GST answers
GST on DVA treatment income
DVA treatment income is GST free where the same service would be GST free supplied to the veteran, and two separate rules get it there: s38-60 when the practice contracts with the department, and the ordinary health service rules when DVA pays on the veteran's behalf. A report the department asks for is a separate supply with its own test.
Key facts
- The provision behind the DVA answer
- s38-60, third party procured GST-free health supplies, in Subdivision 38-B of the GST Act6
- The test it applies
- If the service is GST free provided to the patient, it is also GST free where the practice is contracting with an Australian Government agency2
- The second route to the same answer
- Where the third party is only paying the practitioner on the patient's behalf, the supply stays with the patient and is GST free if it meets the health service definition2
- What the payer does not decide
- Who engages the practitioner sets the recipient of the supply, and a service that is taxable to the patient stays taxable when a department pays for it5
- Where the allied health template posts it
- Account 402, Clinical services, DVA, at the GST Free Income tax rate7
- A report the department asks for
- For a medical report a medical practitioner supplies, GST free only where a Medicare benefit is payable for it or it is an ordinary and natural part of the GST free service4
- An opt out exists
- The practice and the agency can agree not to treat the supplies as GST free, which is worth settling before a standing map is approved2
- What a decline does to the treatment
- Nothing. One rejected item declines the whole invoice, so no payment is posted and the line keeps the rate it was raised on1
Two rules, one answer
Search this question and most of what comes back answers the veteran's question rather than the practice's: whether compensation payments are taxable, or how the car concession works. The practice question is narrower. A veteran walks in with an entitlement, the practice treats them, and DVA pays. What tax rate does the revenue line carry.
The answer is GST free for treatment, and two independent rules deliver it. Which one applies depends on who engaged the practitioner, and the ATO answers that question first because the rest follows from it. Both land on the same rate, so most practices are not forced to choose. The two places the choice matters are the opt out and the report.
Route one, the practice contracts with the department
The first route is the third party rule. Where a health service is organised and paid for by somebody other than the patient, and that somebody is one of a short list of bodies, the supply to them carries the treatment the supply to the patient would have carried. DVA sits on that list as an Australian Government agency, one of the four kinds of body the ATO names.
If the service is GST-free when provided to the patient, it is also GST-free when you are contracting with: an insurer; an operator of a statutory compensation scheme; a compulsory third party scheme (scheme operator); an Australian Government agency.2
Read what the rule does not say. The payer's identity is not the test. It borrows the answer from the supply to the patient, so deciding the treatment is still the work of deciding whether that patient's session would have been GST free on its own. The provision is s38-60, third party procured GST-free health supplies.
Route two, DVA pays on the veteran's behalf
The second route is the sentence almost no page on this query carries. Where the third party is not the recipient of the supply at all, and is only settling the patient's account, nothing needs to be borrowed. The supply is to the patient, and it is GST free if it is a health service under the ordinary rules.
Where a supply is not made to a third party (for example the third party is paying the medical practitioner on behalf of the patient), the supply is GST-free if it falls under the definition of a medical or other health service.2
A consultation a Medicare benefit is payable for is the familiar case. Whether a DVA treatment claim travels this route or the first is a contract question, which is why this page states both rules. The practice reaches the same tax rate either way, so the posting is settled while the characterisation is not.
Where the two routes diverge
| The question | Contracting with the department | The department paying for the veteran |
|---|---|---|
| Who is the recipient of the supply | The department, because it engaged the practitioner | The veteran, because they engaged the practitioner |
| How the treatment gets to GST free | Borrowed from the supply the veteran would have received | Directly, as a medical or other health service |
| Can the parties agree not to treat it as GST free | Yes, the ATO says the supplier and the agency can agree | The ATO names that agreement for a supply to the agency, not for one to the veteran |
| How a report the department asks for reads | A separate supply to the department, taxable unless a Medicare benefit is payable or it is part of the treatment | The same test, applied to a supply the department asked for rather than the veteran |
The opt out is the row worth acting on. The ATO says a supplier and an agency may agree not to treat the supplies as GST free, and gives the reason: it can be simpler where the parties have a mix of taxable and GST free supplies. No published example of DVA doing so was found for this page, so the practice's own arrangements are the answer.
