Is Medicare bulk billing GST free?

For the practice, yes. A service a Medicare benefit is payable for is a medical service and medical services are GST free, and most allied health work also meets the separate listed health service test. Bulk billing itself is not the reason: the supply is to the patient either way, so the same session billed privately carries the same rate.

Do I charge GST on a Medicare rebate paid to the patient?

No. Where the patient has paid the account in full, Services Australia reimburses the patient and nothing reaches the practice. Where the account was left unpaid or part paid, the benefit can come back as a Pay Doctor Via Claimant cheque made out to the provider, which the patient passes on. Either way the invoice is revenue from the patient at the same rate a bulk billed session would carry, so the rebate does not change the tax rate on the line.

Is psychology GST free when it is bulk billed?

Psychology is one of the health services the GST Act lists, so a session by a registered psychologist that the profession accepts as necessary for appropriate treatment is GST free whether Medicare, a patient or an insurer pays. Bulk billing adds a second route through the medical services definition, not a different answer.

Does GST apply to any medical expenses a patient pays us?

Some. The consultation is GST free where it meets one of the ATO's tests, but goods the patient takes home rather than uses during the session, reports commissioned by a business, and services that are not on the listed list are taxable. Each line on the invoice is characterised on its own rather than following the consultation.

Should bulk bill and patient claim income sit on separate accounts?

They do not have to for GST reasons, and the canonical allied health template puts both on account 401 because the revenue treatment is identical and only the settlement rail differs. A practice that wants them split for reporting can still do it, but splitting them to protect a tax position is solving a problem that is not there.

GST answers

GST on Medicare bulk bill income

Yes. Medicare bulk bill income is GST free, but bulk billing is not what makes it so. The supply is to the patient whichever way it is paid, and it clears the ATO's tests either as a service a Medicare benefit is payable for or as a listed health service. The same session billed as a Medicare patient claim carries the same revenue account and the same rate.

Key facts

The first door: A service for which a Medicare benefit is payable is a medical service, and medical services are GST free³
The second door: A listed health service, performed by a recognised health professional in that service, that the profession accepts as necessary for appropriate treatment⁴
What appropriate treatment means: Assessing the patient, working out a course of action to preserve, restore or improve their wellbeing, and supplying treatment the profession accepts as appropriate⁵
Who the recipient of the supply is: Whoever engages the practitioner, which in a bulk billed session is the patient, even though Services Australia sends the money⁶
When a business is the recipient and the supply stays GST free: A supply to an insurer, a compensation or compulsory third party scheme operator, or an Australian Government agency, where the service to the patient would be GST free⁷
When goods handed over in the room are GST free: Where they are a necessary part of providing the GST free service, supplied at the same time and place, and specific to treating that patient⁸
What a bulk billed invoice may carry: The whole value of the service claimed from Medicare, with no gap charged on top²
Where the allied health template posts it: Account 401, Clinical services, Medicare, at the GST Free Income tax rate⁹
Why patient claim invoices share that account: The revenue treatment is the same either way, and only the settlement rail differs⁹
The settlement leg: A separate posting at the BAS excluded tax type, because the revenue was already reported on the revenue line⁹

Two doors, and both reach the same rate

Search this question and the first page answers it for a general practice. A service a Medicare benefit is payable for is a medical service, medical services are GST free, and that is the end of it. The sentence is the ATO's own. It is also half of what an allied health practice needs, because it says nothing about the sessions Medicare did not fund.

The ATO splits health supplies in two. Medical services are GST free under s38-7, and the definition has two limbs: a service a Medicare benefit is payable for, or another service supplied by or on behalf of a medical or approved pathology practitioner that the profession accepts as necessary for appropriate treatment. Other health services are GST free under s38-10, and that is where physiotherapy, psychology, occupational therapy, speech pathology and the other listed professions sit.

A bulk billed allied health session can stand in both doorways at once. A benefit is payable, so the first limb is satisfied, and the service is usually a listed one performed by a recognised professional, so is the second. The rate is identical either way. Knowing which door you are in still matters, because the doors close at different moments: the Medicare item stops when the referral runs out, and the listed service test does not notice.

What the listed service test asks for

The second door has three conditions and they apply together. A service that meets two of them does not get through this door.

