GST answers
GST on contractor practitioner invoices
Where the practice contracted the practitioner to treat the practice's patients, the practitioner's invoice to the practice is not usually GST free, so it carries GST where the practitioner is registered. The session the practice then bills the patient stays GST free. Where the practitioner instead contracted the practice for rooms and administration, the practice's invoice is the taxable leg.
Key facts
- The two supplies in one appointment
- The treatment the patient receives, and the business to business supply between the practitioner and the practice1
- The practitioner's invoice to the practice
- Not usually GST free, because the recipient of that supply is a business rather than a patient1
- The practice's room and admin invoice
- Not GST free either, where the practitioner is the one who contracted the practice for rooms and administration1
- The supply to the patient
- GST free where it is a listed health service, delivered by a recognised health professional, and accepted in that profession as necessary for appropriate treatment3
- What decides which way the invoice runs
- The contract between the parties, rather than the fee split or who banks the patient's payment1
- Where the practice posts its side
- 460 Other income, room rental and admin fees, at the GST on Income tax rate, in the allied health template4
- Across the canonical templates
- All three keep account 460 at the same tax type, and two of them shorten the account name to Other income6
- The patient side revenue
- 400 Clinical services, private patients, at the GST Free Income tax rate, untouched by the payout leg4
Two supplies, one appointment
A contractor arrangement makes two supplies out of one appointment. There is the treatment the patient receives, which is GST free where it is a listed health service delivered by a recognised health professional and accepted in that profession as necessary for appropriate treatment. And there is the supply between the practitioner and the practice, which is one business supplying another. The second one is the leg that ends up on an activity statement, and it is the leg most answers to this question leave out.
Which way the invoice runs
The recipient of a supply is whoever engaged the practitioner to provide the service. Under a contractor arrangement that can be the practice or the patient, and the ATO's guidance on clinic arrangements is unusually direct about how you tell: you read the contract. Not the percentage, not the diary, not who takes the card payment.
There will be different GST outcomes depending on who is contracting who. This can only be determined by the contract entered into between the parties and contracts should clearly state who is contracting who so both parties are aware of the GST outcomes.1
So the same seventy percent split can produce two different sets of books, and the difference is not a bookkeeping preference. It follows the agreement the parties signed, which is why the accountant who drafted the arrangement decides this and the practice's map records the decision.
| The arrangement | The taxable invoice | The GST free supply |
|---|---|---|
| The practice contracts the practitioner to treat the practice's patients | The practitioner's invoice to the practice for their share | The practice's invoice to the patient |
| The practitioner contracts the practice for rooms and administration | The practice's room rent and admin fee invoice to the practitioner | The practitioner's invoice to the patient |
| The contract does not say who contracted whom | Unsettled until the parties read the agreement or fix it | The supply to the patient, on the ordinary reading |
Practice as principal: the practitioner invoices the practice
This is the arrangement most practices run. The practice holds the patient relationship, bills the patient, and contracts the practitioner to deliver the service. The ATO's worked example on this is a clinic that contracts medical practitioners: the practitioner's supply to the clinic is not GST free except in specific situations, and the clinic's supply to the patient is. The practice's books follow that shape.
- The whole patient fee is the practice's revenue, posted to the clinical services account at GST Free Income, so nothing on the patient side changes because a contractor delivered the session.
- The practitioner's invoice for their share is a supplier bill. Where the practitioner is registered for GST it carries GST, and the practice claims that GST back as a credit.
- The payout is an expense rather than a reduction of revenue, so the practice's income statement shows gross fees and a contractor cost instead of a net figure.
- Tracking the practitioner on both the revenue and the expense is what puts fees and payout for one practitioner on the same report, which the practitioner tracking page sets up.
One note on the payout itself: pay on money that has landed and been reconciled rather than on what the billing system invoiced, because a claim can be short paid weeks later.