Neither route rescues a service that is taxable anyway
Both routes rest on the same underlying test, so a service that is taxable to a private patient is taxable when DVA pays for it. For a health service that is not a medical service, three things have to hold at once.
- It is one of the listed health services, and the ATO is strict that a service has to be one of them rather than similar to one of them.
- It is performed by a recognised health professional in that listed service, or in defined circumstances by their assistant.
- It is generally accepted in that profession as necessary for the appropriate treatment of the recipient of the supply.
That third limb is where the recipient of the supply comes back into it, and the first limb is where practices are caught. Remedial massage is not physiotherapy, and the ATO says so with an example. Exercise physiology on its own is not on the list either. Exercise physiology and massage therapy take those two cases in full, and allied health assistants takes the assistant limb.
What the canonical templates post
The templates carry the conclusion as a posting rather than as prose. Only the allied health template names a veterans affairs revenue account of its own, at the GST Free Income tax rate, and the template's reason on that account says the same thing this page has said the long way: DVA funded treatment follows the same listed service test as Medicare, and Services Australia pays it on the department's behalf.
The other two templates reach account 400 through their practice default row, at the same tax rate, which is why the record's agreement reads as differing: the account codes part company even though the treatment does not. A practice starting from one of those templates and billing DVA is raising a mapping question rather than a silent posting.
A report the department asks for is a different supply
This is the split the one provider facing result on the first page of search leaves out. Treatment and a report are two supplies, and the second has its own test.
A medical report that a medical practitioner supplies is only GST-free where one of the following is provided: a Medicare benefit is payable for the report; the report is an ordinary and natural part of the performance of the GST-free medical service.4
The ATO states that for medical services, and its worked example is a progress report a compensation insurer asked for, which is not GST free: the insurer is the recipient and the report is not a natural part of the treatment. The allied health template reads the whole reports category the same way, so account 420, Reports, assessments and medico-legal, defaults to the taxable rate. Reports and medico-legal work and reports for insurers go through it case by case.
When DVA declines the whole invoice
A DVA claim fails as a whole, which is the part of the mechanics that reaches the tax question. Tyro Health's developer documentation states it plainly: a payment run falls short by whole claims rather than by one item inside a claim.
If multiple service items are claimed and one item is rejected the whole invoice will be marked as Declined.1
A bookkeeper watching the deposit come up short reasonably asks whether the GST moves with it. It does not, and the reason is worth stating rather than assuming.
- A decline is not a credit note and not a discount. The invoice stays open, no payment is posted against it, and the claim is corrected and lodged again.
- The line carried no GST to begin with, so there is no GST on sales figure to adjust when it is declined.
- On an accruals basis the sale is already reported in total sales, so a decline moves that label only if the invoice itself is changed.
- On a cash basis nothing was reported, because nothing was received. The decline shows up as an invoice that has not closed.
- A declined claim that is reissued at a different rate is a mapping change, not a claiming change, and belongs in the standing map before it is lodged again.
The deposit has two legs and only one of them is a treatment
The treatment on this page belongs to the revenue leg, which is the leg that carries the GST Free Income rate. The settlement leg is a different posting: every clearing component in every canonical template sits outside the activity statement, because the money it holds was already earned and reported on the revenue leg.
Keeping the two apart is what stops a payment run being posted at a revenue tax rate, which is the error that turns one deposit into a month of chasing. The mechanics of the run itself, the adjudication split and the payment report belong to DVA payments in Xero, and third party payers covers the other payers the same provision reaches.
What Ledger Map does with it
Ledger Map holds one standing map for the practice, approved before anything syncs. A DVA line resolves to its account and its tax rate through that map, so the two supplies stay apart: a treatment item on the veterans affairs revenue account, a report item on the reports account at its own rate. The payment run is then posted as one balanced document set, which leaves one exact match in the bank feed for a person to accept.
