Locum work offers doctors flexibility and high earning potential, but it also comes with tax complexities.

why consider locum work?

Locum work provides doctors with the freedom to choose your working hours and locations. Some doctors take on locum shifts to supplement income, fund travel, or experience different healthcare systems across Australia. Locum contracts can range from a single shift to several months, offering both short-term and long-term opportunities.

Hospitals often pay premium rates to fill urgent staffing gaps, with locum rates typically ranging from $100 to $150 per hour. That means a 10-hour shift could bring in over $1,000 – a lucrative option for doctors looking to increase their earnings.

how locum doctors get paid

There are three primary ways locum doctors can receive payment:

• As a visiting medical officer (VMO) – some hospitals hire locums directly, paying wages with tax withheld and superannuation contributions included. However, this is less common in some states like Victoria
• Through a locum agency – many doctors work via agencies like MedRecruit, which require them to have an Australian business number (ABN). Doctors invoice hospitals for their hours worked and receive gross income, meaning no tax is deducted upfront
• As a sole trader – doctors working under their own ABN manage their income and tax obligations independently, which requires careful financial planning.

the tax complexities of locum work

When working through an ABN, it’s crucial to manage tax obligations properly:

• No tax withheld automatically – unlike salaried employment, locum income received via an ABN does not have tax deducted, meaning you need to set aside a portion for your tax obligations
• GST registration – if your ABN income exceeds $75,000 per year, you must register for goods and services tax (GST). This requires submitting quarterly business activity statements (BAS) and paying 10% GST on your earnings
• Avoiding tax penalties – the Australian Taxation Office (ATO) monitors business income. If you exceed $75,000 in earnings without registering for GST, they may automatically deduct the 10% GST from your declared income, potentially causing cash flow issues. Since the doctor hasn’t added GST to their invoices, they must pay the 10% GST out of net earnings instead of passing it on to the hospital.

planning for your tax obligations

Proper tax planning is essential for locum doctors:

• Keep accurate records – track income and expenses to ensure compliance and avoid last-minute tax surprises.
• Set aside tax savings – expect to pay 30-40% of your earnings in tax and set aside money accordingly.
• Understand tax instalments – once you lodge your first tax return with ABN income, the ATO requires quarterly tax prepayments based on your previous year’s earnings.

travel and expense deductions

A common misconception is that travel costs for locum work are tax-deductible. However:

• Flights and accommodation – if you choose to locum in another state or remote area, the cost of travel and living expenses is generally not deductible, as it is considered a personal expense. This is one of the first things the tax office will check, making it important to understand what can and cannot be claimed.
• Employer assistance – some locum agencies provide travel allowances or cover accommodation costs, so check with your agency before accepting a placement.

is locum work right for you?

With rising living costs, locum work can be an excellent way to boost your income, fund a home deposit, or take a well-earned sabbatical. However, it’s vital to understand your financial responsibilities and seek professional advice to ensure compliance with tax laws.

For expert guidance on locum work and tax planning, speak to an accountant who specialises in medical professionals. A little planning now can save a lot of stress down the track.

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For further information or to book a complimentary meeting, please phone 03 9863 3111, visit bongiorno.com.au or email enquiry@bongiorno.com.au

Mitchell McKeown MBA, BBA. (accounting/marketing), Dip FS (FP), Cert. IV FMB|director
Matthew Homewood BCom(FNCE/MGMT)/BA(CRIM) Dip FS (FP) Cert. IV FMB|consultant

As this general advice has been prepared without taking account of your objectives, financial situation or needs, you should consider the appropriateness of this advice before acting on it. If this general advice relates to acquiring a financial product, you should obtain a Product Disclosure Statement before deciding to acquire the product.