages, the payroll tax rate is 5.45% This means businesses that pay more than $1.2 million in wages annually must register and pay payroll tax on the portion of wages exceeding that threshold.

Bulk Billing Rule and Payroll Tax Exemption

In the context of bulk billing—where healthcare providers (e.g., medical practitioners) provide services to patients and Medicare covers the full cost—the NSW payroll tax system has a specific exemption or concession related to businesses primarily offering bulk-billed services.

The 80% Rule for bulk billing in the context of payroll tax is as follows:

Bulk Billing Exemption: If a medical practice or healthcare provider's total bulk-billed services account for at least 80% of their total medical services, they may qualify for an exemption from payroll tax on wages paid to certain employees in the practice.

Eligible Businesses: The exemption is typically available to medical practices where the employer is primarily bulk-billing for services under Medicare. This is designed to reduce the tax burden on healthcare providers who deliver services to patients at no cost to them, ensuring that providers offering affordable healthcare can continue to operate with less financial strain.

 Key Points of the Bulk Billing Rule:

1.     Eligibility for Exemption: To qualify for the payroll tax exemption, the medical practice must have at least 80% of its patient services bulk billed. This means 80% of the total medical services provided must be fully funded by Medicare, with no out-of-pocket payment from the patient.

2.    Applicable Employees: The exemption typically applies to wages paid to employees who directly participate in the bulk-billed services. This includes medical practitioners, nurses, and administrative staff involved in delivering and managing bulk-billed services.

3.    Purpose: The purpose of this rule is to support healthcare providers who make essential medical services affordable and accessible to the public by reducing their tax burden.

4.    Other Healthcare Professions: This rule may also apply to other health professionals, such as dentists or allied health professionals, depending on the specific services they provide and whether they meet the criteria for bulk billing.

If you would like to discuss this exemption and how it applies to your practice, please contact your adviser.