Problems
GST free income missing from G1 on the BAS
Because the line carrying that income is coded to sit outside the activity statement, or because no revenue line was raised behind the money at all. Health income coded BAS Excluded is left out of total sales and out of GST free sales, so both labels understate the quarter. The invoices are intact; the tax rate on them decided what the statement could see.
Key facts
- The fault the register names
- Wrong GST treatment, entry P9, felt by the accountant at BAS time, with the exposure sitting with the ATO8
- How often it recurs
- Five independent sources record the same fault: a practice management vendor's troubleshooting page, a vendor tax mapping note, a bookkeeper guide and two accounting firms8
- The setting behind the most reported cause
- In Zanda, a GST Free tax code can export to Xero as BAS Excluded where the invoice Tax Usage is set to No Tax2
- The setting behind the second cause
- Cliniko can push taxable and non taxable items to one Xero account, and asks that a tax exempt tax rate be specified in the integration settings for the non taxable half6
- What belongs in the GST free figure
- A listed health service, performed by a recognised health professional in that service, generally accepted in that profession as necessary for the appropriate treatment of the recipient of the supply4
- Who the recipient is
- Whoever engages the health practitioner, which is often the patient and is sometimes a business, and supplies to another business are not usually GST free5
- How the canonical chart splits
- Of the 18 revenue accounts in the allied health template, 13 post at GST Free Income and 5 at GST on Income, so most of a practice's revenue accounts are ones the statement should be counting twice7
- What sits outside the statement instead
- The settlement legs of the ten funder rails, which hold money between the date a funder paid and the date the bank line appears, and the deposit liability that holds money taken before a service is delivered7
What the statement should show for a health practice
Two labels carry this on a Simpler BAS, which is the reporting method for a practice under the GST turnover threshold. G1 is total sales and 1A is the GST collected on sales. A consult that meets the ATO conditions is a sale with no GST on it, so it belongs in G1 and adds nothing to 1A. A practice whose clinical income is entirely GST free should still see a full quarter of revenue at G1. On the full reporting method the same sale is also split out at G3 other GST free sales, a label Simpler BAS does not carry.
That is what makes a short G1 worth chasing. The invoices exist, the money arrived, and the bank reconciled. What decided whether the statement could see any of it was the tax rate sitting on the revenue line, which is set long before anyone opens the activity statement.
Line items with the GST Free Expenses or GST Free Income tax rates are included in your activity statement, but those with the BAS Excluded tax rate aren't.12
Three ways the income drops out
The three causes look identical on the statement and need different fixes, so it is worth telling them apart before touching anything.
- The revenue line carries BAS Excluded. The invoice is right, the account is right, and the rate keeps the line off the statement.
- The money was posted as a settlement movement and no invoice sits behind it, so there is no revenue line for the statement to read.
- The income sits in a revenue account, at the right rate, in the wrong period, which is a timing difference rather than a coding error.
The third is the one to rule out first. On a cash basis Xero counts the sale on the payment date, and a funder that approves a claim in June and pays in July moves that sale into the next quarter. The cash versus accrual page covers which date drives which report, and a quarter that looks short by a funder's payment lag is behaving correctly.
The rate is decided before Xero sees the invoice
In a practice that syncs its invoices, nobody chooses a tax rate in Xero. The practice management system sends one, and the failure is usually a setting rather than a mistake on a line. Zanda names the case on its own troubleshooting page: a GST Free tax code can export to Xero as BAS Excluded where the invoice Tax Usage is set to No Tax. The invoices look correct in the practice system and land outside the statement in Xero.
Cliniko reaches the same place from the other direction. It allows taxable and non taxable items to share one Xero account, on the condition that a tax exempt tax rate is specified in the integration settings. That setting is what gives the non taxable half of a practice's income a rate of its own, so it is the first screen to open in a practice on Cliniko.
Both settings are switched on once, at the start, and neither raises an error afterwards. That is why this surfaces at BAS time rather than at sync time, and why it is usually a whole quarter rather than a handful of invoices. The one account it all lands in is a separate problem with the same root, covered on the single sales account page.
Money with no sale behind it
The second cause is structural. A funder deposit is two legs, and only one of them is a sale. The revenue leg is the session, raised as an invoice against the patient or the funder, and it is the leg the activity statement reads. The settlement leg is the movement of money the funder has approved, and it is deliberately outside the statement because no supply happens when money moves between the practice's own accounts.
