What is the GST rate on medical items?

There is no separate rate for medical items. An item is either a taxable sale at the ordinary GST rate, or it is GST free because it was used in delivering a GST free consultation or because it is a listed medical aid meeting the two design conditions. The question to settle is which of those three the item is, not what rate applies to health products.

What products are exempt from GST in Australia?

GST free is the term the law uses, and it is not the same as input taxed: a practice registered for GST can still claim the credit for the GST in what it paid for the stock behind a GST free sale. For a health practice the GST free products are the goods consumed in a GST free consultation and the medical aids and appliances listed in Schedule 3 to the GST Act or the GST regulations that are specifically designed for people with an illness or disability and not widely used by people without one.

Is GST applicable to medical expenses?

On the practice's own purchases, yes, where the supplier charges it. A practice registered for GST claims a credit for the GST in what it paid for taxable stock, including stock it later sells GST free. Where a supplier and a purchaser agree to treat GST free medical aids as taxable, which the law allows, the purchaser may be able to claim a credit for the GST paid and can still sell those items GST free.

Does a pharmacy or an optometrist follow the same rule?

No. Goods supplied by an optometrist or a pharmacist are GST free only where they qualify under another provision, such as the medical aids and appliances rules or the GST free drugs and medicinal preparations rules, rather than by riding along with a consultation. Herbal medicine practitioners, Chinese herbal medicine practitioners and naturopaths have their own reading again, based on goods being used up during the consultation.

GST answers

GST on products sold to patients

Usually you charge GST. A product a patient takes home is a supply of its own, taxable unless it is a necessary part of the GST free service supplied at the same time and place, or it is a Schedule 3 medical aid specifically designed for people with an illness or disability and not widely used by people without one. Put it on its own line.

Key facts

When goods follow the service: A supply of goods is GST free where it is both a necessary part of providing the GST free health service and supplied at the same time and place as the service, and the goods are either specific to treating that patient's illness or disability or essential for treating them during that consultation¹
The goods rule leans on the service: Goods can follow a service only where that service is itself GST free, which for a health service means a listed service, a recognised professional in that listed service, and treatment generally accepted as necessary for the appropriate treatment of the recipient of the supply³
The take-home line: The ATO's own example is a bandage applied during a GST free consultation, which is GST free, against extra bandages, dressings and antiseptics the patient takes home, which are not¹
The three conditions for a medical aid: Listed in Schedule 3 to the GST Act or in the GST regulations, specifically designed for people with an illness or disability, and not widely used by people without an illness or a disability, all three at once²
Listing is the gate: An aid or appliance that is not on the list cannot be treated as GST free, the ATO cannot rule that it is, and only the Australian Government can add to the list²
The same product at every level: The same product carries the same GST treatment across the supply chain, whether it is sold at wholesale or at retail, so a clinic and its supplier land on the same answer²
What the allied health template posts: A product sold to a private patient goes to account 422, Products and equipment sales, at the Xero tax rate labelled GST on Income, with an item level override left for the practice's listed aids⁴
Where the templates part company: The plan managed template holds no product row, so a product line under it falls back to the private consult row on account 400 at the GST Free Income rate⁶

One product line, three different questions

A practice that sells anything at the front desk asks one question: do we charge GST on products? The ATO answers it on two separate pages, because a product line in a clinic is three questions wearing one label. Sorting the item into the right one settles the rate before anybody opens Xero.

Was the item used up inside a GST free consultation? Then the goods rule decides it, and the answer can be GST free.
Is the item a medical aid or appliance on the government's list? Then Schedule 3 and two design conditions decide it, and the answer does not depend on who buys it or why.
Is it neither? Then it is ordinary retail stock and it is a taxable sale, whoever the customer is and however clinical the shop looks.

The three tests do not rescue each other. An item that fails the goods rule is not saved by being sold in a clinic, and one that is not on the list is not saved by being useful to a patient.

Goods used inside the consult

The first test is narrow. A supply of goods is GST free where it is both a necessary part of providing the GST free health service and supplied at the same time and place as the service. The goods also have to be either specific to treating that patient's illness or disability, or essential for treating them during that consultation.

Dr Jones treats a patient's injury during a consultation by applying a bandage. If the consultation is GST-free, the bandage is also GST-free. However, extra bandages, dressings and antiseptics the patient takes home are not GST-free.¹

That example is the whole rule in one appointment. The bandage on the patient rides along with the service. The box of bandages in the patient's bag is a sale. Same product, same room, two answers, and what separates them is whether the item was consumed in delivering the treatment.

