Templates
Psychology practice chart of accounts
A psychology practice splits its Xero revenue by who pays, opens one clearing account per settlement rail, and adds a liability that holds money taken before the session. A booking deposit sits on that liability until the session invoice applies it, a late cancellation forfeits it, or the practice refunds it.
Key facts
- What the starting chart holds
- Fifteen revenue accounts numbered from 400, six clearing accounts numbered from 100, and three more for deposits held, merchant fees and funder shortfalls1
- How revenue splits
- By who paid for the session, not by which psychologist delivered it1
- Where a booking deposit lands on the day it is taken
- Account 245, customer deposits and booking fees held, a liability posted gross at BAS Excluded rather than as revenue1
- What turns it into revenue
- A negative Less deposit applied line on the session invoice, which is what dates the income on the session rather than on the booking1
- Where a forfeited deposit goes
- Account 422 by default, cancellation and no-show fees, dated on the actual cancellation or no-show date, at the tax rate of the appointment it replaces1
- Why the clinical accounts default to GST Free Income
- Psychology is on the ATO's list of health services, and a listed service performed by a recognised health professional as appropriate treatment of the recipient of the supply is GST-free2
- Why employee assistance program work sits on its own account
- The recipient of the supply is whoever engages the practitioner, and a supply by a health practitioner to another business is not usually GST-free3
- What the template leaves to the practice
- Nine review areas the practice's own BAS agent confirms before the chart is relied on1
A psychology chart answers three questions, not one
A psychology practice sells the same hour to a private client, to Medicare, to an employer's assistance program and sometimes to an insurer, and some of that money arrives before the hour is delivered. So the chart answers three questions separately: who paid for this work, what produced this bank line, and when did this money become revenue.
The canonical template answers the first with fifteen revenue accounts numbered from 400, the second with six clearing accounts numbered from 100, and the third with one liability account and a short set of rules about what moves money off it.
The account a booking deposit waits on
A card held to secure a Thursday appointment is not income on the Tuesday it is taken. Nothing has been supplied yet, and the money may go back. The template puts it on account 245, customer deposits and booking fees held, as a liability at BAS Excluded.
Without that account the deposit is coded straight to income on the day it arrives, and it has to be unpicked when the session lands in a later quarter or does not happen. Bookkeepers who write about service businesses put the problem the other way around.
Most deposits in service based businesses are actually part payments.8
So the template treats the choice as a setting rather than a fact. A refundable hold against a late cancellation behaves like a security deposit; a prepaid block of named sessions behaves like a part payment. The practice picks, its BAS agent confirms the choice against the organisation's cash or accruals basis, and it then holds for every deposit.
The revenue accounts
Nine accounts carry a funding source, so a session reaches its account through who paid for it. Six are service categories that behave the same way whoever pays: reports, supervision, cancellations, group sessions, products and other income.
| Code | Account | Xero tax rate |
|---|---|---|
| 400 | Clinical services, private patients | GST Free Income |
| 401 | Clinical services, Medicare | GST Free Income |
| 402 | Clinical services, NDIS agency-managed | GST Free Income |
| 403 | Clinical services, NDIS plan-managed | GST Free Income |
| 404 | Clinical services, NDIS self-managed | GST Free Income |
| 405 | Clinical services, WorkCover and workers compensation | GST Free Income |
| 406 | Clinical services, CTP and TAC | GST Free Income |
| 407 | Employee assistance program contracts | GST on Income |
| 408 | Clinical services, other third-party payers | GST Free Income |
| 420 | Reports, assessments and medico-legal | GST on Income |
| 421 | Supervision, training and workshops | GST on Income |
| 422 | Cancellation and no-show fees | GST Free Income |
| 423 | Group sessions | GST Free Income |
| 424 | Products | GST on Income |
| 460 | Other income | GST on Income |
Account 408 is the one to watch. It catches a payer nobody has classified yet, so revenue landing there means a rule is missing.
The five lines that carry GST
Most of the chart defaults to GST Free Income, because psychology is on the ATO's list of health services and a listed service performed by a recognised health professional as appropriate treatment of the recipient of the supply is GST-free. Five accounts default the other way, and the reason differs line by line.