Service entity model: the practice invoices the practitioner
The other arrangement turns the invoice around. The practitioner holds the patient relationship and contracts the practice for rooms and administration. The ATO states the outcome plainly: the supply of the rooms and administration services by the clinic to the health practitioner is not GST free, and the practitioner's supply to the patient is GST free where the health service test is met.
What that does to the books is larger than the GST line. The patient fees the practice collects are not the practice's income in this model. They are collected on behalf of the practitioner and the practice's own revenue is the service fee, so a practice that banks every patient payment into its own revenue accounts is reporting income it does not have. The practice's map has to know which model applies before the first invoice syncs.
What the canonical templates post
Ledger Map ships three canonical templates, and all three keep one revenue account for the practice's side of a contractor arrangement: account 460, at the tax type Xero calls GST on Income. Two of them shorten the name to Other income and the allied health template spells it out as Other income, room rental and admin fees. No revenue row in any template is keyed to a contractor, which is the point: this income is not patient revenue and it does not sit in the funding source rows at all.
| Canonical template | Revenue account | Xero tax rate |
|---|---|---|
| allied-health-by-funding-source | 460 Other income, room rental and admin fees | GST on Income |
| ndis-provider-plan-managed | 460 Other income | GST on Income |
| psychology-with-booking-deposits | 460 Other income | GST on Income |
The Xero side and the activity statement
Two legs mean two tax rates on one practice's books, and they land in different places on the activity statement. GST free session revenue appears at G1 total sales and adds nothing at 1A. The taxable leg between the businesses appears at G1 and 1A for whoever raised the invoice, and the side that received it claims the GST back on its own activity statement.
- Post the patient fee at the tax rate the practice's template carries for that funding source, which is GST Free Income for a private clinical session in all three canonical templates.
- Post the invoice between the practitioner and the practice at GST on Income on the side that raised it, and let the receiving side claim the credit.
- Post the practice's room rent and admin fee income to account 460 rather than to a clinical revenue account, so GST free and taxable income are not mixed in one account.
- Leave the tax rate on the clearing accounts alone. Every clearing account sits at BAS excluded in every canonical template, because a settlement movement is not a second sale.
Xero Central's own rates article could not be read directly for this page, so the labels above follow the corpus research rather than a quoted article body.
Whether a contractor has to register
This is the question the search results answer first, and it is a different question. Whether a practitioner registers for GST turns on turnover, not on whether the treatment they deliver is GST free. A contractor invoicing a practice is making taxable supplies, so the registration question is live even for a psychologist whose sessions are all GST free.
The ATO's registering for GST page refused an automated fetch on 3 Sep 2026, so no turnover threshold is printed here. Read it on the ATO site or ask your BAS agent, because the figure is the one thing on this page that changes without the law changing.
Why the third party rule does not reach a practice
There is a reasonable objection to all of this. A WorkCover session stays GST free even though a compensation scheme pays for it, so why is a practice different? Because that rule is a closed list rather than a principle. A supply that would be GST free to the patient stays GST free when the practitioner contracts with an insurer, an operator of a statutory compensation scheme, a compulsory third party scheme operator or an Australian Government agency, unless those two parties agree otherwise.
A practice is none of those four, and the same ATO page says health services supplied to any other third party are not GST free. So the practitioner to practice leg falls back to the general rule. The private patient consult page covers the patient side of the same appointment, and the GST answers index covers the funders that do reach the list.
The two ways it gets posted wrong
These errors come from one tax rate applied to a practice that needs two.
- The contractor's invoice coded GST Free Income. GST is underpaid on a taxable supply, the practice loses the input tax credit it was entitled to, and whether the amount can be recovered from the other party afterwards depends on what the agreement says.
- The patient fee coded GST on Income because the practitioner's invoice was taxable. The practice remits one eleventh of clinical revenue that carried no GST, and getting it back takes an amended activity statement.
- The service fee income posted to a clinical revenue account. The practice's GST free and taxable income sit in one account, so nobody can tell from the trial balance which part of G1 was taxable.
