GST answers
GST on cancellation and no-show fees
A cancellation or no-show fee takes the GST treatment of the appointment it stands in for, so a cancelled GST-free consult leaves a GST-free fee and a cancelled EAP session leaves a taxable one. The allied health and psychology templates default their cancellation account to GST Free Income, and the allied health checklist asks for an item override per appointment type rather than one rate for every cancellation.
Key facts
- What the fee is consideration for
- The service the appointment was made for, so the fee takes that service's treatment rather than a rate of its own1
- A cancelled GST-free consult
- A GST-free fee, because the consult it stands in for would have been GST-free1
- A cancelled EAP session
- Taxable, and the two templates that carry an EAP row spell out a cancellation row of their own to say so4
- The cancellation account in the allied health template
- 423 Cancellation and no-show fees, defaulted to the GST Free Income tax rate4
- The cancellation account in the psychology template
- 422 Cancellation and no-show fees, defaulted the same way5
- What the appointment has to have been, for the fee to be GST-free
- A listed health service, performed by a recognised health professional in that listed service, and generally accepted in that profession as necessary for the appropriate treatment of the recipient of the supply2
- What the template checklists ask for
- An item override per appointment type in the allied health template, and per support type in the NDIS template, rather than one account carrying every cancellation the practice charges4
- Cancellation rows the templates spell out
- Two of the thirty funding source and category keys, one for an EAP booking and one for an NDIS plan managed claim6
- A forfeited booking deposit
- GST attaches when the held amount is applied to a session or forfeited as a cancellation fee, not when it is taken5
What a cancellation fee is consideration for
A cancellation fee looks like a charge for nothing, which is why it gets its own line in the chart of accounts and its own tax rate by accident. The ordinary reading is different. The fee is payment for the thing the appointment was booked for, so it carries whatever that thing carried. There is no cancellation rate to look up.
A cancellation fee paid by a client for a missed or cancelled appointment is treated as payment for the intended service (i.e. treatment, consultation, report writing etc). If a cancellation fee is charged where a customer fails to turn up for an appointment, the fee will normally be treated as payment for the same thing that the appointment was made for. If the service that you would have supplied to the person who cancelled is GST free, then the cancellation fee is also GST free.1
Read the parenthesis in that first sentence. It lists treatment, consultation and report writing together, which is the rule running in both directions: a cancelled consult leaves a GST-free fee and a cancelled report meeting leaves a taxable one. Same fee, same practice, same week, two tax rates.
So the question is what the appointment was
That pushes the work back onto the appointment. A health service is GST-free under a three part test: it has to be a listed health service, performed by a recognised health professional in that listed service, and generally accepted in that profession as necessary for the appropriate treatment of the recipient of the supply. A fee standing in for a session that met all three inherits that. A fee standing in for something that met none of them inherits that instead.
- The appointment was a listed health service delivered to the patient who booked it, so the fee follows it and is GST-free.
- The appointment was a report, an assessment or a court attendance commissioned by somebody other than the patient, so the fee follows a taxable supply.
- The appointment was bought by an employer under an EAP contract, so the recipient was a business and the fee follows a taxable supply.
- The appointment was a session type the practice has not classified yet, in which case the fee has nothing settled to inherit and the line belongs in the questions queue rather than in a posting.
One cancellation account is not one answer
All three canonical templates carry a cancellation account, and all three carry a note next to it saying the account on its own is not enough. The allied health template calls it 423 Cancellation and no-show fees and defaults it to GST Free Income, on the reasoning that most cancelled appointments in an allied health practice were GST-free clinical work. The psychology template does the same at 422. The allied health checklist then asks for the item override, and the psychology note points at the EAP row it already carries, because a practice that also bills reports, supervision or EAP work is charging cancellation fees against appointments that were taxable.
