Psychology practices rarely have a bookkeeping problem. They have a matching problem. Sessions are booked and billed in your practice software, while the money arrives from several directions: clients paying on the day, Medicare paying bulk-billed sessions in batches, health funds through HICAPS, and NDIS plan managers, insurers and employers paying invoices weeks later. Until those two sides are matched, your income, your GST and your associates' pay are all estimates.
True Tally Bookkeeping does bookkeeping, BAS and payroll for psychology practices across Australia, from solo practitioners to group practices with associates and provisional psychologists. We work in Xero, reconcile everything back to your practice software, and give you numbers you can actually use, without ever needing to see a clinical note.
What a psychology practice needs from a bookkeeper
A good psychology practice bookkeeper does five things well. If yours is not doing all five, your reports are probably telling you less than you think.
- Session-level reconciliation. Every session in your practice software is matched to the money that paid for it, whether that was the client, Medicare, a health fund, an NDIS plan manager or a third party, so nothing is double counted and nothing quietly goes unpaid.
- Correct GST coding. Client sessions are generally GST-free, but reports, supervision, training and corporate work are often taxable. Mixing them up means an incorrect BAS.
- Practitioner-level reporting. Billings, splits and margin for each psychologist, not one blended number, so you can see which arrangements work.
- Payroll and associate payments done right. Employees through payroll with PAYG, super and Single Touch Payroll; contractors paid accurately against their agreements; super considered, not assumed away.
- Respect for client privacy. Your bookkeeper needs billing data, not clinical records, and should handle it as carefully as you do.
Psychology practices we work with
The shape of the books changes a lot with the size and model of the practice, so we set things up around how you actually work.
- Solo private practitioners, often running mostly GST-free sessions and wondering whether they need to register for GST, how much tax to set aside, and why the bank balance never matches their session count.
- Practitioners working under a service fee in someone else's rooms, where the fee arrangement, GST on the fee and super all need to be recorded correctly.
- Group practices with associate psychologists on percentage splits, a practice manager and reception staff, where per-practitioner reporting becomes essential.
- Clinical psychology and mental health practices with a mix of Medicare, private, health fund, NDIS, WorkCover and DVA clients.
- Practices with provisional psychologists or registrars, where supervision arrangements create their own income and cost lines.
- Counselling and broader mental health practices, which share many of the same reconciliation and privacy needs.
The income streams in a psychology practice
Most psychology practices have more income streams than the owner realises, and each one behaves differently in the bank feed. This is the map we start from with every new practice.
| Income stream | Who pays | When it arrives | Usual GST treatment | Watch out for |
|---|---|---|---|---|
| Private session, client pays in full | Client, often with a Medicare rebate they claim themselves | On the day | GST-free | Recording the full fee, not the net after the client's rebate |
| Bulk-billed Better Access session | Medicare | A few days later, batched | GST-free | Rejected claims and batches that do not match the session list |
| Health fund session | Client, with fund rebate via HICAPS | On the day, settled in batches | GST-free | HICAPS settlements covering many clients in one deposit |
| NDIS psychosocial or capacity building | NDIA, plan manager or participant | Days to weeks, depending on plan management | Generally GST-free where NDIS rules are met | Unpaid plan-managed invoices and expired plans |
| WorkCover, TAC, DVA, insurer referrals | Scheme or insurer | Often 30 days or more | Depends on what is supplied and to whom | Approval limits and slow-paying invoices |
| Medico-legal and assessment reports | Lawyer, insurer or court | Invoice terms | Usually taxable | Coding these as GST-free |
| Clinical supervision, training, workshops | Other psychologists or organisations | Invoice terms | Usually taxable | Missing GST on supervision and corporate work |
Once each stream has its own income account in Xero, three things improve straight away: your BAS is right, your cash flow timing becomes visible, and you can see which kinds of work really pay.
Medicare Better Access: bulk-billed and gap sessions
Most psychology practices run two Medicare models at once. Under the Better Access initiative, clients with a mental health treatment plan can receive Medicare rebates for up to 10 individual sessions a calendar year, with a higher rebate for clinical psychologists than for registered psychologists.
Bulk-billed sessions are claimed by the practice and paid by Medicare a few days later, usually batched across many clients. Patient-paid sessions are paid in full by the client on the day, and the client claims their own rebate, often on the spot through the payment terminal. In the bank feed these look nothing alike, yet they are the same service.
The bookkeeping trap is treating a Medicare batch as one lump of income, or recording only the client gap and losing sight of the full session fee. We reconcile each Medicare payment back to the sessions it covers, so your books show the true session revenue, any claims that were rejected or are still outstanding, and the real timing of your cash. For the detail behind Better Access and gap billing, see our in-depth guide to psychology practice bookkeeping, Better Access, gap billing and GST.
