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GST answers

GST on EAP and corporate contracts

EAP counselling is taxable on the ordinary reading. The employer or the EAP provider engaged the practice, so the recipient of the supply is a business, and the ATO says health services supplied to a third party other than an insurer, a scheme operator or an Australian Government agency are not GST free. Two of the three canonical templates carry an EAP row, both at GST on Income.

Key facts

The question the law asks
Who engaged the health practitioner to provide the service, which in many cases is the patient and in some cases a business1
An EAP consult for a private sector employer
Taxable, which is the GST on Income tax rate in Xero5
Third party supplies
A health service supplied to a third party that is not an insurer, a statutory compensation scheme operator, a compulsory third party scheme operator or an Australian Government agency is not GST free2
The listed service test comes first
Psychology, social work and occupational therapy are listed health services and counselling on its own is not, so the profession decides the answer before the payer does3
What appropriate treatment means
A practitioner using professional skills to assess a patient's health and work out a course of action to preserve, restore or improve that patient's physical or psychological wellbeing4
Revenue account in the allied health template
409 Employee assistance and corporate contracts5
Revenue account in the psychology template
407 Employee assistance program contracts6
Cancellation fees and group sessions
The two templates with an EAP row give EAP cancellation fees and group sessions a row of their own at GST on Income, not the GST free treatment those categories take for a private client6
Where an EAP line with no row lands
The practice default row at 400 Clinical services, private patients and the GST Free Income rate, which the template itself says belongs in the questions queue rather than posted5

Why the answer changes with the payer

GST free treatment of a health service is decided by the service, the practitioner and the person the treatment is for. An EAP contract changes the last of those three. The practice is engaged by an employer, or by an EAP provider holding the contract on the employer's behalf, and the ATO's test names whoever did the engaging as the recipient of the supply.

The recipient of the supply is whoever engages the health practitioner to provide the service. In many cases, this will be the patient. However, in some cases, it will be a business. Supplies of services by a health practitioner to another business are not usually GST-free.1

The ATO's definition of appropriate treatment is written around a patient: a practitioner using professional skills to assess a patient's health and work out a course of action to preserve, restore or improve that patient's physical or psychological wellbeing. A business is not a patient, which is the reading behind the sentence above. The ATO states the outcome rather than that step, and it states it on its third party page.

Paying is not the same as engaging, and the ATO draws that line itself.

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

An employer that reimburses an employee who booked and engaged the practice themselves sits on that side of the line. An employer or EAP provider that contracts the practice for a block of sessions does not, and that is the arrangement most EAP work runs on.

Two tests, and an EAP invoice has to meet both

The threads that ask this question tend to run two problems together. A health service that is not a medical service is GST free where all three of the ATO's conditions hold.

  1. It is one of the twenty one listed health services. The ATO's list includes psychology, social work, occupational therapy, physiotherapy, speech pathology, dietary, nursing and podiatry, and the service has to be one of them rather than similar to one of them.
  2. It is performed by a recognised health professional in that listed service, or in stated circumstances by their assistant.
  3. It is generally accepted in that profession as necessary for the appropriate treatment of the recipient of the supply.

Condition one is about the profession and condition three is about the recipient, and an EAP contract can fail either. A psychologist delivering EAP sessions passes the first two conditions and comes unstuck on the third, because the recipient is a business. A counsellor without another registration does not reach the first condition at all, whoever pays, which is a separate answer set out on the counselling page. Getting that order right matters, because the fix is different: one is a contract question and the other is a scope of practice question.

The four third parties that keep a supply GST free

A practice reading this will already know that a WorkCover session stays GST free even though a compensation scheme pays for it, and will reasonably ask why an employer is treated differently. The answer is that the third party rule is a closed list rather than a principle. Where the service would have been GST free supplied to the patient, it stays GST free when the practice contracts with one of four parties.

  • An insurer
  • An operator of a statutory compensation scheme
  • A compulsory third party scheme operator
  • An Australian Government agency

Medical and other health services supplied to any other third party are not GST-free.2

A commercial EAP provider is not one of the four on the ordinary reading, and neither is a private sector employer, so an EAP contract falls back to the general rule. One case is worth a second look before applying that across the board: the ATO's own worked example on that page has an Australian Government agency contracting a provider to vaccinate its staff, and calls that supply GST free on two stated grounds: it is made to an Australian Government agency, and the service is delivered to individuals. A public sector employer is a different fact pattern from a corporate one. The same page notes that the supplier and one of the four parties can agree not to treat the supplies as GST free, which is a contract to read rather than an assumption to carry. The third party payers page works through the wider set.

