GST answers
Does the payer change GST on treatment?
Not on its own. The payer changes the answer only where the payer also engaged the practitioner. Where a third party pays on the patient's behalf, the ordinary health service tests decide the rate. Where the third party engaged the practice, the supply is GST free where that party is an insurer, a compensation or CTP scheme operator, or an Australian Government agency, or a Medicare benefit is payable.
Key facts
- The question that comes first
- The recipient of the supply is whoever engages the health practitioner to provide the service, and in many cases that is the patient3
- When the payer is only paying
- Where the supply is not made to the third party, for example the third party is paying the practitioner on the patient's behalf, the ordinary medical or other health service definition decides it2
- The four payers that borrow the patient's answer
- An insurer, an operator of a statutory compensation scheme, a compulsory third party scheme operator, and an Australian Government agency2
- Everyone else
- Medical and other health services supplied to any other third party are not GST free2
- The exception that sits outside the four
- Where the recipient of the supply is not the patient but is another business or organisation, the supply is not GST free as a medical service unless a Medicare benefit is payable4
- The provision behind the four
- s38-60, third party procured GST-free health supplies, in the GST Act7
- An opt out exists in that bucket only
- The supplier and the recipient can agree not to treat the supplies as GST free, which the ATO says may be easier where they have a combination of taxable and GST free supplies2
- What settles a disputed case
- The ATO says the outcome depends on who is contracting who, and that this can only be determined by the contract entered into between the parties3
- Under normal circumstances a plan manager pays and does not receive
- Under normal circumstances, supplies of NDIS supports are made to the participant, not to the plan manager6
- Where an unclassified payer posts
- Account 410 in the allied health template, 407 in the NDIS plan managed template and 408 in the psychology template, all named Clinical services, other third-party payers and all at the GST Free Income rate8
- What the templates say about that account
- It should stay close to empty, because a line landing there means a specific funding rule is missing rather than that the answer has been settled8
The payer is the last question, not the first
Search this question and the first result is the right ATO page, quoted at the wrong sentence. The snippet stops just before the exception, and read only that, a bulk billed session, a fund benefit and a plan managed invoice all look taxable. Here is the sentence with the half that follows.
Medical and other health services supplied to any other third party are not GST-free. 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
Both sentences turn on the phrase supplied to. Money moving from a third party is not a supply made to one.
Who engaged the practitioner
The ATO settles who a supply was made to with one question, and it is not about money.
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.3
A patient who booked their own appointment engaged the practitioner, whoever settles the account. An employer who called and asked for its staff to be seen engaged the practitioner instead. The ATO is blunt about where the evidence for that lives.
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.3
Every payer lands in one of three buckets
Once the recipient question is answered, a payer falls into one of three groups, and the group decides which test runs next.
- The payer is only paying. The patient or the participant engaged the practitioner, so the supply stays with them and the ordinary tests decide the rate.
- The payer engaged the practice and is one of four named parties. The supply is to that party, and GST free if the same service would be GST free supplied to the individual. That is the s38-60 limb.
- The payer engaged the practice and is anyone else. The supply is business to business, and taxable unless a Medicare benefit is payable for it.
The payers who are only paying
This is the biggest bucket in an allied health practice, and the one the first page of search misses. The ATO says it directly for a plan manager: under normal circumstances, supplies of NDIS supports are made to the participant, not to the plan manager. A Medicare benefit and a fund benefit read the same way. The table below runs the payers a practice meets most, this bucket first.
