Funders
EAP contracts: payment and GST
An EAP session is taxable. The recipient of the supply is the employer or the EAP provider that engaged the practice, not the client in the room, and neither is one of the four payers s38-60 makes GST free. So the same hour is GST free billed to a private client and carries GST billed to an employer. The canonical templates post it at GST on Income.
Key facts
- Who pays
- The employer, or the EAP provider holding the contract on the employer's behalf, not the client in the room5
- Recipient of the supply
- Under an EAP contract the service is supplied to the employer or the EAP provider, not to the client in the room3
- GST treatment
- Taxable income, the GST on Income tax rate in Xero5
- Revenue account in the psychology template
- 407 Employee assistance program contracts5
- Revenue account in the allied health template
- 409 Employee assistance and corporate contracts6
- Clearing account
- 103 EAP and corporate clearing, a bank type account in Xero5
- Deposit shape
- One bank transfer per payer, on the payer's own payment terms5
- Cancellation fees
- Taxable, because the session the fee stands in for was taxable4
Who the recipient of the supply is
GST free treatment turns on the service and the practitioner, not on who settles the invoice. That holds right up to the point where a business, rather than a person, engages the practice. The recipient of the supply is whoever engaged the practitioner to provide the service. Usually that is the client. Under an EAP contract it is the employer, or the EAP provider holding the contract on the employer's behalf, and a supply of services to another business is not usually GST free.
So the hour itself is not what changed. The same psychologist delivers the same session to the same person to the same standard, and it is taxable in one case and GST free in the other, because the question the law asks is who engaged them.
If the patient pays you, it is a clear Yes. If a third party pays, then it depends who they are. If Medicare, NDIS, Workers Compensation or private health insurance pays you, then it is as if the patient paid you and it is a Yes. But if somebody else pays you, for example an employer or a life insurance company, then you provide a service to the employer or life insurance company and that service is not a medical or health service since they are not sick.3
The same hour, read twice
Take one session invoiced at A$220.00. Billed to the client it is A$220.00 of GST free income and nothing at 1A on the activity statement. Billed to the employer at the same price it is A$200.00 of revenue and A$20.00 of GST on sales, because 10 per cent comes out of a tax inclusive price as one eleventh of it. The practice keeps A$20.00 less unless the contract rate was agreed GST exclusive.
Which is why the contract rate is worth reading before the first invoice goes out. Where the agreed fee is stated as a flat session rate with no mention of GST, the practice is likely to be wearing the GST out of its own margin rather than adding it to the payer's bill.
Why the insurer rule does not reach an employer
The obvious objection is that a WorkCover session is GST free even though an insurer pays for it. That is true, and it is a specific provision rather than a general principle. s38-60 keeps a supply GST free where the practice contracts with an insurer, an operator of a statutory compensation scheme, a compulsory third party scheme operator or an Australian government agency, and the same service would have been GST free billed to the patient.
An employer is none of those four. Neither is an EAP provider. There is no fifth category for a business that buys health services for its own staff, so an EAP supply falls back to the general rule and carries GST. The workers compensation page covers the other side of that line.
- An insurer, a statutory compensation scheme, a compulsory third party scheme operator or an Australian government agency contracts for treatment: GST free, because s38-60 says so and the underlying service would have been GST free anyway.
- A health fund, Medicare or a plan manager pays on the client's behalf: GST free, because the client is still the recipient and the payer is only settling the bill.
- An employer or an EAP provider engages the practice for its staff: taxable, because the supply is to a business and no provision carves it back out.
What the canonical templates post
Both canonical templates that carry an EAP revenue row code it taxable, and they disagree about where it lands. The allied health template posts EAP revenue to 409, Employee assistance and corporate contracts. The psychology template posts it to 407, Employee assistance program contracts. The tax type is the same in both, and Xero labels it GST on Income. The third canonical template, the NDIS one, holds no EAP row at all, so the card shows it falling back to the practice default: 400, Clinical services, private patients, at GST Free Income. That fallback is the wrong answer for an EAP line, which is why a line that lands there belongs in the questions queue rather than in a posting.
Ledger Map shows each template as it posts rather than averaging them, because a merged code would be one that no template holds. A practice starts from one template, and its standing map carries that template's account for every EAP line the practice bills.
Cancellation fees, group sessions and reports
The categories sitting next to an EAP consult follow the same test, and two of them flip against the practice's usual default. A cancellation fee and a group session are GST free for a private client and taxable for an employer, so a template that codes them once for the whole practice gets them wrong half the time.
| Service category | Revenue account | Xero tax rate |
|---|---|---|
| Consults | 407 Employee assistance program contracts | GST on Income |
| Group sessions bought by the employer | 407 Employee assistance program contracts | GST on Income |
| Cancellation and no show fees | 407 Employee assistance program contracts | GST on Income |
| A report the payer commissioned | 420 Reports, assessments and medico-legal | GST on Income |
| The same consult billed to the client | 400 Clinical services, private patients | GST Free Income |
A cancellation fee takes the treatment of the session it stands in for. Sheridans states the rule for a private client, and it runs the other way just as well: an EAP booking that is cancelled leaves a fee standing in for a taxable session, so the fee is taxable too.