- The patient fees banked as practice revenue under a service entity arrangement. The practice reports income that belongs to the practitioner, which overstates turnover before any GST question is reached.
What Ledger Map does with it
Ledger Map holds one standing map for the practice, approved by the practice before anything syncs. The map carries the account and the tax rate for each funding source from the template the practice started on, so a private session posts GST free and the practice's room rent and admin fee income posts to its own account at GST on Income. A line the map cannot resolve becomes a question with the options laid out, rather than a silent posting.
On the settlement side, each funder deposit is posted as one balanced document set and leaves one exact match in the bank feed, which is what keeps the payout report readable by practitioner. The direction of the contractor invoice is a decision for the practice and its accountant; how it works shows where that decision is recorded and how it is approved.
Questions
Do contractor psychologists charge GST to the practice?
On the ordinary reading, yes, where the practitioner is registered for GST and the practice contracted them to treat the practice's patients. The recipient of that supply is the practice, a business, so it is not GST free. The session the practice then bills the patient is a separate supply and stays GST free.
Are psychology services exempt from GST?
GST free rather than exempt, and it is the service that qualifies rather than the profession. A listed health service delivered by a recognised health professional and accepted in that profession as necessary for appropriate treatment is GST free, and psychology is on the ATO's list of listed health services. An invoice between a practitioner and a practice is a different supply and is tested on its own.
Do I charge GST for consulting services?
An invoice to a business for consulting or contracting work is a taxable supply on the ordinary reading. Where you are registered for GST, add it to the invoice you send the practice. Where you are not registered, do not. The GST free treatment attaches to the treatment supplied to a patient, not to the practitioner's trade.
Is the room rent my practice charges me GST free?
No. The ATO's own words are that where the health practitioner contracts the clinic to provide rooms and administration, the supply of those rooms and administration services by the clinic is not GST free. All three canonical templates post that income at the GST on Income tax rate.
Do I have to register for GST if my sessions are GST free?
Registration turns on turnover rather than on treatment, and a contracting invoice to a practice is a taxable supply. The ATO's registering for GST page refused a fetch on 3 Sep 2026, so no threshold is printed here. Check the current figure on that page or with your BAS agent before you decide.
Sources
Open questions
- ato.gov.au refuses automated fetches. The three ATO pages cited here were read in full on 3 Sep 2026 from copies captured through a signed in browser session, and each carries its own last updated date of 12 June 2024.
- The ATO's registering for GST page returned HTTP 403 on 3 Sep 2026, so the registration turnover threshold is not printed on this page even though three of the top five search results lead with it.
- Xero Central's How GST works in Xero article returned an empty body on 3 Sep 2026 and is carried as unverified. The activity statement labels on this page follow the corpus research at docs/research/domain-mechanics.md section 3.6, which covers G1 and 1A on Simpler BAS. It does not name the label the receiving side claims its credit at, so that side is described in words instead.
- The recipient of the supply page says the practitioner's supply to the clinic is not GST free except in specific situations, and does not list those situations. The specific situations reachable from the third party page are the four payer types, and a clinic is not one of them.
- Whether a service entity arrangement creates payroll tax exposure is not settled by the sources read for this page. It is one reason the accountant picks the model, and it sits outside a GST answer.
- Supervision of another practitioner sits next to this question and the research behind the canonical templates leaves it open: one Australian accounting source treats supervision as taxable and an ATO interpretative decision points the other way in one fact pattern. This page does not settle it.
- Whether a practice can recover GST it did not charge on a service fee after the fact depends on the agreement between the parties and was not researched here.
- Recipient of the supply, GST and health
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
- Supply of services through a third party, GST and health
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
- Other health services, GST and health
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
- First principles, paying practitioners on receipts
Health and Life. Retrieved 3 Sep 2026. Source updated 23 Jul 2026.
secondary
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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