Tax for Doctors: A Complete Australian Tax Guide

A first-year intern and a specialist with three billing arrangements both file a "doctor tax return." The two returns barely resemble each other, though. One is a single PAYG summary. In contrast, the other pulls together hospital wages, private billing through a company, and a locum ABN on the side. Tax for doctors in Australia changes shape at almost every career stage. This guide walks through how it works at each one.

Direct answer: Tax for doctors in Australia depends heavily on how you are paid. Hospital PAYG income is taxed and reported like any employee's. Private billing and locum work usually run through an ABN or company structure instead. Most doctors end up combining several income types in the same return, and understanding which category each stream falls into is the foundation everything else in this guide builds on.

PAYG vs contractor and private billing: what's actually different

Most doctors start their career entirely on PAYG. A hospital employs you, withholds tax from every pay, and reports your income on an income statement at year end. Consequently, you do not need an ABN for this income. Your employer also handles superannuation guarantee contributions automatically.

Private billing and locum work operate differently. For example, if you bill patients directly, or work through a service trust, nobody withholds tax for you along the way. The same applies if you pick up locum shifts using your own ABN. You are responsible for putting money aside yourself. In many cases, you also need to pay quarterly PAYG instalments to the ATO. Otherwise you get hit with the full bill in one go at tax time.

The table below sets out the key differences.

Feature	PAYG employee (hospital)	Contractor / private billing	Locum (ABN)
Tax withheld automatically	Yes	No	No
Needs an ABN	No	Usually yes	Yes
Superannuation	Employer pays SG automatically	Self-funded, unless structured through a company	Usually self-funded
GST registration	Not applicable	Required if turnover exceeds $75,000	Required if turnover exceeds $75,000
Quarterly PAYG instalments	No	Often required	Often required

Many doctors misjudge this shift. It usually happens when they move from a training role into private billing or locum work for the first time. The income feels similar to a payslip. However, the tax obligations attached to it are completely different.

Multiple income sources: hospital, private billing and locum work

Most doctors past the early training years earn from more than one source in the same financial year. For instance, a registrar might hold a hospital PAYG role while doing weekend locum shifts under an ABN. A specialist might combine hospital sessions with a private billing arrangement through a service trust. Add the odd conference speaking fee, and the picture gets more complex again.

Every one of these income sources needs reporting, even the small ones. Specifically, the ATO receives your PAYG income statement directly from your hospital employer. Increasingly, it also cross-checks ABN income against bank data and third-party reporting. Missing a locum shift or two is a common problem. Often the invoice simply slipped past you, and it is one of the more common reasons doctors' returns get queried.

Combining income sources also changes your marginal tax rate calculation. Hospital PAYG withholding assumes that is your only income. Add locum or private billing earnings on top, though, and the maths shifts. You can end up under-withheld across the year unless you plan for it. That is one reason quarterly PAYG instalments exist for non-PAYG income.

The tax return process for doctors

For most doctors, the annual return follows a similar shape. Indeed, this holds true regardless of how complex the income mix gets.

1. Gather your income statements. Your hospital PAYG income statement is available through myGov, usually finalised by mid-July. If you have private billing or locum income, you also need your own invoicing records or your service trust's distribution statement.

2. Reconcile bank and invoice records against ABN income. Unlike PAYG income, nobody sends the ATO a neat summary of your private billing or locum earnings. Consequently, you need to total this yourself from invoices, bank deposits, or your practice management software.

3. Apply your deductions. This is where most of the return's complexity actually sits. That includes professional fees, CPD, equipment, home office hours and travel, all covered in the deductions section below.

4. Account for Medicare levy, the surcharge, and superannuation. These interact with your total income and private health cover status. Both are covered below.

5. Lodge by the deadline. The standard self-lodgment deadline is 31 October. If you lodge through a registered tax agent, you generally get an extended deadline. That applies provided you register with that agent before 31 October and your prior returns are up to date.

Deductions: a brief overview

Deductions reduce your taxable income, not your tax bill directly. For doctors, specifically, they typically fall into a handful of categories. These include professional registration and college fees, CPD tied to your current role, and medical equipment. Home office hours for telehealth or admin work count too, along with travel between different workplaces on the same day.