If the service that you would have supplied to the person who cancelled is GST free, then the cancellation fee is also GST free.4
How EAP money arrives
This is the part no scheme document answers, because there is no scheme. An employer or an EAP provider pays out of its own accounts payable run, on its own terms, in whatever format its finance team already uses. That makes EAP the least standardised payer in a practice's mix and the easiest one to lose track of.
- The invoice goes to the payer rather than to the client, so the payer's business name is what a map should match on. The template's own note says payableBy is the reliable signal here, because the transfer often arrives labelled as nothing more specific than a direct deposit.
- The transfer lands on the payer's payment terms, which the practice learns from its own payment history rather than from a published service standard.
- What arrives with the transfer is whatever the payer chose to send: a remittance advice, a paid statement, or nothing at all beyond the bank line.
- A disputed session count or rate arrives as a short payment against the invoiced amount. There is no reason code and no processing report, so the difference has to be read off the invoice list.
The clearing account for a payer on its own terms
The psychology template gives EAP work its own clearing account, 103, EAP and corporate clearing, set up as a bank type account in Xero and coded BAS Excluded so a clearing movement is not counted as a sale. A short payment has a home of its own too, 605, Funder shortfalls and write offs, at the tax type of the line it reduced.
- Each EAP invoice is receipted to the EAP clearing account on the date the payer paid it.
- The bank line for the transfer is matched as a transfer out of that clearing account, which leaves one exact match in the feed rather than a pile of small payments.
- The clearing balance is then the EAP work invoiced but not yet paid, which is the number to take to a slow payer.
- A balance that will not clear is an invoice that was paid and not matched, or one that was matched and not paid, and both are worth chasing.
What it costs to get wrong
Coding an EAP session GST free understates GST on sales. Either the employer was invoiced without the GST the practice owed, or the GST was collected and not reported. Whether the practice can go back to the payer for the difference depends on what the contract says, and the ATO can assess the shortfall with penalties and interest.
Coding the practice's clinical work GST on Income costs the other way. The practice remits one eleventh of revenue it did not charge GST on, and it takes an amended activity statement to get that back. Both errors come from the same place: one tax rate applied to a funding mix that needs two.
What Ledger Map does with it
Ledger Map holds one standing map for the practice, approved before anything syncs. An EAP line resolves through that map to the account and the tax rate the practice's template carries, the payer's transfer is posted as one balanced document set against the clearing account, and one exact match is left in the bank feed. A line the map cannot resolve becomes a question with the options laid out rather than a silent posting.
The account and the tax rate on this page come from the canonical template the practice starts from rather than from a treatment Ledger Map chose. The practice approves the map before a single invoice syncs, and the funder pages carry the same record for every other payer in the mix.
Questions
Do we charge GST on EAP sessions?
Yes, on the ordinary reading. The employer or the EAP provider engaged the practice, so the recipient of the supply is a business, and a health service supplied to another business is not usually GST free. Both canonical templates code EAP revenue taxable, which is the GST on Income rate in Xero.
Why is an EAP session taxable when the same session for a private client is not?
Because the test is who engaged the practitioner, not what happened in the room. A private client engages the practice for their own treatment, which is a GST free health service. An employer engages the practice as a business buying a service, and there is no provision that carves that back out.
Is an EAP cancellation fee taxable?
A cancellation fee takes the treatment of the session it stands in for, so an EAP cancellation fee is taxable while a private one is GST free. Both templates override their GST free cancellation default for EAP work for exactly that reason.
Is a corporate wellness workshop GST free?
A workshop or seminar is taxable on two counts. The employer is the recipient, and training and seminars are not a listed health service in any case. The same goes for a report the payer commissioned, which the psychology template codes to its reports account rather than the EAP account.
When does an EAP provider pay?
On its own terms, because no scheme sets them. EAP payment terms are not stated in the research behind the canonical templates, so the practical answer is the payer's accounts payable cycle, read off the practice's own payment history. A clearing account per payer keeps the unpaid balance visible while that plays out.
Read next
Sources
Open questions
- Every ato.gov.au page refused a direct fetch on 2 and 3 Sep 2026, returning HTTP 403. The recipient of the supply page is listed as unverified on that basis and no key fact rests on it, and the GST and health page keeps the 29 Aug 2026 date it was read on. The recipient test is carried here by two Australian accounting sources that were read in full.
- EAP payment terms and remittance format are not stated in the research behind the canonical templates, and the template says so in its own note, so the lag on this page is the payer's accounts payable cycle rather than a published standard.
- A contract can put the employee rather than the employer in the recipient seat, and the ATO guidance leaves room for it. This page states the default treatment and sends an unusual contract to the practice's BAS agent.
- Is my psychology or allied health service GST free?
Allied Health Accounting. Retrieved 2 Sep 2026. Source updated 18 Sep 2024.
secondary
- Goods and services tax for self employed psychologists
Sheridans Accountants and Financial Planners. Retrieved 2 Sep 2026. Source updated Jul 2022.
secondary
Review
Last reviewed 2 Sep 2026 by Shane
General information for Australian allied health practices, not tax advice. Confirm a treatment with your BAS agent or accountant before you post it.
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