For practice owners

Accountants for Dental Practices

Q: Does the State Revenue Office ruling on medical centres apply to dental practices?

Yes. Revenue Ruling PTA-041 is current and says it applies to medical centre businesses including dental clinics. The ruling also contains worked examples using a dental clinic.

Q: My associate dentists are contractors with their own ABN. Does that solve payroll tax?

Not by itself. The payroll tax test is separate. A dentist can be a genuine contractor for income tax and super purposes and still create a payroll tax liability for the practice, because the contractor provisions look at the arrangement rather than the label.

Q: Our dental practice is profitable but there is never any cash. Why?

Most often it is equipment finance. Only the interest on a loan is an expense, the principal is not, so repayments drain the bank account without reducing the profit that gets taxed. It is a modelling problem rather than a bookkeeping error.

Victorian dentists are carrying a payroll tax exposure that GPs were partly relieved of in 2025. Most practice owners don't know it yet. We do the forward looking work, not just the lodgements.

The payroll tax problem nobody told you about

From 1 July 2025, Victoria exempted wages paid to contractor and employee general practitioners from payroll tax, for fully funded consultations. That relief names general practitioners. It does not name dentists.

Meanwhile the State Revenue Office ruling that brought practices into scope in the first place, PTA-041 Relevant contracts, medical centres, is still current and expressly covers dental clinics. Its own words: it applies to a medical centre business "including dental clinics, physiotherapy practices, radiology centres and similar healthcare providers".

So if you run a practice with associate dentists, you are in scope and you got none of the relief.

When your associate's pay becomes wages

Under the ruling, a contract between a practice and a practitioner is a relevant contract, meaning the payments can be treated as wages, where all of the following apply:

The practitioner carries on a business or practice of providing medical related services to patients.
In running its business, the practice provides the public with access to those services and engages the practitioner to serve patients on its behalf.
No exemption under section 32(2) applies.

The label on the agreement is not what decides it. Section 31 of the Act says a contract includes an agreement, arrangement or undertaking, whether formal or informal and whether express or implied. Calling someone a contractor does not settle the question.

In practice, the arrangement that attracts attention is the common one: the practice books the patients, the money comes into the practice account, the practice takes a service fee and pays the associate the balance as a percentage of takings.

The three exemptions worth checking

The ruling names three exemptions under section 32(2) as the ones most likely to apply between a practice and a practitioner:

Services to the public generally, section 32(2)(b)(iv). The practitioner provides the same services to the public at large, not just through your practice.
90 days or fewer, section 32(2)(b)(iii). The practitioner performs work for no more than 90 days in a financial year. This is the one that matters for locums.
Two or more persons, section 32(2)(c)(i). The services are performed by two or more people, for example where the practitioner employs their own assistant.

The catch is in the ruling's own words: when claiming an exemption, a practice must be able to substantiate it with sufficient evidence. Believing an exemption applies is not the same as being able to prove it two years later in an audit.

What it costs if you are caught

Victorian payroll tax, current rates:

Threshold of $1,000,000 in annual Australian wages, or $83,333 a month, from 1 July 2025 onward.
4.85% for metropolitan employers.
1.2125% for regional Victorian employers. If your practice is in Gippsland, that is a quarter of the metro rate, and it is worth confirming you are claiming it.
The deduction phases out between $3,000,000 and $5,000,000 of wages and is gone entirely above $5,000,000.

Grouping matters too. If you run a service entity alongside the practice, those entities may be grouped and share a single threshold rather than getting one each.

If you want your agreement looked at before someone else looks at it for you, that is a conversation worth having now rather than after an assessment arrives.

Why your profit never shows up in the bank

This is the one we hear most. The practice made money on paper and there is nothing in the account.

Usually it is the equipment. A chair, a scanner, a CBCT machine, a fit out. The loan repayment leaves your bank account every month, but only the interest portion is an expense. The principal is not. So your profit and loss can show a healthy number while the cash is going out the door to the financier.

Add the tax on that profit, which is real and payable, and you get the classic practice owner's year: profitable, taxed, and broke. The fix is not complicated, it is just forward looking. You model the repayments, the tax and the drawings together, and you plan for them through the BAS cycle rather than finding out in May.

