What junior doctors need to know about locum rates, tax set-asides, GST, salary packaging and HECS before taking a first shift
Locum comes from the Latin locum tenens — "one who holds a place." In medicine, a locum is a doctor who temporarily fills a position at a hospital or clinic, covering gaps in the roster rather than holding a permanent role.
Think in hourly rate versus full package: locum work often wins on raw hourly cash, while salaried hospital work keeps payroll withholding, employer super, paid leave and, where relevant, salary packaging.
Base salary: many residents already sit around $95,000-$110,000/year before overtime.
Shift rate: ~$85-$150/hour for standard shifts.
Shift rate: ~$115-$200+/hour depending on specialty and demand.
For junior doctors, locum work typically means picking up shifts at hospitals outside your base employer — weekend ED cover, interstate relief, after-hours fills — either directly or through a locum agency. It's one of the most common ways residents and registrars supplement their income, build experience across different environments, and maintain flexibility during training.
How do you actually get started? The two main routes are locum agencies (the most common) and direct arrangements with hospitals you already know. Demand is strongest where rostering gaps are hardest to fill, especially in emergency medicine, general medicine, and rural or regional cover. Registrars with procedural or emergency experience are often especially sought after.
This page is about what happens to your money when you locum: tax, ABN, GST, packaging and super. The trap is not that locum income is taxed more than your hospital salary, but that it is taxed differently.
Usually, locum work makes the most sense when the hourly rate premium is real and you can handle contractor-style admin without destabilising your cash flow, leave position or base-hospital arrangements.
You need full (general) AHPRA registration — meaning you need to have completed your intern year (PGY1) and hold general registration. Provisional registrants cannot work as independent locums. If you're still an intern, this page is useful reading for later, but none of the ABN pathway applies to you yet.
Once you have general registration — typically from PGY2 onwards — you're eligible. Some public hospitals also have facility-specific credentialling processes on top of AHPRA registration, so confirm the requirements before agreeing to a shift.
The structure of how you are paid is the second thing to understand early, because it determines your entire tax experience.
Not necessarily — it depends on how the agency pays you. Many agencies pay junior doctors as ABN contractors, meaning you invoice the agency and receive the full amount untaxed. However, some agencies employ doctors as PAYG casual employees, handling tax withholding themselves. The distinction matters enormously. Before you start, ask the agency explicitly: "Will I be paid as an ABN contractor or as a PAYG employee?" If the answer is ABN, you need one registered before your first invoice. If PAYG, you don't — but you still lose salary packaging and the hospital doesn't pay super.
Most junior doctors starting out assume they'll be treated like a PAYG casual employee. In practice, the majority of agency-arranged junior locum work is ABN-based. The moment you're on an ABN, you've become a business. That changes when and how you pay tax, what happens to your packaging, and who is responsible for your super.
The clearest way to understand this is to compare what happens to $1,000 of locum earnings under each arrangement.
Under a PAYG employee structure, the hospital or agency withholds roughly $370 in tax and remits it to the ATO on your behalf. You receive ~$630. Your HECS repayment is also estimated and withheld through the year. You're not particularly exposed at tax time — it behaves like your regular hospital pay.
Under an ABN contractor structure, you receive the full $1,000. It's your job to set aside ~$370–$420 of that and not touch it. At tax time, it all reconciles — but if you've spent it, you now owe the ATO money you don't have.
There's also a critical GST misconception to clear up early. Medical services billed directly to patients are generally GST-free. But locum services billed to a hospital or agency are usually not — you are providing a labour service to the facility, not directly treating a patient. The GST status depends on the specific arrangement, and the ATO's position on this has caught out a significant number of junior doctors. Verify with a medical accountant before you issue your first invoice.
Locum ABN income doesn't get its own tax-free threshold. It piles on top of everything else you earned that year. For most residents earning $95,000–$110,000 as a base salary, that means the first dollar of locum income is already in the 37% marginal tax bracket.
Worked example: A QLD resident earning $94,670 base salary picks up $30,000 in weekend locum shifts over a financial year. Total assessable income: $124,670. The locum income is taxed at 37 cents in the dollar plus the 2% Medicare levy — a combined rate of 39%. Set-aside: roughly $11,700 on those $30,000 of locum earnings. The $30k that looked good as a fortnightly top-up is, after tax, closer to $18,300 take-home.
The exact figure depends on your base salary, your HECS balance, and whether you're making super contributions. Before you commit to a shift pattern, model your combined income — use the AussieClinicians calculator with your state, grade, and expected overtime to get your base salary right first, then factor in the locum income on top.
