Payroll tax continues to be a significant concern for dental practices, particularly those using contractor dentists under service or facility agreements.

In NSW, payroll tax is currently charged at 5.45 per cent on taxable wages above the $1.2 million annual threshold. Importantly, the NSW payroll tax rules can extend beyond traditional employee wages. Payments to contractors may also be taxable where the arrangement falls within the contractor provisions of the Payroll Tax Act 2007. Revenue NSW specifically warns that healthcare businesses can overlook this potential liability.

For dental practices, this creates an important distinction between the way a dentist is described contractually and how the arrangement may be treated for payroll tax purposes. Practices should therefore ensure they understand how their particular contractor arrangements are treated and seek professional advice where appropriate.

Revenue NSW updated its guidance on contractor arrangements in June 2026, while the 2026–27 payroll tax rate remains 5.45 per cent. ADA NSW will continue to advocate for a fair and workable payroll tax framework for dental practices. Members with concerns or experiences regarding payroll tax are encouraged to share their feedback via this survey.