How many patients does an associate actually need?

Most practice owners set an associate's percentage by what the market pays, then hope it works out. It is the same mistake a salon owner makes setting a chair rate, and the maths is identical.

An associate does not cost you their percentage. They cost you their percentage plus their share of the nurse, the chair, the consumables, the lab bills, the software, the admin time booking them and chasing their patients, and the floor space. Then you lose hours again, because not every booked hour is a producing hour, and not every producing hour collects.

Work it from the other end. Take the real cost of that associate for a year, divide by the hours they can genuinely produce in, and you have the collections per hour they have to hit before you make a cent. Most people are surprised by the number, and some find out they are running an associate at a loss to look busy.

Our hourly rate calculator runs this for any staff member, including what they really cost you once you add super, leave and overheads. It is free and it takes two minutes.

Going from one dentist to a team

Overhead does not scale in a straight line and the step up catches people out. One dentist can run lean. The moment you add a second chair and an associate, you add nursing hours, sterilisation capacity, a bigger stock holding, more admin, more software seats, often more space, and usually a practice manager somewhere along the way.

Those costs arrive before the extra production does. Which means there is a window where you have taken on the cost base of a bigger practice and still have the collections of a smaller one. Knowing how long that window is, and having the cash to get through it, is the difference between a growth step and a very stressful year.

That is the modelling we do before you commit, not after.

What we actually do

We are registered tax agents based in the Latrobe Valley, working with business owners across Australia. The compliance is the floor. Lodgements done, on time, no surprises. The part that is worth paying for is everything else.

Tax planned through the BAS cycle so the bill is never a shock.
Cash flow modelled with the equipment loans in it, not just the profit and loss.
Associate and staff costings, so you know what each person has to produce.
Structure reviewed properly, including how your arrangements look from a payroll tax point of view.
Quoted up front, every time. You will never get an invoice you did not expect.

Questions practice owners ask us

Do dentists get the Victorian payroll tax exemption that GPs got?

No. The exemption that started on 1 July 2025 applies to wages paid to contractor and employee general practitioners for fully funded consultations. It names general practitioners. Dentists are not included.

Does the State Revenue Office ruling on medical centres apply to dental practices?

Yes. PTA-041 is current and says it applies to medical centre businesses including dental clinics. The ruling also contains worked examples using a dental clinic.

My associates are contractors with their own ABN. Doesn't that solve it?

Not by itself. The payroll tax test is its own test. A dentist can be a genuine contractor for income tax and super purposes and still create a payroll tax liability for the practice, because the contractor provisions look at the arrangement rather than the label.

What is the payroll tax threshold in Victoria?

$1,000,000 in annual Australian wages, or $83,333 a month, from 1 July 2025 onward. The deduction phases out between $3,000,000 and $5,000,000 and is not available above $5,000,000.

Is there a lower rate for a practice in regional Victoria?

Yes. Regional Victorian employers pay 1.2125% compared with 4.85% for metropolitan employers. If your practice is in Gippsland it is worth checking you are being assessed at the regional rate.

We are profitable but there is never any cash. Why?

Most often, equipment finance. Only the interest on a loan is an expense, the principal is not, so repayments drain the bank account without reducing the profit you get taxed on. It is a modelling problem, not a bookkeeping error.

Do you only work with practices in Gippsland?

No. We are based in the Latrobe Valley and work with clients across Australia. Most of what we do runs over video and in the cloud.

This page is general information about Victorian payroll tax and dental practice finances, current at the time of writing. It is not advice and it does not take your arrangements into account. Payroll tax is state based and the position differs outside Victoria. Before you act on any of it, have your own arrangements reviewed. Sources: State Revenue Office Victoria, Revenue Ruling PTA-041 Relevant contracts, medical centres, and the SRO's published payroll tax rates.

Worth a look at your associate agreements?

If you have associates on a percentage of takings and the practice banks the fees, it is worth half an hour. We will tell you straight whether you have a problem, and quote you up front if there is work to do.

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