For a practice this is a categorisation decision before it is a tax one. Consumables used in the room produce no product line at all. A line appears when the patient is buying something, and by then the goods rule has usually failed.

Listed medical aids answer a different question

The second test has nothing to do with the consult. A medical aid is GST free where all three of the following hold, whether it is sold by a clinic, a pharmacy or a wholesaler.

It is listed in Schedule 3 to the GST Act or in the GST regulations.
It is specifically designed for people with an illness or disability.
It is not widely used by people without an illness or a disability.

The listing condition is a gate rather than a guideline. An aid that is not on the list cannot be treated as GST free, the ATO says it cannot rule that one is, and only the Australian Government can add to the list. Two products that look alike on a shelf can sit on opposite sides of that line.

The rule carries some useful edges. Hire follows sale, so an aid that could be sold GST free can be hired out GST free. A spare part designed for that aid is GST free and a generic part is taxable. On a repair, labour that is incidental to fitting a designed part follows the part, and labour that is the main supply does not.

Where the ATO has moved recently

The medical aids page is the one primary source here that has changed lately, and most of the changes narrow the GST free side. The pattern is the same each time: a product that people without an illness or disability buy in ordinary quantities is taxable, however therapeutic it sounds.

Product groups the ATO calls out on the medical aids page²

Product group	What the ATO says	What it means for a clinic line
Compression socks	GST free only where specifically designed for people with an illness or disability and not widely used by people without one	Travel, sports, general purpose and maternity socks are named as taxable
Wound care	GST free only where made from the listed materials, specifically designed for people with an illness or disability and not widely used by people without one	The ATO's own example is patches that cover blisters, corns and calluses, which are taxable
Burn products	Gels, sprays and creams for minor burns are taxable; hydro gel dressings for emergency first aid can be GST free	A shelf item for sunburn is a taxable sale
Waterproof bedding	Listed, and still taxable where designed for or widely used by people protecting a mattress from spills	A mattress protector sold to a patient is usually taxable
COVID-19 items	Rapid antigen tests, hand sanitiser and personal protective equipment are not listed	Those are taxable; ventilators and other listed respiratory appliances are not

Ordinary retail stock in a clinic

Most of what a physiotherapy or psychology practice sells falls through both tests and lands here. The allied health template's reasoning for its product account names the common ones: goods a patient takes home are GST free only where they are a necessary, specific part of the service supplied at the same time, so general retail items such as braces or theraband are taxable.

Resistance bands, pillows, strapping tape sold by the roll, workbooks and assessment materials land here where they are neither used up in the consult nor on the list. They are taxable even in a practice whose clinical income is GST free, because a rate belongs to a supply rather than to a business. It is also why a registered practice with GST free consults has something to report at label 1A once it sells taxable stock.

Where a product line posts

The treatment becomes useful once it lands on an account. The card below is the private patient product key as the three canonical templates post it, resolved through the product's own cascade rather than off the rows a template spells out.

Plate 1The private patient product line as the three canonical templates post it, read from the templates rather than typed onto this page.

Two of the three are what a bookkeeper expects: a product account, a taxable rate, a separate line. The account name differs because the templates suit different practices. The rate does not.

The third template posts it somewhere else

The plan managed template holds no product row for a private patient, so the cascade drops a level and the line lands on the private consult row at the GST free rate. Nothing in that template says products are GST free. It was built for a practice that does not sell them, and a missing row is answered by a more general row.

This is the quiet failure the ranking pages have no way to show. A practice that starts from that template, adds a small retail shelf and posts through the default is not making a judgement about Schedule 3. It is posting a taxable sale at a GST free rate because nobody added the row.

List the practice's Schedule 3 medical aids and set an item override to EXEMPTOUTPUT for those only.⁴

That note travels with the product account in the allied health template, and it fixes the direction the override runs: the account is taxable, and the listed aids are the exception carved out of it item by item.

One invoice, two rates

A patient who buys a brace at the end of a session leaves with one invoice carrying two supplies. The consult line is tested against the three conditions for a health service, which is allied health GST-free walks. The product line is tested against the two rules on this page. Neither takes its rate from the other.

Showing both on one document is ordinary, and the practice management system will do it anyway. The decision that matters is which revenue account each line points at, because that is what the BAS reads. One invoice, GST free and taxable lines runs the same document from the invoicing side.

Optometrists, pharmacists and herbal practitioners

Three groups sit outside the goods rule as it is written for a general clinic, and a practice in one of them should read its own paragraph on the ATO page.

