--- title: "Employing Your Spouse in a Medical Practice: Tax Rules" description: Can a doctor deduct wages paid to a spouse? How PSI rules, practice structure and Payday Super affect the tax result in 2026-27, with a worked example. image: https://42advisory.com.au/hubfs/employing-your-spouse-medical-practice-tax-rules.webp --- [Skip to Content](https://42advisory.com.au/42-advisory-blog/employing-your-spouse-in-a-medical-practice-tax-rules#body) [![42\_Advisory\_Logo\_Header](https://42advisory.com.au/hubfs/42_Logo_Header.svg "42_Advisory_Logo_Header")](https://42advisory.com.au/) Toggle Menu - Accounting & Tax Toggle children for Accounting & Tax - [Small Business Accountants](https://42advisory.com.au/services/small-business-accountant-melbourne) - [Personal Tax Returns & Advice](https://42advisory.com.au/services/personal-tax-accountant-melbourne) - [BAS & IAS Lodgement](https://42advisory.com.au/services/bas-ias-accountant-services-melbourne) - [Tax Compliance](https://42advisory.com.au/services/small-business-tax-compliance-melbourne) - [SMSF Accountants](https://42advisory.com.au/services/smsf-accountant-melbourne) - [Property Tax](https://42advisory.com.au/services/property-tax-accounting-melbourne) - [Bookkeeping](https://42advisory.com.au/services/small-business-bookkeeping-melbourne) - [CPA Accountants & Business Advisors](https://42advisory.com.au/services/cpa-accountant-melbourne) - [Local Accountants](https://42advisory.com.au/accountants) - Business Advisory Toggle children for Business Advisory - [Business Advisory & 3-Way Forecasting](https://42advisory.com.au/services/business-advisory-forecasting) - [Tax Planning](https://42advisory.com.au/services/tax-planning-melbourne) - [R&D Tax Incentive Services](https://42advisory.com.au/services/r-and-d-tax-incentive) - [Business Valuation](https://42advisory.com.au/services/business-valuations) - [Buying a Business](https://42advisory.com.au/services/buying-a-business-due-diligence-melbourne) - [Finance Broking Overview](https://42advisory.com.au/finance/) - [Residential Finance](https://42advisory.com.au/finance/residential-finance-services-melbourne) - [Commercial Finance](https://42advisory.com.au/finance/commercial-finance-services) - [Asset Finance](https://42advisory.com.au/finance/asset-finance-solutions) - Industries Toggle children for Industries - [Accounting for Doctors](https://42advisory.com.au/industries/accounting-advisory-for-doctors-dentists-health-practices) - [E-Commerce & Online Retail](https://42advisory.com.au/industries/ecommerce-accountants-melbourne) - [Tech, SaaS & IT](https://42advisory.com.au/industries/tech-saas-accounting) - [MMA, BJJ & Muay Thai Gyms](https://42advisory.com.au/industries/martial-arts-combat-sports-gym-accountants-melbourne-42-advisory) - [Cafés, Restaurants & Retail Stores](https://42advisory.com.au/industries/cafés-restaurants-retail-stores) - [Crypto Tax for Investors & Traders](https://42advisory.com.au/industries/crypto-tax-accounting-for-investors-traders) - [Builders, Contractors & Trades](https://42advisory.com.au/industries/builders-tradies-accountants-melbourne) - [Startup Accounting & Advisory](https://42advisory.com.au/industries/startup-accounting-advisory-services-melbourne) - [Professional Services Firms](https://42advisory.com.au/industries/professional-services) - [Automotive & Mechanical Services](https://42advisory.com.au/industries/automotive-accountants-melbourne) - [About Us](https://42advisory.com.au/about) - [Contact Us](https://42advisory.com.au/contact-us) - [Resources](https://42advisory.com.au/42-advisory-blog) - [(03) 9997 7081](tel:0399977081) [back to blog](https://42advisory.com.au/42-advisory-blog) # Employing Your Spouse in a Medical Practice: Tax Rules Read Time **30 mins** ![Doctor and spouse smiling at the reception desk of a modern medical practice, illustrating the tax rules for employing your spouse in a medical practice](https://42advisory.com.au/hubfs/employing-your-spouse-medical-practice-tax-rules.webp) TL;DR A medical practice can employ a spouse and deduct the wages, but only for genuine work at a supportable rate. Where a doctor's fees are personal services income and no personal services business test is passed, wages and super for a spouse's administrative work are generally not deductible. Structure matters too: a private company that overpays a director's spouse risks a deemed dividend. Payroll, Payday Super and WorkCover obligations apply either way. Your spouse already answers the practice phone, chases rejected Medicare claims and does the banking on a Sunday night. Paying them properly for it looks like the obvious move. Whether that wage actually reduces your tax is a separate question, and for many doctors the answer is