The rules inside each category matter more than the category itself. A stethoscope under $300 is an instant deduction. A more expensive piece of equipment, however, gets depreciated over several years instead. Self-education connected to your current specialty is deductible. A course aimed at switching specialties generally is not. Because these rules are specific, and easy to get wrong, we cover them in full elsewhere. See our tax deductions for doctors guide for current ATO thresholds and worked examples.

Medicare levy and Medicare levy surcharge

The standard Medicare levy is 2% of your taxable income, and almost every doctor pays it. However, this is separate from the Medicare Levy Surcharge (MLS), an additional charge of 1% to 1.5%. The MLS applies if your income exceeds a set threshold and you do not hold private hospital cover.

For the 2025-26 income year, the MLS threshold sits at $101,000 for singles and $202,000 for families. The family threshold rises by $1,500 for each dependent child after the first. Many doctors cross this threshold without realising it, particularly registrars moving into higher-paid specialist roles. Combined hospital and private billing income can push total income well past the single threshold. That happens even when neither source alone looks large.

Holding an appropriate private hospital policy for the full income year is the only way to avoid the surcharge. Extras-only cover, such as dental or optical, does not count.

Superannuation considerations for doctors

If you are a PAYG employee, your hospital pays superannuation guarantee contributions automatically. Specifically, the current rate is 12% of your ordinary time earnings. If you bill privately, or work as a locum through your own ABN, though, superannuation is not automatic. You need to fund it yourself, whether through a company structure, direct personal contributions, or both.

The concessional (before-tax) contributions cap is $30,000 for the 2025-26 income year. This covers employer contributions, salary sacrifice, and personal deductible contributions combined. In addition, specialists with high combined income from multiple sources should watch Division 293 tax. It adds an extra 15% tax on concessional contributions once your income plus those contributions exceeds $250,000. Many senior doctors reach that threshold once hospital and private income are combined.

Doctors often need to weigh up how much to contribute, and when to use salary sacrifice. A service trust or company structure changes that calculation further, and this overview only scratches the surface. See our guide to tax planning for doctors for the detail that genuinely changes outcomes.

Record keeping requirements

Every income source, and every deduction, needs a paper trail. For example, your income statement covers most of this automatically for PAYG income. For private billing, locum work, and deductions, though, you carry the responsibility yourself.

Keep invoices, receipts and bank statements for at least 5 years from the date you lodge your return. If your total work-related deduction claims exceed $300, you need written evidence for the full claim. That includes the amount below $300 too, not just the excess. For car expenses claimed under the logbook method, you also need a continuous 12-week logbook with odometer readings.

Good record keeping is not just about substantiating deductions, either. It is also what lets your accountant reconcile ABN and locum income accurately. Without it, they are essentially guessing at what you earned across the year.

Why doctors' returns get more complex over time

A doctor's tax position rarely stays still for long. For example, an intern with a single hospital payslip has a genuinely simple return. Add a few locum shifts in year two, and quarterly PAYG instalments enter the picture. Move into private billing through a service trust as a specialist, though, and the picture shifts again. PSI rules, trust distributions and Division 7A all become relevant at once.

This progression matters for a simple reason. The accountant who suited you as a registrar may not suit you once you own a share of a practice. Reviewing your setup every few years is a habit worth building early, rather than sticking with whoever did your first return. It costs far less than unwinding a poorly structured arrangement once your income has grown.

When to use a specialist accountant instead of doing it yourself

A single PAYG income is usually simple enough for tax software or a generalist accountant. That holds true with no investment property and no company structure. Once you add private billing, a service trust, or locum ABN income, though, the picture changes. The same applies once a company structure enters the picture for practice ownership, since the calculations and planning decisions get considerably more complex.

A specialist accountant who works with doctors regularly understands how PSI rules interact with private billing. In particular, they also know how Division 7A affects loans from a company you control. Just as importantly, they know which deductions genuinely apply to clinical work rather than a generic checklist. These are the exact areas where doctors most commonly under-claim legitimate deductions. Less often, they are also where doctors claim something that does not hold up under review.

If your income is still a single hospital payslip, you likely do not need a specialist yet. Once it is not, though, matching your accountant to your actual complexity matters more than picking based on price alone. You can compare your situation against a specialist review on the accountants for doctors page.

Information current as of August 2026. Tax rates, thresholds and superannuation rules are subject to change, and eligibility depends on individual circumstances. This is general information, not personal financial or tax advice.