| The payer | Who engaged the practitioner | What the treatment carries |
|---|---|---|
| Medicare, bulk billed or claimed back by the patient | The patient | GST free under s38-10 where the service is a listed health service delivered as appropriate treatment by a recognised professional |
| A private health fund paying a benefit at the desk | The patient | The fund pays on the patient's behalf, so the supply is still to the patient and GST free where it is a listed health service |
| A plan manager paying from a participant's plan | The participant | The supply is still to the participant, so the same s38-38 tests decide it; the plan manager only pays |
| The agency paying an agency managed participant's supports | The participant | GST free under s38-38 only where the plan, the written agreement and the supports determination all line up; a non-listed support such as exercise physiology in a clinic is taxable |
| A workers compensation insurer | The scheme | GST free under s38-60 as a statutory compensation scheme where the same service billed to the worker would be, while a report the scheme asks for is taxable |
| A compulsory third party or transport accident scheme | The scheme | GST free under s38-60 as a compulsory third party or statutory compensation scheme, with reports and assessments taxable |
| The Department of Veterans' Affairs | The department, or the veteran on the other route | GST free under s38-60 where the treatment would be GST free supplied to the patient, because the payer is a government agency |
| An employer, or the provider running its assistance programme | The business | Taxable, because a health service supplied to a third party that is not an insurer, a scheme operator or an Australian Government agency is not GST free |
Each named funder has a page of its own: Medicare bulk bill, health fund benefits, NDIS listed supports, workers compensation treatment, CTP and TAC treatment and DVA treatment. What they share is this test, run once each.
The four payers the rule names
The second bucket is a short closed list, and being on it is the only reason a supply to a business stays GST free. Workers compensation and CTP scheme operators are on it, which is why their rows above read as they do.
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
The limb borrows an answer rather than creating one. A service that would be taxable supplied to the patient stays taxable when a scheme buys it, which is why a funded session and a commissioned report sit on one claim at two rates. The agency in the ATO's second example is a state sports institute, which reads wider than the phrase suggests.
Any other business is the other half of the sentence
The third bucket is where practices lose money, because the session looks identical to a GST free one. The recipient is a business, it is not on the list of four, and the supply is taxable unless a Medicare benefit is payable for it. The usual cases:
- An employer buying pre-employment assessments or on-site sessions for its staff.
- An assistance programme provider contracting the practice to see employees, taken in full on EAP contracts.
- A school, sports club or community organisation buying a block of sessions.
- A law firm commissioning an assessment for litigation, which the ATO works through the report test.
- Another clinic contracting the practitioner to see its patients, which contractor invoices covers.
The tell is the invoice. If it is addressed to a business that decided the person would be seen, that is this bucket.
The agreement to step outside it
One option exists in that bucket and nowhere else.
Where an unclassified payer posts
A practice meets this when a payer nobody has classified sends money and the deposit has to be coded today. All three canonical templates carry a named account for it.
Each template spells out a row of its own for this key, so none reaches its posting through a fallback, and the tax rate is the same in all three. Only the account codes differ: the treatment agrees and the chart does not. The allied health template says why the default leans this way, that most third party payers pay on the patient's behalf for a service that would be GST free billed directly.
A line landing there is a question
The templates attach a confirm note to that account, the most useful sentence in the row. The account should stay close to empty: a line landing there means a funding rule is missing, not that the answer has been settled.
- Find out who engaged the practitioner for that session, a fact about the booking rather than the payment.
- If the answer is the patient, the line takes whatever the session would have carried privately.
- If the answer is the payer, check whether it is an insurer, a scheme operator or an Australian Government agency.
- Add the funding rule that says so, so the next payment from that payer resolves on its own.
Writing the rule down matters because the first payment arrives with a person looking at it and the tenth arrives inside a batch.
A report is its own supply, whoever pays
One thing cuts across all three buckets. A report, assessment or estimate a third party asks for is a separate supply to it, judged on its own. In the ATO's example an insurer asks a treating doctor for a progress report on a patient it funds: the treatment stays GST free and the report does not, because it is not a natural part of the treatment.
So one claim can carry two rates, and the invoice has to show them apart. Insurer reports works that case line by line, and invoices with mixed rates covers the document.
The rate belongs to the revenue leg
Everything above decides one thing: what the revenue line carries when the invoice is raised. When the money arrives, often batched and weeks later, the posting that moves it sits outside the activity statement in every canonical template, because the revenue was already earned and reported.
Keeping them apart stops a settlement being posted at a revenue rate and counting the income twice. Xero tax rates for health income sets out which rate belongs on which leg.
What Ledger Map does with a new payer
Ledger Map holds one standing map for the practice, approved before anything syncs. Each payer has a rule naming the revenue account and the tax rate the practice decided on. A payer with no rule takes the template's catch-all account and becomes a question with the options laid out, and stays one until a person answers it.
The settlement is then posted as one balanced document set per deposit, leaving one exact match in the bank feed for a person to accept. The accounts and rates come from the canonical template, not from the product. How it works shows the map and the approval step, and the rest of the GST answers run this test one payer at a time.