no. This guide works through the decision the way we do with [medical and dental practice clients](https://42advisory.com.au/industries/accounting-advisory-for-doctors-dentists-health-practices): who employs your spouse, whether the personal services income (PSI) rules apply, what the work is worth, and what payroll obligations follow. Figures are for the 2026-27 income year unless stated. It applies to doctors, dentists and allied health practitioners in private practice, and to employing a spouse or de facto partner. Super guarantee 12% Of qualifying earnings from 1 July 2026 Payday Super 7 business days For the fund to receive super after each payday, from 1 July 2026 Victorian WorkCover $7,500 Annual remuneration limit for the small-employer exemption (no apprentices) STP concession 19 or fewer Payees, to report closely held payees such as a spouse quarterly   ## Can a Doctor Employ Their Spouse and Claim the Wages? Yes, if the spouse does genuine work for the practice and the pay is reasonable for that work. The wage is then deductible unless a specific rule removes it. For doctors, the main obstacle is the personal services income rules, which generally deny deductions for a spouse's administrative work unless a personal services business test is passed. Australian tax law does not prohibit employing a family member. The starting point is the general deduction rule in section 8-1 of the [Income Tax Assessment Act 1997](https://www.legislation.gov.au/Series/C2004A05138), which allows a deduction for wages incurred in earning assessable income. Three sets of rules can then remove or reduce it: the PSI rules in Divisions 85 and 86, the related-party reasonableness rules (section 26-35 for individuals and partnerships, section 109 of the 1936 Act for private companies), and the general anti-avoidance rule in Part IVA. The work must also be practice work. Cleaning the consulting rooms is a practice cost; cleaning the family home is private, even if it frees up your evenings for paperwork. Childminding, personal errands and household administration are private in the same way, and wages for them are not deductible however the arrangement is documented.   ## Does Your Practice Structure Change the Tax Result? Yes. The rules that limit a spouse's wage depend on who employs the spouse and who earns the clinical income. A sole trader faces the related-party rule in section 26-35, a private company faces the excessive-remuneration rule in section 109, and a spouse who is already a partner receives a share of profit rather than a deductible wage. These categories overlap. A company or trust can also be a personal services entity (PSE), which is not a separate structure but a label the PSI rules attach to an entity that earns an individual's personal services income. Start with two questions: who earns the clinical fees, and who signs your spouse's employment contract? | Situation | Main rules | What it means | | --- | --- | --- | | Doctor practises as a sole trader | s 8-1; s 26-35; PSI rules in ss 85-20, 85-25 and 85-30 | Reasonable administrative wages can still be denied if the PSI rules apply. An excess denied under s 26-35 is not taxed to your spouse. | | Partnership employs a spouse who is not a partner | s 8-1; s 26-35, which extends to relatives of partners; PSI rules | Check who the partners are; further rules apply where a private company is a partner. | | Spouse is already a partner | Partnership profit rules; ATO ruling TR 2005/7 | A “partner's salary” is generally an allocation of profit, not a deductible wage. | | Private practice company employs spouse | s 8-1; s 109 ITAA 1936; Division 86 if a PSE; Part IVA | Excessive pay can be denied as a deduction and treated as a dividend paid to your spouse. | | Trustee employs spouse | s 8-1; s 26-35 depending on the trustee and the relationship; Division 86 if a PSE; Part IVA | No blanket exclusion from the related-party rule. Test the actual arrangement. | | Service entity supplies administration staff | The service entity's wage deduction and the doctor's service-fee deduction are tested separately | A wage paid in the service entity does not on its own justify every fee charged to the doctor. | The company row is the one most often misread. Under section 109 of the Income Tax Assessment Act 1936, where a private company pays a director, shareholder or one of their associates more than the Commissioner considers reasonable, the excess is not deductible to the company and is treated as a dividend paid to the recipient. The sole-trader result, where a disallowed excess is not taxed to your spouse, does not carry across. Service entities follow their own rules on what fee the doctor can deduct, which our guide to [service trust structures for medical practices](https://42advisory.com.au/42-advisory-blog/service-trust-structures-for-medical-practices-2026-guide) explains. If you are still choosing between a company, trust or partnership, settle the structure through [tax planning](https://42advisory.com.au/services/tax-planning-melbourne) before anyone goes on the payroll. It is far easier than unwinding a wage arrangement later.   ## How Do the PSI Rules Affect Wages Paid to a Spouse? Where a doctor's income is personal services income and no personal services business test is passed, wages and super paid to a spouse are not deductible to the extent they relate to non-principal work. Reception, bookkeeping and practice administration are ordinarily non-principal work. Wages denied this way are also not assessable to the spouse. Personal services income is income earned mainly from your own skills and effort, and most doctors' fees qualify, whether billed as a sole trader or through a company or trust. The PSI rules then ask whether you are conducting a personal services business (PSB), by passing the results, unrelated clients, employment or business premises test, or by holding an ATO determination. Our [PSI basics for doctors](https://42advisory.com.au/42-advisory-blog/psi-basics-for-doctors) post explains the tests. If no test is passed, section 85-20 denies a deduction for a payment to an associate, which includes a spouse, to the extent it relates to non-principal work. Principal work is the work your contracts require you to perform to be paid: for a doctor, the clinical service. The ATO's [guidance on deductions when receiving PSI](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/personal-services-income/what-to-do-when-the-psi-rules-apply/claiming-deductions-when-receiving-psi) uses the example of a spouse doing invoicing, banking and home office administration, and denies the wage. Section 85-25 limits super for that work in the same way, and section 86-60 carries the restrictions into a company or trust, as [ATO ruling TR 2003/10](https://www.ato.gov.au/law/view/pdf/pbr/tr2003-010.pdf) explains. There is one consolation. Wages denied under section 85-20 are neither assessable nor exempt income of your spouse, so the same dollars are not taxed twice. The arrangement is still not neutral: payroll, super, WorkCover and record-keeping obligations remain, and both the treatment of the super contribution inside the fund and the correct payroll reporting need specific advice. Two points cause confusion. First, PSI and PSB are different concepts. Passing a PSB test switches off the Division 85 restrictions (section 85-30), but the income is still personal services income. Second, employing your spouse as a receptionist does not help you pass the employment test, which looks at the market value of principal work performed by others, not at payroll spent on support staff. A spouse who is a qualified clinician performing part of the contracted clinical work needs a different assessment, covered in our guide to the [PSI employment test](https://42advisory.com.au/42-advisory-blog/psi-rules-subcontractors-australia).   ## What Is a Reasonable Wage for a Spouse in a Medical Practice? A reasonable wage is what the practice would pay an unrelated person with the same skills for the same duties and hours. The award sets the legal minimum: a receptionist under the Health Professionals and Support Services Award is indicatively Level 3, at $29.11 an hour from 1 July 2026. The minimum alone does not prove reasonableness. Under section 26-35, where a sole trader or partnership pays a relative, only the amount the Commissioner considers reasonable is deductible, and an excess denied under that section is neither assessable nor exempt income of your spouse. The ATO looks at duties, hours, qualifications, experience and what the market pays. Paying above that level gains no deduction and, depending on the facts, can lead to additional tax, interest and penalties on the amount claimed. The [Health Professionals and Support Services Award](https://awards.fairwork.gov.au/MA000027.html) lists receptionist as an indicative Level 3 support services role. From the first full pay period on or after 1 July 2026, the minimum hourly rates for adult full-time and part-time support services employees are: | Support services classification | Minimum hourly rate | | --- | --- | | Level 1 | $26.97 | | Level 2 | $28.03 | | Level 3 (receptionist, indicative) | $29.11 | | Level 4 | $29.45 | Classification follows the duties actually performed. A spouse who runs the practice, manages staff, handles Medicare compliance and oversees the books may sit well above these levels, and a practice manager should not be benchmarked against them. The award