The service is one of the health services the GST Act lists. The ATO fences this off firmly: a service has to be one of the listed services and cannot just be similar to one, and its worked example is a remedial massage therapist whose work resembles physiotherapy without being it.
The person performing it is a recognised health professional in that listed service. That means registered, permitted or approved under a state or territory law, or where no such law exists, a member of a national professional association that sets its own admission standards.
The profession generally accepts the service as necessary for the appropriate treatment of the recipient of the supply. Appropriate treatment is the ATO's own phrase: assessing the patient's health, working out a course of action to preserve, restore or improve their wellbeing, and supplying treatment the profession accepts as appropriate. Preventative work and routine check-ups are inside it.

Bulk billing appears in none of the three. An item number is evidence that somebody agreed the service was warranted, but the test looks at the service and the practitioner rather than at the claim.

Services Australia paying is not the test

The habit worth breaking is reading a tax rate off the payer. It fails in both directions: Medicare money is assumed GST free because Medicare sent it, and an employer's money is assumed taxable because an employer sent it. Only one of those instincts happens to land.

The ATO settles it with one sentence about who the recipient of the supply is: whoever engages the health practitioner to provide the service. In a bulk billed session that is the patient. They booked, they were treated, and they assigned the benefit so that Services Australia would settle the account on their behalf. The supply was characterised before the claim was lodged, and lodging it changed nothing.

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.⁶

Where it bites is the other way round. A supply to a business rather than to the patient is not GST free as a medical service unless a Medicare benefit is payable, which is why an assessment an employer commissions reads differently from the session that produced it.

What the canonical templates post

The templates carry the conclusion as a posting rather than as prose. Two of the three name a Medicare revenue account of their own at the GST free income rate. The third holds no Medicare row and lands on its practice default, at the same rate but a different account, which is a mapping question rather than a tax one.

Plate 1Medicare bulk bill revenue as each canonical template posts it, side by side rather than merged.

A practice starting from the NDIS template and billing Medicare is therefore raising a question rather than getting a silent posting. The rate is settled; the account is a decision the practice makes once, while the map is approved.

Bulk bill and a patient claim share one revenue line

This is the practical payoff, and it is what practices get wrong by being careful. Bulk bill and patient claim feel like different worlds operationally, so the chart of accounts grows a line for each. On the revenue side there is nothing to separate.

The same session billed two ways, read line by line⁶⁴⁹

The question	Bulk billed	Patient claim
Who settles the account	Services Australia, after the claim is adjudicated	The patient, at the desk
What makes the revenue GST free	A benefit is payable, and the service is usually a listed one	The service is a listed one, performed as appropriate treatment
Revenue account in the allied health template	401, Clinical services, Medicare	401, Clinical services, Medicare
Tax rate on the revenue line	GST Free Income	GST Free Income
What actually differs	The settlement rail, handled away from the revenue line	Nothing on the revenue line

The template says so in its own words. Account 401 also carries Medicare patient claim invoices, because the revenue treatment is identical either way and only the settlement rail differs. The mechanics of the two claim types, and the receivable a gap only claim leaves behind, are on Medicare bulk bill payments in Xero and Medicare patient claims in Xero.

What stays taxable in a bulk billing practice

A GST free consultation does not spread its treatment over everything invoiced alongside it. Each supply is characterised on its own, and a practice that bulk bills all day still has taxable lines to keep apart.

A report the ATO's tests do not reach. For a medical practitioner's report the rule is a Medicare benefit payable for the report itself, or the report being an ordinary and natural part of the GST free service. The ATO's example of a progress report an insurer asked for fails both limbs.
Goods the patient takes home rather than uses in the room, which sit outside the service that produced them.
Work a business commissioned and received itself. A supply to an insurer, a compensation or CTP scheme operator or an Australian Government agency stays GST free where the service to the patient would be.
A service that is not on the listed list with no Medicare benefit payable for it, the ordinary taxable case for the professions the list leaves out.

Reports and medico-legal work and private patient consults take those cases one at a time. The Medicare row answers for the consultation and nothing else.

The revenue leg and the settlement leg are different postings

One Medicare deposit produces two kinds of posting, and confusing them is how a payment run ends up at a revenue tax rate. The revenue leg is the invoice line, and it is the leg this page has been about. The GST free income rate belongs there.