| The appointment that was cancelled | Where the template posts that appointment | The Xero tax rate on it |
|---|---|---|
| A private patient consult | 400 Clinical services, private patients | GST Free Income |
| A report or medico-legal assessment | 420 Reports, assessments and medico-legal | GST on Income |
| A supervision session | 421 Supervision, training and workshops | GST on Income |
| A training session or workshop | 421 Supervision, training and workshops | GST on Income |
| An EAP session | 409 Employee assistance and corporate contracts | GST on Income |
| The template's own cancellation account | 423 Cancellation and no-show fees | GST Free Income |
How a cancellation line actually resolves
Here is the part that surprises people who read the chart of accounts and stop there. Across the three templates there are thirty distinct funding source and service category keys, and exactly two of them name a cancellation: an EAP booking, and an NDIS plan managed claim. No template spells out a cancellation row for a private patient, for Medicare, for DVA, for a health fund or for WorkCover. The EAP row posts to the EAP account, so in the allied health and psychology templates the cancellation account sits in the chart with no standing rule routing anything to it. The NDIS template is the exception: its plan managed cancellation row posts to its own cancellation and short-notice claims account.
What happens instead is the cascade. A line resolves on its funding source and service category together, then on the funding source alone, then on the practice default. A private cancellation with no row of its own therefore lands on the private patient account at GST Free Income, which is the right tax rate by the inheritance rule and the wrong account for reporting on how much the practice charges in cancellation fees.
- In the allied health and psychology templates an item override on the cancellation item is the only level that reaches the cancellation account, and it is set per appointment type, which is what the checklist asks for.
- Without one, the funding source and category row decides, which is how a cancelled EAP booking gets its taxable rate.
- Without either, the funding source default decides, which is how a private cancellation ends up on the clinical services account at GST Free Income.
- The practice default is the last level, and a line reaching it means the funding source did not resolve, which is a question rather than a posting.
The cancellation row the templates do spell out
The EAP cancellation is the worked counter-example, and it is worth reading as the shape of the problem rather than as a fact about EAP. An employer or an EAP provider engaged the practice, so the session was taxable, so the fee for the cancelled session is taxable too. Both templates that carry an EAP row spell that out with a row of their own, overriding their own GST-free cancellation default for this one case.
The NDIS row on that card is not a disagreement about cancellation fees. That template holds no EAP row of any kind, so the cascade runs all the way down and the card shows what it lands on. A line resolving there has told the practice something useful: the funding source was not matched, and the answer is a question rather than a posting. The EAP contracts page and the funder page for EAP payments carry the recipient test the row rests on.
When a held deposit becomes the fee
A practice that takes a deposit to secure a booking is holding money before any session happened, and the psychology template treats that as a security deposit: gross, outside the activity statement, sitting in a liability account. Its own note says when GST attaches, which is when the amount is applied to a session or forfeited as a cancellation fee. So the forfeiture is the moment the inheritance rule fires, and the rate it fires at is the rate of the session that was booked.
Which is why the deposit policy and the cancellation policy have to agree before either is switched on. The booking deposits page covers the choice the practice makes at the receipt end, and the template says that choice interacts with the practice's cash or accruals basis and belongs in a Xero test organisation before writes are enabled.
NDIS cancellation claims are their own case
An NDIS short notice cancellation is claimed rather than invoiced, and the NDIS template treats it accordingly. It posts to a cancellation and short-notice claims account whose tax type is not a Xero code at all: the template writes a sentence there instead, saying the treatment matches the original invoice line's tax type. That is the same inheritance rule, stated for a scheme where the underlying support might be listed or might not be. The NDIS cancellation claims page takes the claim type and reason codes column by column.
What it costs to get wrong
The two errors are mirror images and they cost differently. Coding a taxable cancellation fee GST-free understates GST on sales, and the shortfall is the practice's to make good when it is found. Whether the practice can go back to the payer for the difference depends on what the contract or the published fee schedule says.
Coding a GST-free cancellation fee taxable costs the other way. The practice remits one eleventh of a fee it did not need to charge GST on, and getting that back takes an amended activity statement. Both errors come out of the same decision: one tax rate applied to a cancellation account that is collecting fees from more than one kind of appointment.
