Do you charge GST on deposits?

It depends on what the deposit is. Money held as a security deposit against a booking is not consideration for a supply yet, so the canonical template posts it gross at the BAS Excluded rate and takes no GST at that point. Money that is really the first instalment of a session already agreed is a part payment, so the sale is attributed when the money is received and it carries the rate of the session being prepaid. For a private clinical booking that rate is GST Free Income, so no GST is taken then either. GST on Income arrives only where the booking itself is taxable.

Can you charge GST on a security deposit?

Under the default treatment the receipt itself carries no GST, because nothing has been supplied. The tax arrives later: when the money is applied to a session, the session's own revenue row decides it, and when the booking is forfeited the fee takes the treatment of the appointment it replaces. Both events are dated when they happen rather than when the deposit arrived.

Is GST payable on a deposit taken before the session?

For a private psychology or allied health session, the supply behind the deposit is usually GST free once the ATO's three conditions are met, so applying the deposit moves the sales labels without adding tax. The receipt side still matters: coding it as revenue on arrival overstates sales for that quarter and hides a liability the practice owes.

What happens to the GST if the client cancels and the practice keeps the deposit?

The forfeited amount becomes revenue on the date of the cancellation or no-show. In the psychology template a forfeited private booking posts to account 422, Cancellation and no-show fees, and the fee takes the tax treatment of the booking it replaces, so an employee assistance booking is taxable where a private session is GST free. That template gives an employee assistance cancellation a revenue row of its own for that reason.

Does the cash or accruals basis change when the GST on a deposit is paid?

For a part payment, yes. On a cash basis the tax falls in the period the money arrived; on an accruals basis it turns on the invoice as well as the payment, and which comes first is the part a practice proves rather than assumes. Under the security deposit default the receipt sits outside the sales labels on either basis, and the basis matters from the point the money is applied or forfeited. The organisation's basis is read from Xero and shown beside the setting.

GST answers

GST on booking deposits

GST is usually not payable when the deposit arrives. The canonical psychology template holds a booking deposit as a security deposit: the gross amount sits in a liability account at the BAS Excluded rate, and the GST point moves to the session it is applied to, or to the fee it becomes if the booking is forfeited. Part payment at receipt is the other option.

Key facts

What the template spots: An unallocated payment, or a billable item carrying a deposit amount, taken at the time of booking, with a manual override where the signal misses¹
Default receipt treatment: Held as a security deposit: the gross amount to account 245, Customer deposits and booking fees held, at the BAS Excluded rate¹
The other option: Part payment, which attributes the sale on the day the money arrives at the rate the prepaid session itself carries, offered for a practice that treats the deposit as prepayment of one named upcoming session¹
When GST attaches under the default: When the held money is applied to a session, or when it is forfeited as a cancellation fee¹
How it is held in Xero: A liability account plus a negative Less deposit applied line on the session invoice, itself at the BAS Excluded rate¹
What every canonical template agrees on: All three hold the money in account 245 at the BAS Excluded rate, and two of them name that account Customer deposits and credits held²
Where a forfeited deposit goes: Account 422, Cancellation and no-show fees, dated on the actual cancellation or no-show date, not the window boundary, taking the tax treatment of the appointment it replaces, unless that funder has a cancellation row of its own¹
The revenue leg it lands on: All three canonical templates resolve a private session to account 400, Clinical services, private patients, at the GST Free Income rate³
Why the session behind it is usually GST free: A health service that is not a medical service is GST free where it is a listed health service, is performed by a recognised health professional in that service, and is generally accepted in that profession as necessary for the appropriate treatment of the recipient of the supply⁴
What the GST basis changes: The organisation's cash or accruals basis is read from Xero and shown on the card, because it changes when a part payment's GST is attributed¹

What the practice is holding before the session

A booking deposit arrives before the work does. The canonical psychology template spots one from an unallocated payment, or from a billable item carrying a deposit amount, taken at the time of booking, with a manual override for the case the signal misses. However it is spotted, the money is not revenue yet. Nobody has been treated, no session invoice has been raised, and the practice can still be asked to hand it back.