What the canonical templates post

Ledger Map ships three canonical templates, and they do not post an EAP line the same way. 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. Both carry the same tax type, which Xero calls GST on Income. The NDIS template holds no EAP row at all, so the card shows what its cascade actually reaches.

Employee assistance programThe employee assistance program funding source with one posting per canonical template, each with the reason its template gives: the allied health template at account 409 and the psychology template at account 407, both at the GST on Income tax rate through a funding source row of their own, and the NDIS template reaching the practice default row at account 400 and GST Free Income. A closing line says the templates do not post this the same way.Employee assistance programEvery service category with no row of itsownallied-health-by-funding-source409 Employee assistance and corporatecontractsGST on IncomeResolved by the funding source default row.See account 409.ndis-provider-plan-managed400 Clinical services, private patientsGST Free IncomeResolved by the practice default row.The required safety net when funding_sourceitself has not resolved. Should almost neverfire; a line landing here belongs in thequestions queue (docs/02-product-spec.md,section 6.1).psychology-with-booking-deposits407 Employee assistance programcontractsGST on IncomeResolved by the funding source default row.See account 407.The canonical templates do not post this thesame way, so each template is shown as itposts it.This is the default posting for the fundingsource, so any category with a row of itsown overrides it.In allied-health-by-funding-source thesecategories override it: Cancellation fees,Group sessions.In ndis-provider-plan-managed no categoryoverrides it.In psychology-with-booking-deposits thesecategories override it: Cancellation fees,Group sessions, Reports.
Plate 1The EAP posting as each canonical template reaches it, shown one template at a time rather than merged.

That third row is the mechanism behind the error the other two templates warn about. A practice whose template has no EAP row, or a line the funding rules did not classify as EAP, lands on the practice default at 400 and GST Free Income. Nothing looks broken on the invoice. The GST on that revenue is simply not reported. Both templates that carry an EAP account put a note against it calling this a common error, so the warning sits in the template data a practice starts from.

Consults, cancellation fees, group sessions and reports

One EAP contract produces more than consults, and the categories around it are where a practice-wide default gets it wrong. A cancellation fee takes the treatment of the session it stands in for, so a fee that is GST free for a private client is taxable for an employer. A group session bought by an employer is a business to business supply of the same kind as the consult. A report the payer commissioned is taxable on its own footing, which is why one template files it with the rest of the report revenue.

Where an EAP line lands in the two templates that carry an EAP row, by service category56
Service categoryAccount, allied health templateAccount, psychology templateXero tax rate
An EAP consult409407GST on Income
An EAP cancellation fee409407GST on Income
A group session the employer bought409407GST on Income
A report the payer commissioned409420GST on Income
The same consult billed to the client400400GST Free Income

The standing map holds those as rules rather than as one setting, keyed on the funding source and the service category together, with the template's own reason travelling beside each one.

Standing map rulesThree standing map rows for employee assistance program work in the psychology template: a cancellation fee and a group session posting to account 407, the employee assistance account, at GST on Income, and a commissioned report posting to account 420, the reports account, at GST on Income, each with the reason the template gives.What was billedWhere it postsEmployee assistanceprogram407 Employeeassistanceprogram contractsCancellation feesGST on IncomeA cancellation fee inherits the taxtreatment of the session it replaces.Employee assistanceprogram407 Employeeassistanceprogram contractsGroup sessionsGST on IncomeA corporate group session bought by anemployer is a taxable business-to-businesssupply.Employee assistanceprogram420 Reports,assessments andmedico-legalReportsGST on IncomeAn EAP-commissioned report is taxable forthe same reason as any other third-partyreport.
Plate 2The three EAP categories the psychology template gives a row of their own, with the reason beside each.

The Xero tax rate and the activity statement

Two Xero tax rates are in play on the revenue line, and they move different labels on the activity statement.

  • GST on Income puts the sale in G1 and the GST in 1A, so the practice remits one eleventh of a tax inclusive fee.
  • GST Free Income puts the sale in G1 total sales, and nothing in 1A.
  • The two rates on one invoice are fine. A line by line tax rate is what an EAP contract needs where the same client also has private sessions.

The clearing account movement is a separate leg. Every canonical template codes a clearing account BAS Excluded, so receipting an invoice into it and matching the payer's transfer out of it moves no activity statement label. The tax treatment sits on the revenue line, which is where this page's answer applies. The Xero tax rates page sets out which rate belongs where.

