Tax Deductions for Locum Doctors in Australia: What You Can and Can't Claim

Tax is one of the biggest blind spots for doctors starting locum work. You're earning well, invoicing under your ABN, and then tax time arrives with a larger bill than expected — or you miss deductions you were entitled to all along. This guide covers what the ATO actually allows locum doctors to claim, what trips people up, and how to stay compliant from day one.

How Locum Doctors Are Taxed

When you work as a locum under your ABN, no tax is withheld from your invoices. Hospitals and agencies pay you gross — the full amount — and it's your responsibility to manage what you owe.

After you lodge your first tax return showing ABN income, the ATO enrols you in the PAYG instalment system — quarterly prepayments toward your estimated tax liability. Miss these and you may face interest charges on top of your end-of-year bill.

A practical rule: set aside 30–40% of every payment you receive. The exact amount depends on your total income, deductions, and structure, but this buffer prevents nasty surprises. If you're new to working under an ABN, read our guide on getting an ABN as a locum doctor before you start invoicing.

What You Can Claim

The ATO's rule: an expense is deductible if it's incurred to earn assessable income and is not private or domestic in nature. In practice, the line gets blurry for locums. Here's how each category works.

Car and Travel Expenses

Travel between two workplaces on the same day is deductible. If you work a morning shift at one hospital and an afternoon shift at another, you can claim the trip between them. The ATO's guide for medical professionals recognises that locums with truly shifting workplaces — no fixed base — may treat each hospital as an alternative workplace, making more travel claimable.

Home-to-work travel is generally not deductible. This was confirmed in Mfula v Federal Commissioner of Taxation, where a locum doctor's car expenses and meals were disallowed because the travel was simply commuting — not on-work travel between sites.

Two methods for calculating car expenses:

• Cents-per-kilometre: 88 cents per kilometre for up to 5,000 work-related kilometres per year. No receipts needed, but you must be able to explain how you calculated the kilometres.
• Logbook method: Better for heavy-driving locums. You record 12 consecutive weeks of driving, establish the business-use percentage, and apply it to actual vehicle costs (fuel, insurance, depreciation, registration).

Accommodation and Meals

Accommodation is deductible only when you have a permanent home elsewhere, sleep away from it to perform locum duties, and declare a travel allowance as income. All three conditions must be met.

Meals follow the same rule — claimable only when you sleep away overnight for work and receive a bona fide travel allowance on your income statement. A long day shift that keeps you at the hospital until midnight does not make dinner deductible.

Professional Fees and Insurance

Deductible professional costs include:

• AHPRA registration fees
• Medical indemnity insurance premiums
• College and specialist society memberships (RACGP, ACRRM, ACEM, etc.)
• Professional association subscriptions

For a detailed look at what insurance you need, see our post on essential insurance and legal considerations for locum doctors.

Equipment and Uniforms

Equipment used exclusively for work is deductible — stethoscopes, otoscopes, diagnostic kits, and similar clinical tools. Items under $300 can generally be claimed immediately; more expensive equipment may need to be depreciated over time.

Uniforms and scrubs are claimable if they are distinctive, occupation-specific clothing — not everyday clothing that could be worn outside work. Plain business clothing does not qualify, even if you only wear it to the hospital.

Self-Education and CPD

CPD courses, conferences, and study directly related to your current work are deductible. The course must maintain or improve skills in your existing role — not qualify you for a different one. Registration fees, course materials, and associated travel all count. For a broader overview, see our guide on how to start as a locum doctor.

Phone, Internet, and Home Office

Claim the work-related proportion of your phone and internet costs. If you use your mobile 40% of the time for work, claim 40% of the bill. Keep one month of records to establish the pattern, then apply it to the full year.

Home office expenses are claimable under the fixed-rate method (currently 70 cents per hour worked from home) or the actual-cost method. The fixed-rate is simpler; actual-cost may yield more if you have a dedicated workspace.

What You Cannot Claim

These are the most common mistakes at tax time:

• Normal commute: Driving from home to your first hospital of the day is a private expense. The Mfula case is a direct warning here.
• Relocation costs: Moving to a new city to take up a locum role — removalist fees, temporary accommodation, flights for family — is not deductible. The ATO treats relocation as a personal choice made before income-earning begins.
• Parking at your regular workplace: If you work at the same hospital regularly, parking there is not claimable.
• Meals without an overnight stay: Buying lunch during a long shift does not create a deduction.
• Clothing that is not occupation-specific: A suit, business shoes, or plain scrubs that could double as leisurewear do not qualify.

GST, BAS, and Business Structure

You must register for GST when your ABN turnover exceeds $75,000 in any rolling 12-month period. Once registered, you charge 10% GST on your invoices, claim GST credits on business expenses, and report everything through a quarterly Business Activity Statement (BAS). Miss the $75,000 threshold and the ATO may assess the GST retrospectively — meaning you absorb it rather than passing it on to the hospital.

The three main business structures are:

• Sole trader: Simplest to set up. You pay tax at your marginal rate. Suits most locums starting out.
• Company: A base rate entity company pays a flat 25% on income. Higher setup and compliance costs.
• Trust: Offers estate planning flexibility but adds complexity and administration.

One critical point: most locum income is classified as Personal Services Income (PSI) by the ATO. Under PSI rules, income from personal exertion is attributed to you individually, even if it flows through a company or trust. Income-splitting advantages are generally not available to doctors earning from clinical work. Get specific advice from a medical accountant before setting up any structure.

Record-Keeping Tips

The ATO can audit claims going back five years. Keep:

• Receipts for all deductible purchases — photograph them and save to cloud storage. Paper receipts fade.
• A logbook if you're using the logbook method for car expenses.
• Invoices and income records for every ABN payment.
• A roster or calendar showing which hospitals you worked and when — essential for substantiating travel claims.
• A separate bank account and card for business expenses to keep things clean at year end.

A medical accountant is worth the fee. The deductions they identify — and the mistakes they prevent — typically exceed what their advice costs.

If you're looking for a simpler way to find and book locum shifts, download the StatDoctor app and connect directly with hospitals across Australia.