After you lodge your first tax return including ABN income, the ATO may automatically enrol you in quarterly tax prepayments for the following financial year. This catches almost every first-time locum off guard.
It is not extra tax. The total tax you owe is exactly the same. The difference is that the ATO now collects it in four quarterly instalments instead of a single annual assessment. The first instalment notice — typically for thousands of dollars — arrives in October and feels like a penalty. It isn't. It's just the timing changing.
The trigger is based on the amount of tax payable on your business and investment income in your most recent return. Exact thresholds should be confirmed at ato.gov.au — they are updated and not fixed figures. The practical implication: once you've lodged a return with ABN income, budget as if every locum payment already has ~38% quarantined before you decide what to spend.
HECS repayments apply to your total repayment income — hospital salary plus locum ABN earnings combined. From 2025–26, the ATO uses a marginal system: repayments are calculated only on income above the $67,000 threshold, at 15 cents per dollar from $67,001 to $125,000, then at higher marginal rates above that (verify current thresholds at ato.gov.au).
Here's the trap: your hospital payroll withholds HECS throughout the year based on your salary alone. The locum income has no HECS withheld. When your full income is assessed at tax time, the higher repayment — calculated on the combined total — arrives as a single amount owing.
Worked example: Resident with $80,000 HECS balance, base salary $94,670. During the year, HECS withheld through payroll: approximately $4,151 (15% × ($94,670 − $67,000)). They add $30,000 locum income. Total repayment income: $124,670. Total HECS obligation: 15% × ($124,670 − $67,000) = $8,651. Shortfall: ~$4,500 owed at tax time, with no forewarning on the locum side.
For the full picture of how salary packaging interacts with HECS repayment income — and it does, in a way that surprises most people — see the HECS/HELP guide.
You must register for GST when your ABN income — across all locum work combined, not per hospital — exceeds $75,000 in any 12-month rolling period. Once registered, you add 10% GST to your invoices and remit that amount to the ATO each quarter via a Business Activity Statement (BAS). The current threshold and rules are at ato.gov.au.
A registrar picking up weekend ICU shifts at three different hospitals — $20,000 each — has an ABN income of $60,000 from no single hospital over $20k, but a combined total of $60k. A fourth hospital's shifts push them over $75,000 for the rolling year. GST registration is now required.
The consequence of crossing the threshold without registering is severe and immediate: the ATO can require you to pay 10% GST retrospectively. Because you didn't add GST to your invoices at the time, you can't go back to the hospital and request it. You absorb it from your own pocket. On $30,000 of unregistered locum income, that's $3,000 gone.
A few other points worth knowing:
The $9,009 living expenses cap and the $2,650 meal and entertainment cap are not your entitlement as a doctor — they're your entitlement as an employee of an eligible public or not-for-profit employer. The packaging flows through your hospital's payroll. It does not follow your ABN.
If you go full-time locum with no base hospital role: no packaging. None. The caps disappear entirely.
If you hold a base hospital role and locum on the side: packaging still applies to your hospital salary. Your ABN locum income sits outside it entirely — that income is pre-tax with no packaging benefit.
The trap people miss is around FTE. If you reduce your hospital contract from 1.0 FTE to 0.6 FTE to free up time for more lucrative locum shifts, your packaging cap is now applied to a lower salary base. More importantly, if you drop FTE partway through the FBT year (which runs 1 April to 31 March), any unused cap from the first part of the year is permanently gone. You cannot carry it forward or compensate with later months.
Before you make that call, model whether the additional locum income actually offsets the lost packaging value in net terms. The salary packaging guide has a worked example of what that calculation looks like.
As an ABN contractor, the hospital or agency has no obligation to pay super on your behalf. The Superannuation Guarantee applies to employees — standard locum arrangements fall outside it.
There is one exception worth knowing: if your contract is predominantly for your personal labour and meets certain ATO tests for being employee-like, employer SG obligations can apply. This is the exception in standard junior doctor locum arrangements, not the rule — but if your setup is unusual, confirm it with an accountant.
The practical question is: what do you do about super yourself?
You can make personal concessional super contributions from your locum earnings. These are tax-deductible up to the annual concessional cap ($30,000 for 2025–26, which includes any employer contributions from your hospital salary — verify the current cap at ato.gov.au). To claim the deduction, you must lodge a Notice of Intent to Claim with your super fund before you lodge your tax return. Do this in the last few days of June or early July — not retroactively.