When the contract says nothing about GST

This is the practical sting. Where the agreed fee is 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. Whether the difference can be recovered from the payer depends on what the contract says about tax, and that is a contract question rather than a tax one.

The ways an EAP line gets posted wrong

Each of these comes from the same place: one tax rate applied across a funding mix that needs two. The first two cost money in opposite directions.

  • Coded GST free, an EAP session understates GST on sales. Either the payer was invoiced without the GST the practice owed, or the GST was collected and not reported, and the shortfall can be assessed with penalties and interest.
  • Coded taxable, the practice's own clinical work remits one eleventh of revenue that carried no GST, and getting that back takes an amended activity statement.
  • Coded correctly at the consult and left on the practice default for the cancellation fee, the error is small enough to survive a review and repeats every month.

A practice sync that offers one GST setting for all invoices cannot hold this. The setting is per sync, and the answer is per line.

What Ledger Map does with an EAP line

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 own template carries, at the funding source and service category level rather than at the item level. A line the map cannot resolve becomes a question with the options laid out, rather than a silent posting on the practice default.

On the money side, the payer's transfer is posted as one balanced document set and one exact match is left in the bank feed. The account and the tax rate on this page come from the canonical template the practice starts from, not from a treatment Ledger Map picked. The EAP funder page carries the payment side of the same contract.

Questions

  • Is EAP counselling GST free?

    On the ordinary reading it is taxable. The employer or the EAP provider engaged the practice, so the recipient of the supply is a business, and the ATO states that health services supplied to a third party other than an insurer, a scheme operator or an Australian Government agency are not GST free. Two of the three canonical templates carry an EAP row, and both code it at GST on Income.

  • Which professionals are exempt from GST?

    No profession is exempt as such. A health service that is not a medical service is GST free where it is one of the twenty one listed health services, is performed by a recognised professional in that service, and is accepted in that profession as necessary for the appropriate treatment of the recipient. Psychology, social work and occupational therapy are on the list. Counselling and exercise physiology on their own are not.

  • Do we charge GST on a corporate wellness session?

    The employer is the recipient of the supply, so on the ordinary reading the session is taxable. There is a second test to clear as well: the ATO's list is closed, a service has to be one of the listed health services rather than similar to one, and a general wellness workshop is not one of them. The allied health template codes a group session bought by an employer to its employee assistance account at GST on Income.

  • 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 with an EAP row spell that out with a cancellation row of their own at GST on Income, rather than letting the fee take the GST free treatment a private cancellation takes.

  • Does it change if the employer is a government department?

    It might, and this one is worth checking rather than assuming. An Australian Government agency is one of the four third parties the ATO keeps GST free, and its worked example is a government agency buying staff vaccinations. That example is not about counselling, so a public sector EAP contract is one to put in front of a BAS agent with the contract in hand.

Read next

Sources

Open questions

  • Whether a particular payer sits inside the four third parties the ATO lists. A commercial EAP provider is not an insurer, a scheme operator or a government agency on the ordinary reading, but a public sector employer may be an Australian Government agency, and the ATO's worked example on that point covers staff vaccinations rather than counselling. This page states the default treatment and sends the specific contract to a BAS agent.
  • The opt out. Where the third party is one of the four, the ATO says the parties can agree not to treat the supplies as GST free. Whether any given arrangement has done so is a contract question, unresolved per contract.
  • Whether a practice can recover the GST from a payer whose contract states a flat session rate with no mention of tax. The sources behind this page do not settle it, and the contract does.
  • EAP payment terms and remittance format. The psychology template says these are not detailed in the research behind it and flags them for confirmation during onboarding.
  • The ato.gov.au pages behind this page refuse an automated fetch. All four were read through a signed in browser on 3 Sep 2026, and each one prints 12 June 2024 as its own last updated date, which is the basis for citing them as primary.
  1. Recipient of the supply, GST and health

    Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.

    primary

  2. Supply of services through a third party, GST and health

    Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.

    primary

  3. Other health services, GST and health

    Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.

    primary

  4. Appropriate treatment, GST and health

    Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.

    primary

  5. Allied health by funding source, the canonical template

    Ledger Map. Retrieved 3 Sep 2026.

    primary

  6. Psychology with booking deposits, the canonical template

    Ledger Map. Retrieved 3 Sep 2026.

    primary

  7. Is my psychology or allied health service GST free?

    Allied Health Accounting. Retrieved 2 Sep 2026. Source updated 18 Sep 2024.

    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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