also includes annual leave loading of 17.5% for non-shiftworkers, so an hourly rate multiplied by 52 weeks is not the full cost. There is no rule that a spouse may work only a few hours a week. Hours follow the real workload. A busy solo practice may need a full-time administrator, while a practice that already pays a service entity for administration will struggle to justify a second person doing the same job. ### Records that support the wage - A written employment agreement with a role description, hours and pay rate. - A pay benchmark: the award classification, comparable job advertisements and the duties actually performed. - Timesheets or rosters showing when the work was done, even where not legally required. - Payslips issued within one working day of payday, with wages paid into your spouse's own bank account. - Super contribution receipts and STP reports that match the payroll. - Employment records kept for 7 years, as the [Fair Work Ombudsman](https://www.fairwork.gov.au/tools-and-resources/fact-sheets/rights-and-obligations/record-keeping-pay-slips) requires. A spouse is easier to manage as an employee when they sit in the same payroll system as everyone else. Our [bookkeeping and payroll service](https://42advisory.com.au/services/small-business-bookkeeping-melbourne) sets up related-party employees in Xero with the same controls as other staff.   ## Worked Example: What Is a Two-Day Receptionist Role Worth in Tax? Dr A is a GP practising as a sole trader with taxable income of $300,000 in 2026-27. Their spouse, B, has no other income and works two days a week (15.2 hours) as receptionist and administrator at $30 an hour, above the Level 3 minimum of $29.11. The example is hypothetical and assumes: - Both are Australian residents for the full year. - In the first column, the wage is supportable for the work and no PSI restriction or anti-avoidance adjustment applies. - B claims no work-related expenses, so the $1,000 standard deduction applies, and B qualifies for the low income tax offset (LITO) and the low income super tax offset (LISTO). - Super is received by the fund within the income year. - Leave loading, WorkCover premiums and payroll costs are excluded, so this is not a full employment-cost quote. | Item (2026-27) | PSI rules do not apply | PSI rules apply (non-principal work) | | --- | --- | --- | | Wages ($30 x 15.2 hours x 52 weeks) | $23,712.00 | $23,712.00 | | Super guarantee at 12% | $2,845.44 | $2,845.44 | | Deduction to Dr A | $26,557.44 | Nil | | Reduction in Dr A's income tax and Medicare levy (47%) | $12,482.00 | No reduction from these deductions | | B's taxable income after the $1,000 standard deduction | $22,712.00 | Wages not assessable to B | | B's tax: ($22,712 - $18,200) x 15% = $676.80, less LITO | $0.00 | Nil on these wages | | B's Medicare levy (income below $28,011) | $0.00 | Not applicable | | Contributions tax in B's fund at 15% | $426.82 | Needs specific advice | | LISTO paid to B's fund | ($426.82) | Depends on the facts | | **Combined tax and LISTO benefit** | **$12,482.00** | **No income tax benefit to Dr A** | Sources: ATO [resident tax rates](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents); [standard deduction](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/standard-deduction-for-work-related-expenses); [low income tax offset](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/tax-offsets/low-income-tax-offset); [low income super tax offset](https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/how-to-save-more-in-your-super/government-super-contributions/low-income-super-tax-offset); [Medicare levy low-income threshold](https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy/medicare-levy-reduction/medicare-levy-reduction-for-low-income-earners). Without LISTO, the first-column benefit falls to $12,055.18. Not all of it is spendable: about $9,636.56 improves household cash outside super, and $2,845.44 sits in B's super account, preserved until retirement. The wage itself is a transfer within the household, not money leaving it. The comparison assumes the work would otherwise be done unpaid. If B replaces an unrelated receptionist, the practice would have had a deductible wage anyway, and the real benefit is much smaller. In the second column, the PSI rules remove Dr A's deduction, so the household carries the payroll, super and WorkCover obligations without an income tax benefit. B's own return changes too, which our [personal tax accountants](https://42advisory.com.au/services/personal-tax-accountant-melbourne) prepare alongside the doctor's. The 47% rate assumes Dr A stays in the top bracket (45% plus the 2% Medicare levy) after the deduction. B's 15% first bracket applies from 2026-27; it was 16% in 2025-26.   ## What We See in Practice: Two Spouse Scenarios The two scenarios below are hypothetical. We built them from issues that come up regularly when we take over a medical or dental client from another accountant, during year-end tax planning, and since the ATO's focus on personal services income under PCG 2025/5. They do not describe any particular client, and the figures are illustrative. ### Scenario A: a dental practice where the pay is reset A dentist owns their practice. Their spouse works three days a week (22.8 hours) on reception, billing and bookkeeping and is paid $95,000 a year: about $80 an hour, or $158,000 on a full-time basis. There is no employment agreement, and the wages go across as bank transfers rather than through payroll. Assume the practice meets the unrelated clients test because its patients engage it directly in response to its own public offers, and the evidence of that is kept. A busy practice with many unrelated patients is not enough on its own, and ordinary referrals do not automatically count. Passing the test switches off the Division 85 restrictions, but the pay must still be reasonable for the work. In this situation we benchmark the role against comparable part-time practice administration positions. Here that supports about $48,000 a year, roughly $40 an hour or $80,000 full-time. That is above the Level 3 receptionist minimum of $29.11 an hour, but an award rate is only a floor: classification, leave loading and other entitlements still need checking, and the award does not establish what the market pays. We then put a written agreement and timesheets in place and run the spouse through payroll with PAYG withholding, STP and super. If the spouse is employed by a service entity rather than the practice, there are two expenses to support: the service entity's wage cost, and the service fee the practice pays the service entity. Moving the employment does not make either deductible on its own. The fee must reflect the commercial benefit the practice receives, as ATO ruling TR 2006/2 and our guide to [service trust structures](https://42advisory.com.au/42-advisory-blog/service-trust-structures-for-medical-practices-2026-guide) explain. ### Scenario B: a GP company where the salary does not fit the work A GP contracts to a medical centre through their own company. The centre bills the patients, pays the company a percentage of fees from its own funds, and supplies the rooms, equipment and support staff. The company pays the GP's spouse $90,000 a year for a few hours a month of banking and checking remittances. The company's income is the GP's personal services income. The results test is not met: the GP is not paid to produce a result, does not supply the main equipment, and does not bear the cost of fixing defects. Because 80% or more of that income comes from one source, the centre, the other three tests cannot be self-assessed without an ATO determination. On these facts the company is a personal services entity, and section 86-60, applying section 85-20, denies its deduction for wages paid to the spouse for administration. That would be true of a smaller, reasonable administration wage as well. The size of the salary is a separate problem. A private company paying $90,000 for a few hours a month risks the excess being treated as a dividend under section 109. In this scenario our advice is that the wages are not deductible and the salary should stop: the limited administration does not justify it, and no wage for that work is deductible while the PSI rules apply. The contract matters. If the GP instead bills patients in their own name and the centre only collects the fees as agent, the patients may be the sources of the income rather than the centre, as the ATO explains in its personal services income ruling, TR 2022/3. One location or a single remittance does not prove a single source, so read the contracts before concluding that the 80% rule applies. Both scenarios turn on the same questions: whether the income is PSI, whether a PSB test is met on the actual contracts and evidence, and whether the pay matches the work. ### Not Sure Whether the PSI Rules Apply to Your Practice? We review how your clinical income is earned, who employs your spouse and what the role is worth, then tell you plainly whether the wage is deductible. [Contact Us](https://42advisory.com.au/contact-us)   ## What Payroll Obligations Apply When You Employ Your Spouse? The same obligations as for any employee. You must register for PAYG withholding, withhold tax from wages, report through Single Touch Payroll and pay super guarantee of 12% of qualifying earnings, received by the fund within 7 business days after each payday from 1 July 2026. In Victoria, WorkCover