At the 37% marginal rate, every $10,000 you contribute to super from locum earnings instead of taking as personal income saves you approximately $3,700 in tax. That's not financial advice — it's the arithmetic of concessional contributions. Whether and how much to contribute is worth discussing with a medical accountant before the end of the financial year.
These are rough guides. Your exact figure depends on your base salary, HECS balance, and whether you're making personal super contributions. Use the AussieClinicians calculator to model your combined income before committing to a regular shift pattern.
| Your situation | Rough set-aside per locum dollar |
|---|---|
| Combined income under ~$135k (32.5% bracket) | ~35% (tax + Medicare; more if HECS balance is large) |
| Combined income over ~$135k (37% bracket) | ~40–42% (tax + Medicare + HECS on locum component) |
| Want equivalent to employer super (11.5% SG) | Add 11.5% on top, paid into your super fund |
Working on an ABN opens up deductions that employed doctors can't claim. The following are generally deductible where they're directly related to your current work — not future specialisation, not personal:
The deduction that most locums try to claim and shouldn't: travel costs to interstate locum placements. The ATO's position is that travel from home to a place of work — even if it's in another state — is generally a personal expense, not a work-related deduction. This is an audit focus area. If you believe your specific situation is different, get written advice from a registered tax agent before claiming.
For context, not as a guarantee. Rates vary meaningfully by state, specialty, urgency, time of day, and whether the placement is agency-arranged or direct.
The gap between what looks attractive on paper and what you net after tax and set-asides is where most first-time locums get their expectations recalibrated. A $130/hour weekend shift that pushes your marginal rate to 39% nets you closer to $79/hour effective take-home, before HECS.
The admin is usually heavier than first-time locums expect. The goal is to sort out eligibility, payment structure and cash-flow setup before the first shift or invoice goes out.
No. Interns hold provisional AHPRA registration, not general registration. Working as an independent locum contractor requires general registration, which you receive after completing your intern year. If you're PGY1, you cannot legally work as an independent locum in Australia regardless of what an agency tells you.
It depends on how the agency structures your payment. If they pay you as an ABN contractor — which is the most common arrangement for junior doctor locum work — you need an ABN registered before your first invoice. If they pay you as a PAYG casual employee (tax withheld, super paid by the agency), you don't need one. Ask the agency explicitly before you start: "Am I being paid as an ABN contractor or a PAYG employee?" The financial consequences of each are very different.
It depends on your total ABN income across all work in a rolling 12-month period, not the number of shifts. A registrar doing a handful of high-value shifts could breach $75,000 within a few weeks. Track your running total from the date of your first invoice. If you expect to approach or exceed $75,000 in any 12-month period, register before you breach the threshold — not after. Current threshold and rules at ato.gov.au.
Your packaging continues to apply to your hospital salary — the locum ABN income sits entirely outside it. The risk is if you reduce your hospital FTE to locum more: a lower FTE means less salary to package, and any unused packaging cap you had access to during the higher-FTE period is permanently gone. See the salary packaging guide for a full breakdown.
Yes — locum ABN income counts toward your repayment income in exactly the same way as salary. The difference is that your hospital payroll withholds HECS based on your salary alone. The additional HECS obligation on the locum income is not withheld during the year. It arrives as a lump sum in your tax assessment. For the 2025–26 year, HECS uses a marginal system: 15% on income above $67,000 up to $125,000, then escalating rates above that. Verify current thresholds at ato.gov.au.
No. One ABN covers all clients. Your ABN is your business identity — you can invoice multiple hospitals, agencies, and facilities from the same ABN. Each client gets the same ABN on the invoice.
Generally not. The ATO treats travel from your home to a place of work as a personal expense, regardless of the distance. An interstate locum shift at a regional hospital is, in the ATO's view, travel to a workplace — not a work-related travel expense. This is a commonly claimed deduction and a commonly disallowed one. There are specific circumstances where travel costs can be deductible (for example, travelling between two separate workplaces in a single day). If you believe your situation qualifies, get written advice from a registered tax agent before claiming.
Disclaimer: This page is general educational information only. Tax rules, GST thresholds, HECS repayment rates, and superannuation caps change annually. Verify all figures with the ATO (ato.gov.au) and consult a registered tax agent or medical accountant before acting. AussieClinicians is an independent site built by Jacob Stretton (RN; final-year medical student). Not financial or tax advice.
Sources: ATO — Sole traders · ATO — GST registration · ATO — PAYG instalments · ATO — HECS/HELP repayment thresholds 2025–26 · ATO — Concessional contributions · ABR — Register an ABN · AHPRA — Registration types