If you run an allied health practice, GST is rarely as simple as “health is GST-free”. Most of your clinical work is GST-free, but the moment you add a medico-legal report, a missed-appointment fee, or sell a product over the counter, the rules change. Get the mix wrong and you either overcharge your clients or underpay the ATO, and both are avoidable.
This guide explains, in plain terms, how GST applies across the income streams a typical allied health practice sees: Medicare, NDIS, DVA and private fees. It is general information, not personal tax advice, so treat it as a map rather than the final word on your practice.
The short answer
Clinical allied health services listed in the GST law, such as physiotherapy, occupational therapy, speech pathology, podiatry, dietetics and psychology, are generally GST-free when they are supplied to the patient and are a normal part of treating them. That covers the bulk of what most practices invoice.
What is not automatically GST-free is everything sitting around the clinical work: reports written for a third party, non-clinical products, room hire, cancellation fees and some administrative charges. Those can be taxable, which means you charge GST and remit it on your BAS.
What “GST-free” actually means
GST-free is not the same as “GST does not apply to me”. You still register for GST once your turnover reaches the threshold, you still lodge a BAS, and you still claim GST credits on your business expenses. The difference is that you do not add GST to the price of a GST-free service. For an allied health practice, that usually means most of your income is GST-free, while your expenses still carry GST you can claim back, which often puts you in a refund position.
For a supply to be GST-free, two things generally need to be true: the service is one of the recognised allied health services, and it is supplied to the person being treated and is generally accepted as appropriate for their care. When both hold, no GST is charged.
How each income stream is treated
| Income stream | Usual GST treatment | What to watch |
|---|---|---|
| Medicare / bulk billing | GST-free | The service must be an eligible clinical service delivered to the patient. |
| Private patient fees | GST-free (for clinical treatment) | Non-clinical add-ons billed to the same patient can still be taxable. |
| NDIS-funded supports | GST-free where conditions are met | Needs a participant with an NDIS plan and a written agreement that the support is covered. |
| DVA services | GST-free | Treated like other eligible clinical services to the patient. |
| Medico-legal / insurer reports | Taxable (GST applies) | The “patient” is not the one receiving the supply, so GST-free treatment usually does not apply. |
| Product sales, room hire, cancellation fees | Usually taxable | These are not clinical treatment, so GST generally applies. |
NDIS is where practices trip up
NDIS income can be GST-free, but it is not automatic. The support generally needs to be for a participant who has an NDIS plan, and there needs to be a written agreement that the support is a reasonable and necessary part of that plan. Miss the paperwork and the same service that would have been GST-free can become taxable. If you take NDIS clients, tight agreements and clean records are not admin busywork, they are what keeps your GST correct.
Common mistakes that catch allied health practices
- Treating all income as GST-free. Reports, products and cancellation fees are often taxable and get missed.
- Charging GST on clinical services by default. Some practices add GST to everything out of caution and overcharge patients.
- Weak NDIS paperwork. No written agreement means the GST-free position is hard to support.
- Coding it wrong in the software. If items are set up with the wrong tax code in Xero or MYOB, every invoice repeats the error.
- Never reviewing the setup. Services and funding change, and the tax codes need to keep up.
Set your bookkeeping up so GST looks after itself
| Step | Why it matters |
|---|---|
| Map every service and item to the right tax code | Correct codes at the source mean correct invoices and a correct BAS. |
| Separate clinical from non-clinical items in your software | Makes the GST-free and taxable split obvious rather than guesswork. |
| Keep NDIS agreements on file per participant | Supports the GST-free treatment if the ATO ever asks. |
| Reconcile regularly, not just at BAS time | Errors get caught while they are small and easy to fix. |
Done well, this is a set-up job more than an ongoing headache. Once your services and items carry the right tax codes and your NDIS records are in order, each invoice comes out correctly and your BAS largely takes care of itself.
Frequently asked questions
Is physiotherapy or occupational therapy GST-free?
Yes, when the service is delivered to the patient as part of their treatment. These are recognised allied health services, so the clinical work is generally GST-free.
Do I charge GST on NDIS invoices?
Usually no, provided the participant has an NDIS plan and there is a written agreement that the support is covered. Without that, the supply can become taxable, so keep the agreements on file.
Are medico-legal or insurance reports GST-free?
Generally no. The report is supplied to a third party rather than as treatment for the patient, so GST usually applies.
If most of my income is GST-free, is registering for GST worth it?
Often yes. You still claim GST credits on your business expenses, and with most income GST-free, many practices end up in a refund position. Registration is required once you reach the turnover threshold.
Can I fix past invoices where the GST was wrong?
Usually yes. Prior periods can generally be corrected, and it is far better to fix them proactively than to wait for a review. A bookkeeper can help you work out the cleanest way to do it.
Get your allied health GST right, year round
GST for allied health is not hard once it is set up properly, it just needs someone who understands the mix of Medicare, NDIS, DVA and private income. At True Tally Bookkeeping we work with allied health practices across Victoria and New South Wales all year, not just at BAS time, so your invoices and your BAS stay right without you thinking about it.
If you would like a second set of eyes on how your practice handles GST, call us on 0468 159 950 or get in touch through the website. We are happy to walk through your setup and show you where it can be tidied up.