Goods supplied by an optometrist or pharmacist are only GST-free if they qualify for GST-free status under other provisions, such as medical aids or appliances or GST-free drugs and medicinal preparations.¹

Herbal medicine practitioners, Chinese herbal medicine practitioners and naturopaths get a different reading again. Goods supplied during a GST free consultation by a recognised professional in one of those services are GST free where they are completely used or consumed during that consultation, and where they are only partly used on the premises, only the used portion is GST free.

What the deposit does not tell you

None of this is visible in the bank feed. A card terminal batch holding four consults and a brace arrives as one amount, and that amount says nothing about how many supplies are inside it. The settlement leg is a separate posting, and it sits outside the BAS in every canonical template.

The tax question belongs to the revenue lines underneath. A taxable product line puts an amount at label 1A as well as at G1, while a GST free consult line reaches G1 total sales and adds nothing at 1A. A practice that posts every line to one clinical account sees a tidy BAS that understates the first of those.

What Ledger Map does with it

Ledger Map holds one standing map for the practice, approved before anything syncs. A product line resolves through that map to an account and a tax rate, and the practice's listed aids sit in the same map as item level overrides, so an orthosis is decided once.

Nothing here is a treatment the product chose. The accounts, the rates and the reasons come from the canonical template a practice starts from, and a line the map cannot resolve becomes a question with both readings laid out rather than a silent posting. Each deposit is posted as one balanced document set, leaving one exact match in the bank feed for a person to accept. How it works shows the map and the approval step.

Questions

What is the GST rate on medical items?
There is no separate rate for medical items. An item is either a taxable sale at the ordinary GST rate, or it is GST free because it was used in delivering a GST free consultation or because it is a listed medical aid meeting the two design conditions. The question to settle is which of those three the item is, not what rate applies to health products.
What products are exempt from GST in Australia?
GST free is the term the law uses, and it is not the same as input taxed: a practice registered for GST can still claim the credit for the GST in what it paid for the stock behind a GST free sale. For a health practice the GST free products are the goods consumed in a GST free consultation and the medical aids and appliances listed in Schedule 3 to the GST Act or the GST regulations that are specifically designed for people with an illness or disability and not widely used by people without one.
Do I charge GST on a theraband or a brace sold at the front desk?
A resistance band or a general purpose brace is ordinary retail stock, so the sale is taxable even in a practice whose consults are GST free. A brace that is on the list, specifically designed for people with an illness or disability and not widely used by people without one, is a different item and can be GST free. The check is against the schedule rather than against how clinical the item feels.
Is GST applicable to medical expenses?
On the practice's own purchases, yes, where the supplier charges it. A practice registered for GST claims a credit for the GST in what it paid for taxable stock, including stock it later sells GST free. Where a supplier and a purchaser agree to treat GST free medical aids as taxable, which the law allows, the purchaser may be able to claim a credit for the GST paid and can still sell those items GST free.
Does a pharmacy or an optometrist follow the same rule?
No. Goods supplied by an optometrist or a pharmacist are GST free only where they qualify under another provision, such as the medical aids and appliances rules or the GST free drugs and medicinal preparations rules, rather than by riding along with a consultation. Herbal medicine practitioners, Chinese herbal medicine practitioners and naturopaths have their own reading again, based on goods being used up during the consultation.

Sources

Open questions

Whether a particular item is on Schedule 3 to the GST Act or in the GST regulations is a per item check against the list. No source here holds any practice's own stock list, so the page states the test and leaves the item by item answer to the practice and its BAS agent.
Products supplied to an NDIS participant are a different treatment key. The allied health template posts a plan managed product to the same taxable account, and whether a particular product is a GST free NDIS supply also turns on the plan, the written service agreement and the determination tables. That question is left to the NDIS pages.
The law allows a purchaser and a supplier to agree to treat GST free medical aids as taxable, and no source read here says how common that agreement is in allied health. A practice that has one should check the credit side of its purchases with its BAS agent.
Three of the non-ATO results on this query could not be read on 3 Sep 2026: the Services Australia page timed out, and two accounting firm articles returned HTTP 404. The page therefore carries no Australian practitioner or accounting source of its own, and every load-bearing fact rests on the two ATO pages and the canonical templates.
The medical aids page carries transitional compliance approaches with end dates of their own for burn products, waterproof bedding and compression socks. Those affect past periods rather than today's invoice, and they are not summarised here because the wording matters more than a paraphrase would carry.

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.
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GST and health: medical aids and appliances
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 8 Oct 2025.
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GST and health: other health services
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
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Allied health by funding source, the canonical template
Ledger Map. Retrieved 3 Sep 2026.
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Psychology with booking deposits, the canonical template
Ledger Map. Retrieved 3 Sep 2026.
primary
NDIS provider, plan managed, 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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