What Ledger Map does with it
Ledger Map holds one standing map for the practice, approved before anything syncs, and the map is where the per appointment type rule lives. A cancellation item is mapped once, against the appointment type it stands in for, and every fee on that item resolves the same way afterwards. The funder's payment is then posted as one balanced document set, which leaves one exact match in the bank feed.
The accounts and the tax rates on this page are read out of the canonical template a practice starts from, not chosen by the product. A cancellation item the map cannot place becomes a question with the options laid out, and the practice answers it. The other GST answers carry the same treatment record for every funding source in the mix.
Questions
Do you charge GST on a cancellation fee in Australia?
It depends on what was cancelled. A cancellation fee is treated as payment for the service the appointment was made for, so a cancelled GST-free health service leaves a GST-free fee, and a cancelled report, workshop or employer funded session leaves a taxable one. There is no separate rate for cancellations.
Is a no-show fee GST free?
A no-show is read the same way as a cancellation: the fee stands in for the appointment that was booked and takes its treatment. For a practice whose no-shows are almost all GST-free clinical sessions, that means a GST-free fee, which is why the allied health and psychology templates default their cancellation account to GST Free Income.
Which cancelled appointments leave a taxable fee?
The ones whose underlying appointment was taxable. In the allied health template that is reports and medico-legal work, training and workshops, product sales, and any session an employer or EAP provider bought. Two of the three templates carry an explicit cancellation row for the EAP case, and the allied health checklist asks for an item override per appointment type for the rest.
Does a forfeited booking deposit carry GST?
The psychology template holds a booking deposit as a security deposit outside the activity statement, and its note says GST attaches when the amount is applied to a session or forfeited as a cancellation fee. At forfeiture the fee takes the treatment of the session that was booked, so the rate comes from the appointment rather than from the deposit.
What does the ATO ruling on cancellation fees say?
GSTR 2009/3 is the ruling, and it could not be read on this pass: the ATO refused the fetch twice, so it is cited here as unverified and nothing on this page rests on it. The project's research note reads it as treating the fee as consideration for the intended supply, and the search index also returns a paragraph about a fee that buys a separate service of giving effect to a cancellation. Which paragraph fits a clinic's late cancellation fee is a question for the practice's BAS agent.
Is it legal to charge a cancellation fee in Australia?
That is a consumer law and professional practice question rather than a GST one, and this page does not answer it. What it answers is the tax rate a fee carries once the practice has decided to charge one, and which revenue account it lands in.
Sources
Open questions
- GSTR 2009/3 itself was not read. The ATO refused the fetch twice on 3 Sep 2026, and the session's verified copies of the ATO GST and health pages carry nothing about cancellations. The ruling is cited as unverified, and the inheritance rule on this page is carried by the project's own research note and by one Australian accounting source read in full.
- The ruling's analysis may split by fact pattern. The research note reads it as treating the fee as consideration for the intended supply, while the search index returns a paragraph where the fee is consideration for a separate service of giving effect to the cancellation, which is taxable on its own terms. Which one fits a clinic's late cancellation fee is a question for a BAS agent.
- Supervision is a grey area both templates flag in their own review checklists: one bookkeeping source treats it as taxable and one ATO interpretative decision points the other way for provisionally registered psychologists. This page states what a template posts for a supervision line and leaves the underlying treatment open.
- No notice period appears anywhere on this page. The only figure the corpus holds is the psychology template's own cancellation window, which that template flags as a placeholder rather than a researched number.
- Whether a forfeited deposit is better handled as a cancellation fee or as the application of a security deposit interacts with the practice's cash or accruals basis, which the psychology template says has to be proven in a Xero test organisation before writes are enabled.
- GST for psychologists
Sheridans Accountants and Financial Planners. Retrieved 3 Sep 2026. Source updated Jul 2022.
secondary
- Other health services, GST and health
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
- GSTR 2009/3, Goods and services tax: cancellation fees
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 29 Apr 2009.
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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