Locum Tax in Australia: What You Owe and When

If you're working as a locum on an ABN, you're running a business, and the ATO treats you that way. That means income tax, possibly GST, PAYG instalments, and superannuation are all your responsibility. Most locums don't realise this until they're staring down a tax bill they can't pay.

Employee or ABN Locum? This Distinction Matters for Tax

This is the first question worth answering. If a hospital or medical practice employs you directly, they withhold tax from your pay, super goes into your fund automatically, and BAS is their problem.

But most locums invoice through their own ABN. That makes you a sole trader. No tax is withheld at source, GST may apply, and every obligation lands on you.

Some locums don't realise they've crossed this line until they lodge their first tax return and see a number they weren't expecting. Mia is a GP from Fremantle who started doing weekend locum shifts at a private clinic during her GP training year. She assumed it was casual work. It wasn't. She was invoicing on her ABN, which made her self-employed for those shifts, with all the obligations that come with it.

GST Registration and BAS: The $75k Threshold

If your locum ABN income crosses $75,000 in a financial year, you must register for GST. This includes all ABN income, not just locum work, so factor in consulting, teaching, or private billing too.

Once registered, you charge 10% GST on your locum fees, lodge a Business Activity Statement (BAS) quarterly or monthly, and remit that GST to the ATO. One nuance worth knowing: many clinical GP services are GST-free under the health exemption, but your locum fee itself is generally taxable. Check with your accountant because the rules vary by service type.

Under the $75k threshold, GST registration is optional. Most ABN locums earning below that skip it. But if your income is growing and you're approaching the threshold, register before you cross it, not after.

Missing a BAS lodgement carries penalties. The ATO's Failure to Lodge penalty is currently $330 per 28-day period the return is late, capped at $1,650 for individuals. Let three or four quarters slip and you're suddenly paying fines on top of the GST you already owe.

PAYG Instalments: The ATO's Way of Prepaying Your Tax Bill

After your first full year of self-employment income, the ATO often enrols you in Pay As You Go instalments automatically. Instead of one lump-sum tax bill at the end of the year, you pay your estimated income tax in quarterly chunks throughout the year.

The ATO sends a pre-calculated instalment amount to your myGov inbox. You can pay their figure or vary it downward if your income has dropped. If you vary it down and your actual income ends up higher than estimated, you'll pay a penalty on the shortfall.

Most doctors see PAYG instalments as an annoying extra step. But they exist to stop you getting blindsided by a debt you can't service in one go. If you've been doing locum work for more than a year and haven't seen an instalment notice, check myGov. You may already be enrolled and not know it.

Super and Tax: The Numbers No One Tells You Up Front

As a self-employed locum, superannuation is entirely your responsibility. No employer is putting 11.5% into your fund. Self-employed contributions are technically voluntary, but missing years of compounding growth is a real cost, especially if you're comparing yourself to colleagues in salaried roles who are having super contributed for them automatically.

The more immediate problem is income tax. When you invoice as a locum on an ABN, the full amount lands in your account. That money is not entirely yours.

The practical rule: set aside 30-35% of every locum payment into a separate savings account the moment it arrives. If your combined income (salaried plus locum) exceeds $180,000, push that to 45%. Don't touch that account until you lodge your return.

Mia learned this the hard way. In her first full year of regular locum shifts, she earned $95,000 through her ABN on top of her registrar salary. She spent freely through the year, assuming tax would sort itself out. It didn't. Her bill came to $28,000. She had $4,000 saved. That meant a payment plan with the ATO, months of financial stress, and a difficult conversation with her accountant.

If she'd set aside 35% of each payment from day one, she'd have had over $33,000 sitting ready. The rule is simple. The follow-through is the hard part.

For a full breakdown of what you can claim as a locum, see our guide to tax deductions for doctors. And if you're thinking about your broader tax structure, the tax guide for Australian healthcare professionals covers the bigger picture.

Key Takeaways

• If you invoice through an ABN, you're self-employed for tax purposes. No tax is withheld at source, and all obligations are yours.
• Register for GST once your ABN income hits $75,000. Lodge BAS on time or face compounding penalties.
• The ATO will likely enrol you in PAYG instalments after your first year of locum income. Check myGov and pay them.
• Superannuation is your responsibility at 11.5%. Missing years costs you more than the cash feels like right now.
• Set aside 30-35% of every locum payment for tax. Above $180k combined income, make it 45%.

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Talk to a broker who actually understands medical income. Book a free call with Voyage Financial. https://www.voyagefinancial.com.au/contact