The accounts and rates come from the canonical template the practice starts from, not from the product. A DVA line the map cannot place becomes a question with the options laid out, answered once. How it works shows the map and the approval step, and the other GST answers carry the same record for every funder in the mix.
Questions
Is DVA income GST free?
DVA treatment income is GST free where the same service would be GST free supplied to the veteran directly. Two rules reach that: s38-60 treats a service the practice supplies to an Australian Government agency the way it would treat the service to the patient, and where DVA is only paying the practitioner on the veteran's behalf the supply stays with the veteran and is GST free as a health service. A report the department asks for is a separate supply.
Are veterans exempt from GST?
GST free status attaches to a supply, not to a customer. A veteran with an entitlement is not a GST exempt buyer, so a service that carries GST for anyone else carries it for them. What the entitlement changes is who pays, and for treatment that meets the health service test the supply was already GST free before DVA was involved.
Does a DVA White Card or Gold Card change the GST treatment?
No. The card sets what the department will fund and for which conditions, which is a claiming question. The GST question is whether the service is a listed health service delivered as appropriate treatment, and it is answered the same way whichever card the veteran holds.
Do I charge GST on a report DVA asks for?
Treat it as its own supply. For a medical report a medical practitioner supplies, the ATO says it is GST free only where a Medicare benefit is payable for the report or the report is an ordinary and natural part of the GST free service. The ATO publishes no equivalent example for allied health, and the canonical allied health template defaults its reports account to the taxable rate.
What happens to GST when DVA declines the whole invoice?
Nothing moves on the GST on sales side, because a GST free treatment line did not carry any. One rejected item declines the whole invoice, so the invoice stays open at the rate it was raised on, no payment is posted against it, and the claim is corrected and lodged again. On an accruals basis the sale sits in total sales until the invoice itself is changed.
Is this the same rule as the DVA car GST exemption?
No, and the search results for this question mix the two. The car concession is a separate set of rules about buying a vehicle or parts, and it turns on the buyer's eligibility. This page is about the practice's revenue line for a treatment session, which turns on the supply and on who engaged the practitioner.
Read next
Sources
Open questions
- The department's own statement about GST was not read. Three dva.gov.au fetches timed out on 3 Sep 2026, including the provider notice on recipient created tax invoice registration whose search snippet says DVA and repatriation pharmaceutical payments or services are generally GST free. It is cited here as unverified and nothing above rests on it.
- Whether the practice supplies the department or supplies the veteran under the DVA treatment arrangements is a contract question this page does not settle. Both routes reach the same rate for treatment, so the posting is unaffected, but the opt out and the report analysis differ by route.
- Whether DVA has agreed with any provider not to treat the supplies as GST free. The ATO says the parties may agree; no published example was found for this page, so a practice's own arrangements are the answer.
- The full text of s38-60 was not read. AustLII returned 403 from two hosts and the legislation register rendered only its table of contents, so the section is cited for its title and location and the test itself is carried by the ATO page.
- The ATO states the report test for a medical report a medical practitioner supplies. Whether the same two limbs decide an allied health report is not stated on any page read for this, so the taxable default on the reports account is the canonical allied health template's reading rather than a quoted rule.
- The travel item on a DVA home visit. Whether it rides with the treatment or stands as its own supply is not settled by anything in the corpus, and the ATO page on goods supplied with a health service does not reach travel.
- Whether a treatment cycle report back to the referring general practitioner is an ordinary and natural part of the treatment. The ATO gives an example each way for medical practitioners and none for allied health.
- Whether a DVA recipient created tax invoice arrangement changes what the practice has to issue for a GST free supply. The notice describing the registration could not be read.
- GST and health, supply of services through a third party
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
- GST and health, other health services
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
- GST and health, medical services
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
- GST and health, recipient of the supply
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
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- A New Tax System (Goods and Services Tax) Act 1999, s38-60, third party procured GST-free health supplies
Federal Register of Legislation. Retrieved 3 Sep 2026. Source updated 1 Jan 2026.
primary
- Recipient created tax invoice registration, provider news
Department of Veterans' Affairs. 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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