That is the GST question in one line. GST attaches to consideration for a supply. Until the deposit becomes consideration, either for a session that happened or for a fee the client owes because it did not, there is no supply for the tax to attach to. The template's own reason for its default names a Division 99 security deposit, held gross and BAS Excluded until it is applied or forfeited. The division itself could not be read, so that reading is the template's rather than this page's.

This is where a general answer stops helping a clinic. The results for this question are general, and the examples on page one are hospitality and accommodation, where the supply behind the deposit is taxable. In a health practice the session is usually GST free, so the receipt side decides which BAS labels move and when, rather than how much tax is owed.

Most deposits in service based businesses are actually part payments.⁶

Two treatments, and the one the template defaults to

The template offers two treatments for the receipt and defaults to one. Held as a security deposit, the gross amount goes to account 245, Customer deposits and booking fees held, at the BAS Excluded rate, which keeps it out of the sales labels until a supply appears. Treated as a part payment, the same money is a sale the day it arrives, at the rate the session it prepays carries: GST Free Income for a private clinical booking, GST on Income only where the booking is itself taxable.

The two receipt treatments the psychology template offers, and when GST is taken¹

Treatment	What is posted when the money arrives	When GST is taken
Security deposit, the template default	The gross amount to 245, Customer deposits and booking fees held, at the BAS Excluded rate	When the money is applied to a session, or forfeited as a fee
Part payment, the other card option	The sale at receipt, at the rate the prepaid session carries	At receipt, on the date the organisation's GST basis gives it

Which one fits is the practice's call, not the software's. A deposit that is refundable when the client cancels with notice behaves like a hold against a risk. One that is really the first instalment of a session already agreed behaves like a prepayment. The template's note asks the practice's BAS agent to confirm which matches the published booking policy.

The deposit drawn whole

Card deposits do not arrive one by one. They arrive as one settlement, net of the fee the rail took, and the practice has to post something that reconciles to it without touching a revenue account.

Plate 1One card settlement of booking deposits, held as a liability, with the fee taken out and no revenue account touched.

Read the plate as a balance sheet movement rather than an income one. The liability grows by what the practice holds, the fee is an expense already incurred, and the bank line is the net the rail sent.

Where the GST point actually lands

Under the default, a deposit has five possible endings and each one decides its own tax. The template names all five, so the product does not have to guess when the practice software allocates a credit or a client asks for the money back.

What each ending does to a deposit that was held rather than taxed¹

What happens next	What the template posts	The GST consequence
The client attends and the session is invoiced	The held payment is allocated to the invoice, which carries a negative Less deposit applied line at the BAS Excluded rate	The session's own revenue row decides the tax
The client cancels late or does not attend	The forfeited amount becomes revenue in 422, Cancellation and no-show fees, dated on the actual cancellation or no-show date, not the window boundary, unless that funder has a cancellation row of its own	The fee takes the treatment of the appointment it replaces
The money is handed back before it is applied	The liability is released	Nothing was taxed at receipt, so nothing is untaxed
The money is handed back after it was applied	A credit note on the original tax type, plus a payment against it	The reversal carries the treatment the revenue leg took
Part is applied and part handed back	A question with both candidate postings shown, rather than one chosen	The practice decides, and the answer is recorded

The forfeit row is the one that surprises people, because a forfeited deposit takes no rate of its own. It inherits the rate of the booking it replaces, so a forfeited private session and a forfeited employee assistance booking land at different rates under one policy. GST on cancellation and no-show fees works that rule through per appointment type.

The revenue leg the deposit lands on

Once the deposit is applied it stops being a deposit question and becomes an ordinary revenue question. For a private client the answer is the same in all three canonical templates, which is why the card below draws one chip rather than one row per template.

Plate 2The revenue leg a booking deposit reaches once it is applied, read from the canonical templates rather than typed onto this page.