Practices that skip the invoice and post the deposit straight to income sometimes get the statement right by accident. Practices that skip the invoice and post the deposit as a transfer get a clean bank reconciliation and an activity statement with a hole in it. Every settlement leg in the canonical templates posts outside the statement, across all ten funder rails the allied health template models, so the revenue leg is the only leg that can put the quarter at G1.
The mirror error, sales counted twice
The same pattern fails in the other direction, and it is worth checking at the same time because the fix touches the same accounts. When the transfer that empties a settlement account is coded as income rather than as a movement, the money is reported as a sale for the second time: once when the session was invoiced, again when the funder's payment landed.
That gives an overstated G1 for the whole quarter, with a settlement account that still balances. A practice that fixes the first error by coding everything to an income rate can create the second, which is why the two legs are worth stating separately in the map before anything is repointed.
What the templates post for one funder
A Medicare consult is the ordinary example. The card below is read out of the canonical templates rather than written here, and it shows the two things a practice needs to separate: the account code is a decision about the chart, and the tax rate is not a decision at all once the service and its recipient are known.
The rate follows the service and the recipient. The ATO's conditions are that the service is a listed health service, that a recognised health professional in that service performed it, and that the profession generally accepts it as necessary for the appropriate treatment of the recipient of the supply. Who pays is a separate question from who was engaged, and only the second one moves the treatment.
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.5
An accountant who works with allied health practices puts the same test in the language a practitioner uses: where Medicare, the NDIS, workers compensation or a private health fund pays on the patient's behalf, it reads as the patient paying, while an employer or a life insurer engaging the practice does not. The Xero tax rates for health income page sets out which accounts take which rate.
Four checks that tell you which cause it is
These four checks run in Xero in a few minutes, without opening the practice management system, and they separate the three causes from each other.
| Check | What it tells you |
|---|---|
| Compare G1 for the quarter against revenue on the profit and loss for the same dates | A gap of roughly the whole clinical income points at the tax rate; a gap the size of one funder points at that funder's rate or its payment lag |
| Open the account transactions report for each clinical revenue account and group by tax rate | Any line at BAS Excluded in a revenue account is a line the statement did not read |
| Check whether the profit and loss itself is short before blaming the statement | Revenue missing from both reports means the deposit was posted as a movement and no invoice was raised behind it |
| Compare the profit and loss to the practice management system's billing report | Agreement between them, with a short statement, isolates the fault to the tax rate rather than to the sync |
What the wrong rate costs
Understating G1 does not change the GST payable in the quarter, which is why it survives a review of the bottom line. What it changes is the picture the practice reports: turnover tests and audit ratios are read off the figures on the statement, so a practice whose statement shows a fraction of its actual sales looks like a different business from the one it is.
Treating the whole job as GST-free because the client is an NDIS participant is a compliance error, and one the ATO sees regularly in BAS lodgements.10
The opposite miscoding costs cash directly. Health income coded at an income rate that carries GST hands the ATO one eleventh of revenue the practice did not collect from anyone, and getting it back means amending the statement. A bookkeeper who works on physiotherapy practices describes where that lands.
Miscoding a single Medicare rebate as taxable income, or treating a DVA invoice the same as a standard private invoice, can snowball into BAS errors, GST overclaims, and reconciliation headaches that take days to untangle at year end.9
Fixing the current quarter is editing the rate on the affected invoices and correcting the setting that sent it. Fixing a quarter already lodged is an amendment, and that is a question for the practice's BAS agent rather than one this page answers.
What this page does not settle
The line between a report that is part of the treatment and a report supplied to a third party is the other one worth taking advice on, because it changes the rate on a single line inside an otherwise GST free invoice rather than on a whole account.
What Ledger Map does with it
Ledger Map holds one standing map for the practice, approved before anything syncs. Each revenue line resolves to its account and its tax rate through that map, so the rate is decided once by the practice and its adviser rather than by an integration setting nobody has looked at since it was switched on.
A funder deposit is posted as one balanced document set: the session revenue on its own line at its own rate, the settlement movement on its own leg, and one exact match left in the bank feed for a person to accept. Anything the map cannot resolve becomes a question with the options laid out, rather than a silent posting at whatever rate arrived. How it works shows the map and the approval step.
Questions
Should G1 include GST free sales?