Questions
Do you pay GST on health services?
For a practice, the usual answer is no, and the reason is the service rather than the payer. A listed health service performed by a recognised professional in that service, and generally accepted in that profession as necessary for appropriate treatment of the person who engaged them, is GST free. A report a third party asks for is taxable, and so is a session a business bought, unless a Medicare benefit is payable or that business is an insurer, a compensation or CTP scheme operator, or an Australian Government agency.
Is there GST on third party insurance?
That question is usually about a motor policy premium, which is a different supply from a practice's fee and sits under its own provisions. The practice question that shares the words is narrower: when a compulsory third party scheme funds a patient's treatment, the treatment is GST free where the same session would be GST free supplied to the patient directly. A report the scheme commissions is a separate supply and is taxable.
What services are exempt from GST in Australia?
The ATO uses GST free rather than exempt. For health, the listed services are acupuncture, audiology or audiometry, chiropody, chiropractic, dental, dietary, herbal medicine, naturopathy, nursing, occupational therapy, optometry, osteopathy, paramedical, pharmacy, psychology, physiotherapy, podiatry, speech pathology, speech therapy, social work, and Aboriginal or Torres Strait Islander health services. Being on the list is one of three conditions, and none of them is about who paid.
Is GST applicable to medical expenses?
A medical service is GST free where a Medicare benefit is payable for it, or where it is another service supplied by or on behalf of a medical practitioner or approved pathology practitioner that is generally accepted in the medical profession as being necessary for the appropriate treatment of the recipient. Where the recipient is a business rather than the patient, the ATO says the supply is not GST free as a medical service unless a Medicare benefit is payable, which is the same recipient question this page runs on.
Does it change anything if a third party pays the invoice?
Only where that third party is also the party who engaged the practitioner. A payer settling a patient's own account leaves the supply with the patient, so the rate is whatever the session would have carried privately. A payer who engaged the practice becomes the recipient, and then the supply is GST free where a Medicare benefit is payable for it, or where the payer is an insurer, a compensation or CTP scheme operator, or an Australian Government agency.
Sources
Open questions
- Which arrangement a given practice is in with a given payer. The ATO says the outcome depends on who is contracting who and that this can only be determined by the contract between the parties, so no page can settle it for a reader.
- Whether any particular insurer, scheme or agency has agreed with a practice not to treat its supplies as GST free. The ATO says the parties may agree, and the corpus records this as unverified scheme by scheme.
- Whether a particular public body counts as an Australian Government agency for s38-60. The ATO's own example is a state sports institute, which reads wider than the phrase suggests, and the corpus carries no test for the boundary.
- The full text of s38-60 was not read. The Federal Register of Legislation rendered its table of contents only on 3 Sep 2026, so the section is cited for its heading and its location and the test itself is carried by the ATO page.
- Where a plan manager pays for report writing or for a therapy assistant's time, the open question is on the support rather than on the payer, and the corpus leaves both readings standing. Report writing funded in the plan as part of a therapy support can be read as travelling with that support, or as its own support judged on the determination tables. A therapy assistant's time can be read as part of the professional's service where it is billed in their name under direct supervision, or as its own support. Those sit on [NDIS report writing](/gst/ndis-report-writing) and [allied health assistants](/gst/allied-health-assistants).
- Whether supervision of another practitioner is taxable. The corpus holds both readings: commentary treats supervising a practitioner as a service to that practitioner rather than a health service, and an ATO interpretative decision points the other way on a fact pattern about provisionally registered psychologists. The corpus records it as taxable by default with an override and accountant review, so this page leaves it open.
- Which funding rule to add when a line lands in the catch-all account. The templates say a missing rule is what put it there; which rule belongs is a fact about the practice's payer rather than about the template.
- GST and health, supply of services through a third party
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
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- GST and health, recipient of the supply
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
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- GST and health, medical services
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
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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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- GST and health, National Disability Insurance Scheme
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 13 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.
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- The canonical templates: allied health by funding source, NDIS plan managed, psychology with booking deposits
Ledger Map. Retrieved 3 Sep 2026.
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Review
Last reviewed 4 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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