The settlement leg is the money moving. In the allied health template the Medicare rail moves each paid claim into account 100 at the BAS excluded tax type, because the sale was already reported when the invoice was raised and reporting it again would double it. The psychology template posts that leg the same way, and the NDIS plan managed template models no Medicare rail at all.

One thing bulk billing does decide

Bulk billing does not set the tax rate, but it does set the amount. Accepting the benefit as full payment means the claim goes to Medicare for the whole value of the service, and no gap is charged on top. There is no second line on the invoice to characterise.

It also decides what paperwork exists. A bulk billed claim produces payment and processing reports through Services Australia; a patient claim produces neither. That difference drives the matching work, not the tax rate.

What Ledger Map does with it

Ledger Map holds one standing map for the practice, approved before anything syncs. A Medicare line resolves to its account and its tax rate through that map, so a consultation and a report on the same invoice land on their own rows rather than inheriting one rate from the payer. 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 the rates come from the canonical template the practice starts from, not from the product. A line the map cannot place becomes a question with the options laid out, and the practice answers it once. How it works shows the map and the approval step, and the other GST answers cover the rest of the funder mix.

Questions

Is Medicare bulk billing GST free?
For the practice, yes. A service a Medicare benefit is payable for is a medical service and medical services are GST free, and most allied health work also meets the separate listed health service test. Bulk billing itself is not the reason: the supply is to the patient either way, so the same session billed privately carries the same rate.
Is bulk billing free with Medicare?
For the patient, yes, in the sense that nothing is charged at the desk. Accepting the benefit as full payment means the claim goes to Medicare for the whole value of the service and no gap is charged on top. That is a billing rule rather than a tax rule, and it is the reason a bulk billed invoice has only one line to characterise.
Do I charge GST on a Medicare rebate paid to the patient?
No. Where the patient has paid the account in full, Services Australia reimburses the patient and nothing reaches the practice. Where the account was left unpaid or part paid, the benefit can come back as a Pay Doctor Via Claimant cheque made out to the provider, which the patient passes on. Either way the invoice is revenue from the patient at the same rate a bulk billed session would carry, so the rebate does not change the tax rate on the line.
Is psychology GST free when it is bulk billed?
Psychology is one of the health services the GST Act lists, so a session by a registered psychologist that the profession accepts as necessary for appropriate treatment is GST free whether Medicare, a patient or an insurer pays. Bulk billing adds a second route through the medical services definition, not a different answer.
Does GST apply to any medical expenses a patient pays us?
Some. The consultation is GST free where it meets one of the ATO's tests, but goods the patient takes home rather than uses during the session, reports commissioned by a business, and services that are not on the listed list are taxable. Each line on the invoice is characterised on its own rather than following the consultation.
Should bulk bill and patient claim income sit on separate accounts?
They do not have to for GST reasons, and the canonical allied health template puts both on account 401 because the revenue treatment is identical and only the settlement rail differs. A practice that wants them split for reporting can still do it, but splitting them to protect a tax position is solving a problem that is not there.

Sources

Open questions

Whether an allied health service that does attract a Medicare benefit, for example under a chronic condition management referral, is a medical service under the first limb as well as a listed health service under the second. The ATO's medical services page states the first limb without qualifying it by profession and gives no allied health example. Both routes reach the same rate, so the posting is unaffected, but the characterisation is not settled here.
Whether a treatment cycle report back to the referring general practitioner is an ordinary and natural part of the GST free service. The ATO gives an example each way for medical practitioners and none for allied health.
Supervision of another practitioner. The corpus holds a secondary source treating it as taxable and an interpretative decision snippet pointing the other way in a narrow fact pattern, so it is left open rather than resolved on this page.
The exact bank narration Services Australia uses for a payment run was not confirmed from a primary source, so no descriptor string is stated anywhere and the matcher learns patterns from the practice's own feed.

Medicare digital claiming: payment and processing reports, MDCM07INFO2
Services Australia. Retrieved 29 Aug 2026. Source updated Jul 2024.
primary
Cliniko Medicare frequently asked questions
Cliniko. Retrieved 29 Aug 2026.
secondary
GST and health, medical services
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, appropriate treatment
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.
primary
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, goods supplied as part of a GST free health service
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
Allied health by funding source, the canonical template
Ledger Map. Retrieved 3 Sep 2026.
primary

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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