Yes. A GST free sale is reported in total sales at G1, and nothing is remitted on it at 1A. That is the difference between a sale carrying no GST and a line that is outside the statement, which is where a transfer between the practice's own accounts belongs.
Why is my G1 lower than the revenue on my profit and loss?
Either the revenue lines carry a rate that keeps them off the statement, or the two reports are on different bases. Xero counts a cash basis sale on the payment date and an accruals sale on the invoice date, so a funder that approves in one quarter and pays in the next moves the sale between statements without anything being wrong.
Is BAS Excluded ever the right rate for money a practice receives?
It is the rate for a line with no supply behind it. Moving a funder settlement between the practice's own accounts is the common case, along with a deposit taken before the service is delivered, which is a liability until the session happens. Session revenue is a supply, so it takes an income rate.
Does it matter who paid, if the service is a health service?
It matters who engaged the practice, which is not the same question. The ATO's test turns on the recipient of the supply, and supplies by a health practitioner to another business are not usually GST free. A funder paying on the patient's behalf leaves the patient as the recipient; an employer commissioning the session does not.
I have already lodged the quarter. What now?
Correcting the invoices fixes the ledger and the next statement, not the one lodged. Whether the difference is corrected on a later statement or by amending the lodged one depends on the size and the direction of the error, and it is a decision for the practice's BAS agent with the corrected figures in front of them.
Where is the rate actually set, if not in Xero?
In the practice management system, on the item or the service the invoice was billed from, and in the accounting integration settings that decide how a non taxable item arrives. Editing the rate in Xero corrects the invoices already there; correcting the item and the integration setting is what stops the next quarter arriving the same way.
Read next
- GST answersGST Free Income or BAS Excluded in Xero
- ProblemsAll practice revenue lands in one Xero account
- Xero how toCash vs accrual GST for a clinic in Xero
- ProblemsClearing account will not clear in Xero
- Practice systemscoreplus Xero sync: one account for all revenue
- GST answersGST on allied health assistant services
- HubProblems
Sources
Open questions
- What each Xero tax rate does at G1 and 1A is stated here from the research corpus behind the canonical templates, which took it from Xero Central. The ATO pages returned 403 to a fetch on 3 Sep 2026 and again on 4 Sep 2026, so the ATO reporting methods page is carried from search result extracts rather than from a fetched body and a BAS agent is the check on the label mapping.
- Both Xero Central articles served an empty body on 3 Sep 2026, and a refetch on the same day returned an empty body again. The one sentence quoted from Xero is carried as unverified, from a search result snippet captured the same day, and no key fact rests on it. What Xero counts on a cash basis and on an accruals basis is carried the same way, through the corpus reading of How GST works in Xero.
- Whether a line outside the activity statement still appears in the Xero GST Audit report is reported by Xero Central rather than confirmed here.
- Whether supervision sold to another provider is taxable is not settled by the research behind the canonical templates: one Australian accounting source treats it as taxable and an ATO interpretative decision points the other way on one fact pattern.
- NDIS report writing, therapy assistant time and gift vouchers are left open by the corpus for the same reason, and this page does not resolve them.
- The search snapshot for this query shows the diagnosis written for other accounting products, on a MYOB forum thread and a Manager forum thread, so the Xero version of the same fault is stated here from vendor documentation and from the canonical templates rather than from a published Xero write up.
- Whether a practice that is not registered for GST should code its sales as GST free or as outside the statement is a separate question, and it is not answered here.
- The account codes named here are the allied health canonical chart. A practice on a different chart carries different codes, and the rate on those is a question for its own BAS agent.
- GST reporting methods
Australian Taxation Office. Retrieved 4 Sep 2026. Source updated 15 Apr 2021.
primary
- Other health services, GST and health
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
- Recipient of the supply, GST and health
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
- Customer pain point evidence, entry P9
Ledger Map. Retrieved 3 Sep 2026. Source updated 29 Aug 2026.
secondary
- Bookkeeper for physio practices, chart of accounts and reporting
True Tally. Retrieved 3 Sep 2026. Source updated 1 Jul 2026.
secondary
- Providing GST-free supplies to NDIS participants
RSM Australia. Retrieved 4 Sep 2026. Source updated 30 Jul 2026.
secondary
- Is my psychology or allied health service GST free
Allied Health Accounting. Retrieved 3 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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