From Employee Doctor to Business Owner: Your First Year as a GP

So you’ve swapped the hospital corridors for your own consult room. No more payroll department. No more automatic tax. No more safety net.Now it’s just you, your patients… and the ATO quietly watching from the corner. Let’s make sure you don’t get caught out.

You’re Not an Employee Anymore (And That Changes Everything)

When you start working as a subcontractor GP in a clinic, you’re essentially running your own small business.You’re not being “paid” a salary.Instead, patients pay the clinic, the clinic takes its cut (service fee) and the balance gets passed on to you That means , No tax is withheld, no super is paid for you and no sick leave, no annual leave. You’re in charge of these things now, so you neeed to make sure you understand how the everthing works. 

Step 1: Get Your Foundations Right (ABN, TFN, GST)

Before you see your first patient, you need to be properly set up.

You’ll need:

• TFN (Tax File Number)
  You already have this — it sticks with you for life.
• ABN (Australian Business Number)
  This tells the world (and the ATO) you’re operating as a business.
• GST Registration
  Here’s where most new GPs get confused.

Medical services are generally GST-free. So you won’t be charging GST to patients.But — and this is critical — you still usually need to register for GST if your income is over $75,000. Why? Because the clinic charges you GST on their service fees.Example:

• You bill $1,000
• Clinic takes 30% = $300
• Plus GST = $330 total fee

If you’re registered:

• You claim that $30 GST back from the ATO

If you’re not:

• That $30 is gone forever

Multiply that by a full year… and it hurts!

Step 2: Understand How You Actually Get Paid

Let’s keep it simple.Say you bill:

• $2,000 in a day

The clinic might:

• Take 30% service fee = $600
• Add GST = $660

You receive:

• $1,340

That $1,340 is your gross income — not your profit. From that, you still need to:

• Pay tax
• Pay super (if you want retirement sorted)
• Cover your own expenses

Step 3: BAS – The Quarterly Reality Check

If you’re registered for GST, you’ll lodge a Business Activity Statement (BAS) every quarter.This is where you:

• Report GST collected (usually minimal for GPs) as most of your services are GST free.
• Claim GST credits (like the clinic service fees) or other practice expenses. 
• Pay or receive the difference

Most GPs:

• End up getting a small refund 

But the BAS isn’t just admin — it’s your financial heartbeat. Ignore it, and the ATO will remind you… loudly.

Step 4: PAYG Instalments – The Tax Trap No One Warns You About

Here’s where it gets real.Because no tax is withheld from your income, the ATO introduces you to:PAYG Instalments. After your first tax return, they’ll say:“Hey doc, looks like you made good money… mind paying tax in advance next year?”So instead of one big tax bill:

• You’ll pay tax quarterly

Think of it as:

• “Pay-as-you-go tax… but for business owners”

We suggest you put aside 30% of every dollar you earn into a separate account. Don’t touch it.That’s not your money — it belongs to the ATO.

Step 5: What You Can Claim as a Tax Deduction (Legally)

This is where being a subcontractor works in your favour.You can claim deductions for expenses that are directly related to earning your income.

Common GP deductions:

Professional costs

• Medical indemnity insurance
• Registration fees (like AHPRA)
• College memberships

Work expenses

• Medical equipment
• Stethoscope, tools, consumables
• Laptop, iPad, software subscriptions
• Motor vehicle expenses click here to find out how to maximise your claims 
• Professional library 
  

Running your business

• Accounting fees
• Bookkeeping
• Bank fees

Education

• CPD courses
• Conferences (including travel if work-related)

Home office (if applicable)

• Admin work done at home, power and heating and internet.
• Furniture and equipment used for home office 
  

What you can’tclaim (don’t get cute):

• Normal clothes (even if you “only wear them to work”)
• Coffee on the way to the clinic
• Fines, penalties
• Your home mortgage 

Remember, If it smells like a personal expense… the ATO will treat it that way. And if you're not sure, just ask us!

Step 6: Keep Your Records Tight (Or Pay for It Later)

Here’s the unsexy truth: Good records are what separate a calm, profitable GP… from one scrambling at tax time.

First rule: separate your money

If you do nothing else, do this. Set up a dedicated bank account just for your practice:

• All your income goes in
• All your expenses come out

No mixing with personal spending. No guessing. No mess. Because when everything is mixed together:

• You miss deductions
• You overpay tax
• Your accountant charges you more

Second rule: use a simple system (and stick to it)

This is where something like Xero accounting  software earns its keep.It:

• Automatically pulls in your bank transactions
• Categorises income and expenses
• Tracks GST
• Makes your BAS almost a push-button exercise

Instead of handing your accountant a shoebox of receipts, you’re handing them clean, organised data.That means:

• Lower accounting fees
• Faster BAS lodgements
• Fewer mistakes

And most importantly — you get your time back.Because your job is to treat patients… not wrestle spreadsheets at 10pm.

That’s it. Do that consistently, and tax time becomes boring — which is exactly what you want.
At Tolevsky Partners, we offer a complete, 'done for you service' where  we prepare and lodge all of your BAS, so that you can focus on your patient. All you need to do is have a Xero monthly subscription, for use of the xero software, which is tax deductible. 

Step 7: Super — The Thing No One Pays For You Anymore

As a subcontractor: No one is paying your super. That’s on you. If you ignore this, you’ll wake up at 65 wondering where it all went.

Simple plan:

• Set up a super fund 
• Contribute regularly (even 10–15% of income) up to a maximum of $30,000 p.a. (tax deductible)

Step 8: The 'Tolevsky Method' (For Doctors)

You don’t need complexity — you need control. Set up 3 bank accounts:

1. Income Account
   All earnings land here (deduct your super) from here.
2. Tax Account
   Transfer 30 % immediately into a separate account 
3. Spend Account
   What’s left is yours to spend 

This one move will save you years of stress.

Final Word

Being a subcontractor GP offers flexibility,  Income potential and Independence.But it comes with a catch: You’ve gone from being taken care of, to being in charge. Get the structure right early, keep your records clean, and follow The Tolevsky Method — and you’ll build real wealth.Ignore it, and the ATO becomes your business partner — the silent one who takes more than half.