That treatment is not automatic, and the deposit does not create it. The ATO sets three conditions for a health service that is not a medical service: it has to be a listed health service, performed by a recognised health professional in that service, and generally accepted in that profession as necessary for the appropriate treatment of the recipient of the supply. A supervision session or a report is a different supply, and its own treatment decides what a deposit taken against it lands on.

Cash basis or accruals changes a part payment

This is the part the general answers leave out, and it only bites on the part payment treatment. The organisation's GST basis is read from Xero and shown beside the setting, because it changes when the tax on a part payment is attributed rather than whether it is owed.

On a cash basis, a part payment's GST falls in the period the money arrived, so a deposit taken in one quarter can carry tax on a session delivered in the next.
On an accruals basis it turns on the invoice as well as the payment, and which of the two comes first is the part the template asks a practice to prove rather than assume.
Under the security deposit default the receipt sits outside the sales labels on either basis, and the basis matters from the point the money is applied or forfeited.
The template asks for both the cash basis and the accruals basis BAS reports to be proven in a paid Xero test organisation before writes are enabled.

None of that is a treatment this page picks. It is the reason the choice sits on the configuration card with the basis printed beside it, so whoever approves the map can see what the two options do to a quarter. GST Free Income or BAS Excluded in Xero covers what each rate does to the labels themselves.

Taking the GST exactly once

A deposit and the invoice it is later applied to are two documents about one dollar, so tax can be taken twice by accident. The product carries a receipt-GST pool for that: tax taken on the receipt side is netted against the tax on each invoice the held money is applied to, so the same dollar is not taxed on both sides. It is mechanics rather than a treatment the practice chooses.

What goes wrong in the books

Each shows up as a number a bookkeeper cannot explain at the end of a quarter.

The deposit is coded to revenue on receipt, so income appears in a quarter with no session behind it and the liability is missing from the balance sheet.
The deposit is held correctly and then the session invoice is raised for the full fee with no negative line, which counts the same money twice.
A forfeited deposit is left in the held money account, so a fee the practice earned never reaches revenue.
A refunded deposit is treated as a credit note when the money was never applied, which puts a reversal through the sales labels for a supply that never happened.
The held money account is not read at month end, so its balance quietly stops matching the deposits the practice holds.

One check catches all five: read the held money balance at month end and name it, payer by payer. What is left should be deposits taken and not yet applied, forfeited or handed back. Reconcile an overpayment in Xero walks the bank side of that, and GST on prepaid session packages covers the block of sessions a client buys upfront, which the templates treat differently.

What to settle before anything is written to Xero

Those are questions about what the practice promises a client, and the answer decides the posting.

What Ledger Map does with it

Ledger Map holds one standing map for the practice, approved before anything syncs. The booking deposit treatment sits on it as a setting with its reason beside it, so the person approving it sees the receipt rate, the account that holds the money, and what happens on each ending.

After that it is mechanical. A card settlement of deposits is posted as one balanced document set against the account that holds them, with the deposits underneath it, and one exact match is left in the bank feed for a person to accept. A deposit the map cannot resolve becomes a question with the candidate postings shown rather than a silent posting. How it works shows the map and its approval step.