GST-free versus taxable psychology work
Psychology is a listed health service, so a session supplied to the client being treated, by a registered psychologist, and generally accepted as necessary for their treatment, is GST-free. The word that matters is who the service is supplied to. When you supply something to someone other than the client, the answer often changes.
- Usually GST-free: individual and group therapy sessions for clients, including those funded by Medicare, a health fund or an NDIS plan where the relevant rules are met.
- Usually taxable: medico-legal and assessment reports prepared for lawyers, insurers or courts, workshops and training for organisations, corporate consulting, and clinical supervision you provide to other psychologists.
- Needs checking: employer-funded and Employee Assistance Program work, where the answer depends on exactly what is supplied and to whom.
Two points catch psychologists out. First, GST-free session income still counts towards the $75,000 GST registration threshold, so a busy practitioner can need to register even though clients never pay GST. Second, if you work under a practice service fee, that fee is usually taxable, so being registered lets you claim back the GST on it. We code each income type separately so your BAS is right the first time, and we will tell you when it is time to talk to your accountant about registration.
Associate psychologists, splits and payroll
Group practices usually pay associates a percentage of their billings, with the practice keeping the rest to cover rooms, reception, software, marketing and management. That model works well, as long as the numbers underneath it are right.
Track splits per practitioner. Recorded as one blended "associates" expense, the split hides which arrangements are profitable. Using tracking categories in Xero, we report billings, the associate's share and the practice's margin for each psychologist, and we check every month that the payment matches the agreement, including whether it is based on billings or on collections.
Get the classification right. Whether an associate is an employee or a contractor depends on how the relationship really works, not on the contract heading. Associates working set hours, in your rooms, under your systems, can look more like employees, which brings PAYG withholding, super and Single Touch Payroll.
Do not assume super away. Even a genuine contractor can be owed super if the contract is wholly or principally for their personal labour. And state payroll tax rules can treat payments to contractors as wages in some arrangements. These questions are for your accountant and adviser to assess, and our role is to keep the records clean enough to answer them. Our guides to service facility arrangements and superannuation and payroll tax by state explain the background.
For employed staff, including psychologists, practice managers and reception, we run payroll in Xero with award rates checked, super at 12% calculated on the right earnings, and super paid on time under the Payday Super rules that started on 1 July 2026. You can see the full cost of a new team member, including super and on-costs, with our free employee cost calculator.
NDIS, WorkCover, DVA and other third-party payers
Third-party work is often where a psychology practice's cash gets stuck. The sessions happened, the reports were written, and the invoice is sitting with a plan manager, insurer or scheme waiting for approval.
- NDIS. Whether a participant is NDIA-managed, plan-managed or self-managed changes who pays and how quickly. Invoices against expired plans or exhausted budgets are a common source of bad debts. Our NDIS bookkeeping work covers the claims side in more depth.
- WorkCover, TAC and insurers. Approval limits, report requirements and longer payment terms mean these invoices need active follow-up.
- DVA and Open Arms referrals. These have their own claiming rules and timelines, so they deserve their own income account and their own follow-up list.
We keep an aged receivables report split by funder and flag invoices as they drift past their terms, so your practice manager knows exactly who to chase each week.
Privacy: we keep the books, not the clinical notes
Psychology practices hold some of the most sensitive information there is. Health service providers are covered by the Privacy Act regardless of their turnover, and your clients trust you with things they may not have told anyone else. Your bookkeeper should treat that trust as seriously as you do.
- We work from invoices, claims, remittances and bank feeds. We do not need clinical notes, session content or treatment plans.
- We ask for the most limited access your practice software allows, usually billing and reporting only.
- We never put client information into public AI tools. Our bookkeeping is done by people, and while we are happy to learn AI alongside our clients, client data stays out of it.
- We keep client names out of Xero wherever a client number or initials will do the job.
Your practice software, into Xero
Your practice management system is where sessions, billing and claims live. Xero is where the accounting lives. The work that matters is making them agree. We reconcile against the systems psychologists use most, including Halaxy, Cliniko, Zanda (formerly Power Diary), Coreplus, Splose and Nookal, and against payment terminals and HICAPS settlements. Some integrations push invoices into Xero, some push summaries, and some do neither, so we set up the approach that suits your system and your volume, then check the totals every month. If you use Splose or Halaxy, our guides on reconciling Splose with Xero and Halaxy vs Splose go deeper.
