Medicare’s $7.9B shake-up: what GPs need to know about tax and cashflow

Published: 24 October 2025
Updated: 27 November 2025

Medicare reform special – A Veri Health series covering the $7.9B transformation reshaping Australian primary care.

From November 2025, a $7.9 billion Medicare overhaul will reshape how Australian clinics bill, earn and operate. In this Veri Health feature, we break down what practice owners need to know, and how GPs can prepare financially.

The reform and why it matters

The Government’s $7.9 billion Medicare overhaul is set to reshape how clinics bill and earn, introducing new incentives for practices that bulk bill every patient. 

From 1 November 2025, those joining the Bulk Billing Practice Incentive Program (BBPIP) will receive a quarterly 12.5% top-up on eligible MBS payments, split evenly between the GP and the practice.

The reform aims to make no-gap care financially sustainable again, but new income brings new responsibility. These quarterly bonuses also introduce fresh tax and cashflow considerations that every GP should weigh up carefully before opting in.

Related update: Medicare reforms continue to evolve beyond 2025. The Federal Government has now delayed the new Assignment of Benefit (AOB) requirements, including digital consent, until July 2026. To understand what this means for billing workflows, authorisation processes and cashflow timing, read Bulk-bill benefit reforms delayed: what the 2026 pushback means for practices.

A welcome boost with hidden tax traps

The new incentives are a clear win for primary care, but they also bring new financial realities.

Dr Adrian Raftery, known as Mr Taxman, and a leading tax and financial planning expert for healthcare professionals, says the incentive will still count as taxable income.

“Based on the government’s calculator, it is expected that there will be an increase in both the practice profit and the individual GP’s share. There would be no change for the characterisation for tax purposes, as this increase would be considered assessable income.”

In other words, the BBPIP top-up is taxable for both the GP and the practice, which could lead to higher PAYG instalments and end-of-year tax bills.

Managing the money flow

Quarterly payments can disrupt a practice’s usual rhythm, so forward planning is essential. 

Dr Raftery says cashflow management is “dreadfully important” for every business, particularly those with irregular income.

“Where possible, try to smooth out some of the outflows to match the inflows, but just as important is to not consider the quarterly payment as a sugar rush & spend frivolously on non-essential or discretionary items. After a year elapses, it should become far easier to manage.”

He also recommends that some practices speak with their bank about financing options or a flexible overdraft to help bridge gaps between quarterly payments.

Setting aside for tax and super

Higher revenue is great news, but it also calls for smarter planning.

“Without doubt, you should be setting a portion aside for your tax obligations,” Dr Raferty said. “Most would already be on the quarterly PAYG Instalment system, so should be used to paying taxes progressively during the year and then the balance when the final tax return is lodged with the actual net income earnt for the year.”

He advises setting aside between one third and two fifths of income for tax, noting that the incremental top-up may be taxed at the top marginal rate of 47% (including the Medicare Levy). 

Dr Raferty adds that now is a good time to review superannuation strategies.

“Given the generous tax concessions relating to superannuation, it would be expected that most medical professionals would already be fully utilising them – if not, then it is highly recommended!”

Making it work for you

The Medicare boost might look like easy money, but what really counts is how you manage it.

Keep your tax tidy, your cashflow calm, and resist the sugar rush. With the right planning, this shake-up could be just what the doctor ordered.

Next in Medicare’s evolution 

The shift to digital consent and the new AOB process will reshape how claims flow through practices from mid-2026. With the reforms now delayed, GPs and practice leaders have extra time to prepare their systems and reduce compliance risk. Explore what the delay means in our latest analysis: Bulk-bill benefit reforms delayed: what the 2026 pushback means for practices.

Further reading in Veri Health’s Medicare Shake-Up series:

• Medicare’s $7.9 billion shake-up: what practice owners need to know 
• Bulk-bill benefit reforms delayed: what the 2026 pushback means for practices