Questions

Do you charge GST on deposits?
It depends on what the deposit is. Money held as a security deposit against a booking is not consideration for a supply yet, so the canonical template posts it gross at the BAS Excluded rate and takes no GST at that point. Money that is really the first instalment of a session already agreed is a part payment, so the sale is attributed when the money is received and it carries the rate of the session being prepaid. For a private clinical booking that rate is GST Free Income, so no GST is taken then either. GST on Income arrives only where the booking itself is taxable.
Can you charge GST on a security deposit?
Under the default treatment the receipt itself carries no GST, because nothing has been supplied. The tax arrives later: when the money is applied to a session, the session's own revenue row decides it, and when the booking is forfeited the fee takes the treatment of the appointment it replaces. Both events are dated when they happen rather than when the deposit arrived.
Is GST payable on a deposit taken before the session?
For a private psychology or allied health session, the supply behind the deposit is usually GST free once the ATO's three conditions are met, so applying the deposit moves the sales labels without adding tax. The receipt side still matters: coding it as revenue on arrival overstates sales for that quarter and hides a liability the practice owes.
What happens to the GST if the client cancels and the practice keeps the deposit?
The forfeited amount becomes revenue on the date of the cancellation or no-show. In the psychology template a forfeited private booking posts to account 422, Cancellation and no-show fees, and the fee takes the tax treatment of the booking it replaces, so an employee assistance booking is taxable where a private session is GST free. That template gives an employee assistance cancellation a revenue row of its own for that reason.
Does the cash or accruals basis change when the GST on a deposit is paid?
For a part payment, yes. On a cash basis the tax falls in the period the money arrived; on an accruals basis it turns on the invoice as well as the payment, and which comes first is the part a practice proves rather than assumes. Under the security deposit default the receipt sits outside the sales labels on either basis, and the basis matters from the point the money is applied or forfeited. The organisation's basis is read from Xero and shown beside the setting.

Sources

Open questions

Division 99 of the GST Act and the ATO ruling on deposits held as security could not be read directly on 3 Sep 2026: four attempts at the primary law text returned HTTP 403, and the consolidated text that did resolve stopped short of the division. The security deposit characterisation on this page is stated as the canonical template's own reasoning, and no key fact rests on either source.
The template's cancellation window is a placeholder its own note calls unsourced, so this page prints no number of hours. When a deposit is forfeited follows the practice's published cancellation policy.
Which of the two receipt treatments fits a given practice is left to the practice and its BAS agent, with both the cash basis and the accruals basis BAS reports proven in a paid Xero test organisation before writes are enabled. Neither treatment is stated here as settled.
Gift voucher treatment is left open by the template's own note, which records that ATO Division 100 was not covered in the research read for it. A voucher is a fourth deposit type in the same policy and its treatment is not answered here.
Supervision is left open by the corpus rather than settled here. The templates default a supervision session to the taxable account, and their own checklist asks a practice to confirm that against current ATO guidance: one reading is that supervising another practitioner is a service to that practitioner rather than a health service, and the other is an ATO interpretative decision recorded in the research read, cited as suggesting GST may not apply to supervision of provisionally registered psychologists on a particular fact pattern. The decision itself was not readable on this pass. A deposit taken against a supervision booking follows whichever reading the practice settles on.
How a part payment's GST is attributed on an accruals basis, where the money arrives before any invoice is raised, is not answered here. The attribution rule in the GST Act could not be read on 3 Sep 2026, so the page states that the invoice and the payment both bear on it and leaves the order to the accruals basis BAS report the template asks to be proven.
The prepaid package default takes GST at receipt and the template flags that treatment as unproven, so this page points at the packages question rather than answering it.
No practitioner thread could be read in a practitioner's own words on 3 Sep 2026, because the session's web search budget was spent and the ATO Community threads on this query refuse an automated read. The one first-hand line quoted here is a bookkeeping firm's account of what it sees in service businesses.

Psychology practice with booking deposits, the canonical template
Ledger Map. Retrieved 3 Sep 2026.
primary
Allied health by funding source, the canonical template
Ledger Map. Retrieved 3 Sep 2026.
primary
NDIS provider, plan managed, the canonical template
Ledger Map. Retrieved 3 Sep 2026.
primary
Other health services, GST and health
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
Appropriate treatment, GST and health
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
Understanding GST on deposits, retainers and prepayments
Bond Financial. Retrieved 3 Sep 2026.
secondary
A New Tax System (Goods and Services Tax) Act 1999, Division 99, deposits as security
AustLII. Retrieved 3 Sep 2026.
unverified
GSTR 2006/2, deposits held as security for the performance of an obligation
Australian Taxation Office. Retrieved 3 Sep 2026.
unverified

Review

Last reviewed 3 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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