The numbers we report every month
A monthly profit and loss is a start. These are the measures that actually help a psychology practice owner make decisions about hours, hiring, fees and referrals.
| Measure | How it is calculated | What it tells you |
|---|---|---|
| Utilisation per psychologist | Sessions delivered ÷ sessions available | Whether clinical time is being filled, and where the gaps are |
| Revenue per psychologist | Session and report revenue for each practitioner | Who is carrying the practice and how that is changing |
| Practice margin per associate | Associate billings minus their share and direct costs | Which split arrangements actually work for the practice |
| Funding mix | Revenue by Medicare, private, health fund, NDIS and third party | Exposure to rebate changes and slow-paying funders |
| Cancellation and no-show rate | Late cancellations and no-shows ÷ booked sessions | Lost revenue, and whether your cancellation policy is applied |
| Debtor days by funder | Amounts owed ÷ revenue for the period × days | Who is slow to pay and where cash is stuck |
| Wages and associate costs to revenue | Wages, super and associate payments ÷ revenue | Whether team costs are growing faster than income |
Our guide to management report metrics explains how to read these alongside your profit and loss and balance sheet.
What a month with us looks like
- Weekly: bank feeds reconciled, Medicare, HICAPS and terminal settlements matched to sessions, and a list of rejected claims and overdue invoices sent to your practice manager.
- Each pay run: payroll processed, super calculated and paid on time, and associate payments checked against their agreements.
- Monthly: practice software totals reconciled to Xero, GST coding checked, and a short report covering your profit and loss, cash position and the measures above, with a plain-English note on anything that needs your attention.
- Quarterly: BAS prepared and lodged on time, with GST-free and taxable income split correctly, and a check-in on the year so far.
- Yearly: clean, reconciled books handed to your accountant for tax, a review of associate arrangements and award rates before 1 July, and a look at fees for the year ahead.
| Solo practitioner | Group practice | |
|---|---|---|
| Main focus | Session reconciliation, GST threshold, tax set-aside | Per-practitioner reporting, splits, payroll |
| Payroll | Often none, or owner wages only | Psychologists, practice manager and reception, with STP and super |
| Associate arrangements | Not applicable, or paying a service fee yourself | Splits checked monthly against agreements |
| Reporting | Income by funder, cash flow, tax position | Utilisation, revenue and margin per psychologist |
| Compliance watch points | GST registration, record keeping | Super, payroll tax exposure, award rates, contractor status |
Situations we see often
These are composite examples that show common patterns, not specific clients.
A practitioner with mostly GST-free sessions starts taking on report writing for an insurer. Because the session income counts towards the threshold and the reports are taxable, they need to register for GST, but nobody has been watching turnover. Fixing it after the fact means working out GST on reports already invoiced. Watching the threshold monthly, and coding reports to their own account from day one, avoids the whole problem.
A practice pays associates a percentage of billings, but the calculation was set up in a spreadsheet years ago and nobody noticed that cancellation fees and report income were being treated differently for different associates. Each month's error is small. Over a year it is not, and it is awkward to fix with the people involved. Checking each payment against the agreement every month keeps the arrangement fair and the relationship intact.
A busy practice looks profitable on paper but is tight on cash every month. The aged receivables show why: NDIS plan-managed invoices, insurer reports and a few invoices against expired plans have built up over several months. A weekly follow-up list by funder turns that from a vague worry into a short, specific task for the practice manager.
How to choose a bookkeeper for your psychology practice
- Check they are registered. Anyone providing BAS services for a fee must be registered with the Tax Practitioners Board, and you can check the public register. True Tally is a Registered BAS Provider (26360186) and a Xero Certified Partner.
- Ask how they reconcile Medicare. If the answer is "we match the deposit to income", keep looking. You want session-level reconciliation against your practice software.
- Ask about GST on reports and supervision. A bookkeeper who knows psychology will raise this before you do.
- Ask how they handle associate splits. Per-practitioner tracking and monthly checks against agreements should be standard.
- Ask what access they need. The right answer is billing data only, never clinical notes.
- Ask about fees and lock-in. Fixed monthly fees make the cost predictable, and no lock-in means they have to keep earning your business.
Not sure whether you need a bookkeeper, an accountant or both? Our guide to bookkeeper vs accountant explains who does what.
Fixed fees, no lock-in
Bookkeeping from $300 per month, BAS from $150, and payroll from $20 per payslip, all fixed monthly fees. The exact number depends on your session volume, how many practitioners you pay, how many funders you invoice and which systems need reconciling into Xero. You get a clear, fixed quote after a free call, and there is no lock-in contract.
Running a psychology practice and not sure your Medicare reconciliation, GST coding or associate splits are right? Book a free call and we will take a look. No obligation, no lock-in, and no silly questions.