insurance is also generally required. ### PAYG withholding and STP Register for PAYG withholding before the first pay and report the amounts withheld on your [BAS](https://42advisory.com.au/services/bas-ias-accountant-services-melbourne). If you fail to withhold or notify the ATO as required, section 26-105 can deny the deduction for the wage, subject to conditions and an exception for voluntary disclosure. Your spouse is a [closely held payee](https://www.ato.gov.au/Business/Single-Touch-Payroll/Concessional-reporting/Closely-held-payees/): an employer with 19 or fewer payees can report their pay through STP quarterly, while other employees must still be reported on or before each payday. The concession covers reporting only. It does not delay wages, withholding or super. ### Payday Super From 1 July 2026, super is due with every pay rather than quarterly. Under [Payday Super](https://www.ato.gov.au/businesses-and-organisations/super-for-employers/about-payday-super), contributions of 12% of qualifying earnings must be received by the fund within 7 business days after payday. A longer 20-business-day period applies only in limited situations, such as the first contribution for a new employee or after a fund change, so check the [ATO's payment deadlines](https://www.ato.gov.au/businesses-and-organisations/super-for-employers/paying-super-on-payday/payment-deadlines-for-payday-super) before relying on it. The super obligation applies even where the PSI rules deny your deduction for it. ### WorkCover in Victoria Victorian employers generally need WorkCover insurance. The small-employer exemption applies only where you have no apprentices and the remuneration you pay or are liable to pay for the financial year does not exceed $7,500, counting all staff, not just your spouse. A spouse genuinely employed as a worker is not excluded because of the relationship. [WorkSafe Victoria](https://www.worksafe.vic.gov.au/pdf/do-i-need-register-workcover-insurance) sets out how to register. ### Payroll tax Spouse wages count toward Victorian payroll tax wages. Most single-doctor practices sit well below the $1 million threshold, but grouped practices can reach it, and our [payroll tax guide for medical practices](https://42advisory.com.au/42-advisory-blog/payroll-tax-for-medical-practices-in-victoria-2026-guide) covers grouping and the GP exemption.   ## When Does Employing a Spouse Become an Income-Splitting Risk? When the pay outruns the work. Paying a spouse more than the services are worth, or for work they do not do, shifts income to a lower tax rate without commercial substance. The ATO can deny the excess and, where the dominant purpose of an arrangement is a tax benefit, apply the general anti-avoidance rule in Part IVA. The ATO's guideline on PSI and Part IVA, [PCG 2025/5](https://www.ato.gov.au/law/view/view.htm?docid=%22COG%2FPCG20255%2FNAT%2FATO%2F00001%22), treats remuneration paid to an associate for genuine services, at a level reasonable for those services, as a lower-risk indicator. Remuneration that is not commensurate with the skills used or the services provided is a higher-risk indicator. A market-rate wage for your spouse also does not fix an arrangement that otherwise diverts or retains the doctor's clinical income. The ATO has said it will not generally apply compliance resources to pursue Part IVA where taxpayers make a genuine attempt to move to a lower-risk arrangement by 30 June 2027. That is a conditional compliance approach, not an amnesty: higher-risk arrangements can still be reviewed in the meantime, and the guideline creates no safe harbour. Our view is simple. Employ your spouse for work the practice genuinely needs, pay what that work is worth, and document it. If the main attraction is the tax rate, the arrangement is unlikely to hold up. Employment law (including what happens if the relationship ends), family law and any super strategy for your spouse are outside our scope, and we work alongside lawyers and licensed financial advisers on them. As a [CPA firm](https://42advisory.com.au/services/cpa-accountant-melbourne), our role is the tax and accounting position.   ## Key Takeaways - Employing your spouse is lawful; the wage is deductible only for genuine practice work at a supportable rate. - If your fees are personal services income and you are not a PSB, wages and super for a spouse's administrative work are generally not deductible. - Structure changes the rules: s 26-35 for sole traders and partnerships, s 109 for private companies, and a profit share for a spouse who is a partner. - The award is a floor, not proof of reasonableness: receptionist is indicatively Level 3, at $29.11 an hour from 1 July 2026. - Payroll obligations apply in full: PAYG withholding, STP, 12% super received within 7 business days after payday, and WorkCover in Victoria. ### Set Up Spouse Employment Properly A fixed-fee review of your practice structure, PSI position and payroll set-up for 2026-27, with fees agreed in writing after your initial meeting. [Book a Meeting](https://42advisory.com.au/meetings/42advisory/initial-meeting-online) **About the author:** Sergiy Kucherenko is a CPA and Director of 42 Advisory, advising doctors, dentists and allied health practices on structure, PSI and practice tax. Forty Two Advisory Pty Ltd is a registered tax agent (TPB 26303651). Sources checked 31/10/2026. **Disclaimer:** The information provided in this article is general in nature and does not constitute specific tax, legal, or financial advice. Tax outcomes depend on your practice structure, contracts and the work your spouse actually performs. We recommend seeking professional advice tailored to your individual circumstances. 42 Advisory is a CPA firm and Registered Tax Agent.   ## Frequently Asked Questions ### Can I pay my spouse a wage from my medical practice? Yes, for genuine work at a reasonable rate. Whether the wage is deductible depends on your practice structure and whether the PSI rules apply. If your fees are personal services income and you do not pass a personal services business test, wages for administrative work are generally not deductible. ### Can a sole trader doctor employ their spouse? Yes. A sole trader can employ a spouse like any other worker, with PAYG withholding, STP, super and WorkCover obligations. The deduction is limited to a reasonable amount under section 26-35, and the PSI rules can deny it entirely for non-principal work. ### Does employing my spouse help me pass the PSI employment test? Generally no. The employment test counts the market value of principal work done by others, which for a doctor is clinical work. A spouse working in reception or administration does not count toward it. ### What if my spouse is already a partner in the practice? A partner's salary is generally an allocation of partnership profit, not a deductible wage, as the ATO explains in TR 2005/7. How profit is allocated between partners in a medical practice also needs checking against the PSI rules and Part IVA. ### Do I have to pay super for my spouse under Payday Super? Yes. A spouse employee is entitled to super guarantee of 12% of qualifying earnings, and from 1 July 2026 it must be received by their fund within 7 business days after each payday. The obligation applies even where the PSI rules deny your deduction for the contribution. ### Can I report my spouse's wages through STP quarterly? If you have 19 or fewer payees, you can choose to report a closely held payee such as your spouse quarterly. The concession covers reporting only; wages, withholding and super are still due on the usual timetable. ### Can I make extra super contributions for my spouse? Separately from employer super, you may be able to claim the spouse contribution tax offset of up to $540 for contributions to a low-income spouse's fund, where their income is $37,000 or less (phasing out at $40,000) and other conditions are met. See the ATO's [super-related tax offsets](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/tax-offsets/superannuation-related-tax-offsets). Any wider super strategy is a question for a licensed financial adviser. ## Framework Will Help You Grow Your Business With Little Effort. [Get Started](https://www.example.com) ![](https://42advisory.com.au/hubfs/sergiy-kucherenko-cpa-director-42-advisory.jpg) [mailto:skucherenko@42advisory.com.au](mailto:skucherenko@42advisory.com.au) ##### Sergiy Kucherenko Sergiy Kucherenko is the founder and director of 42 Advisory and a member of CPA Australia. He has spent his career in public practice, working with business owners on tax, structuring and the practical problems that come with running a growing company. Before accounting, Sergiy trained as an engineer and studied computer science. The habit of building systems stuck. It is why the practice runs cloud-first and heavily automated, with Xero at the centre rather than paper files, and why he is comfortable acting for clients whose businesses are technical, software companies in particular. His client work covers medical technology, telecommunications, SaaS, construction and trades, and healthcare, including general practice and dental groups. Some clients come to him at incorporation; others when they are restructuring, acquiring or preparing to sell. The areas he knows best are service trust arrangements for medical practices, revenue recognition for SaaS businesses, and cash flow management in construction. 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