- Employee assistance program contracts, because the recipient of the supply is the employer rather than the client and a supply to another business is not usually GST-free.
- Reports, assessments and medico-legal work, because a report for a court, an insurer or a school is not treatment of the person in the room.
- Supervision, training and workshops, because supervising another practitioner is a service to that practitioner, not treatment of a client.
- Products, because workbooks and assessment materials are not a necessary part of the session.
- Other income, because room rental to an associate or an administration fee is not a health service.
The other direction matters as much. Where the practice contracts with an insurer, an operator of a statutory compensation scheme, a compulsory third party scheme operator or an Australian Government agency, the ATO says a service that would be GST-free supplied to the client stays GST-free, which puts WorkCover, CTP and TAC sessions on GST Free Income accounts. The supplier and that party can agree not to treat the supplies as GST-free.
How one invoice line picks its account
The map resolves a line in three steps: funding source and service category together, then funding source on its own, then the practice default. A category row beats a funder row, which is how a supervision hour billed to a private payer reaches the supervision account at the taxable rate rather than the consult account at the GST-free one.
The two employee assistance program rows are the pair worth studying. That session is taxable, so the fee charged when it is cancelled late is taxable too and lands on the program's own account rather than the cancellation account. A cancellation fee takes the treatment of the appointment it replaces, so no one account is right for every cancellation.
How money lands on the liability, and the five ways it leaves
The template names how money reaches the liability and the five ways it can leave, with what each one does in Xero. A chart of accounts on its own cannot express this part.
- Taken. The payment posts gross to 245 Customer deposits and booking fees held at BAS Excluded, so it stays out of G1 until it buys something.
- Applied. The session invoice carries a negative "Less deposit applied" line at BAS Excluded, which releases the liability and leaves the session revenue on its own account at its own rate.
- Forfeited. A late cancellation or a no-show moves the money to 422 Cancellation and no-show fees, dated on the actual cancellation or no-show date, not the window boundary, at the tax rate of the appointment it replaces.
- Refunded before it was applied. The liability is released and nothing is reversed, because nothing was ever taxed.
- Refunded after it was applied. A credit note on the original line's tax type, then a payment against it.
- Refunded partly, across held and applied money. No posting is obviously right, so the practice is shown both candidates as a question.
One rule sits under every one of them and is not a setting. GST is taken once, whether it attaches on receipt or on supply, so a pool nets the receipt side against the tax on each invoice the money is later applied to.
The clearing accounts, one per settlement rail
The settlement side takes six accounts numbered from 100, one for each rail that produces a bank line of its own.
- 100 Medicare clearing
- 101 Tyro Health and EFTPOS clearing
- 102 Online payments clearing (Stripe)
- 103 EAP and corporate clearing
- 104 NDIS clearing
- 105 WorkCover and CTP clearing
Each is a bank type account in Xero, because fee lines and sweeps both need one. A balance in one is money a payer has approved and the bank has not delivered yet, and it returns to nil once the run lands. Every leg posted here is BAS Excluded: the tax question was settled on the revenue line. The setup steps are the same for each rail.
Six is a starting number rather than a rule. A practice banking card payments straight to the operating account drops one. The principle holds: the rail makes the bank line, so the split is by rail, not by funder.
Who the invoice is addressed to, and what the client is called
Xero ages receivables by contact, so the payer is the Xero contact wherever the payer is not the client. Employee assistance program operators, WorkCover and CTP insurers, plan managers and other third party payers are billed as contacts in their own right, with the client in the reference field. Private and Medicare work is billed to the client.
The naming default is where this template departs from the others. Because an invoice line plus a client name is health information, it defaults to initials plus the practice management system id rather than a full name. A practice can switch to a full name after confirming that against its own privacy posture.
What the template hands to the practice's BAS agent
A starting chart is a set of defaults, and the template says so in the file rather than in a disclaimer. Nine areas are listed for the practice's own BAS agent to confirm before the chart is relied on.
- EAP taxability
- Supervision grey area
- NDIS written service agreements
- Booking deposit treatment
- Session block (package) treatment
- Cancellation window
- Gift voucher GST
- EAP remittance format
- Client naming privacy default
Two of them decide more than the rest. The deposit treatment dates income across the whole book, and it interacts with whether the organisation reports GST on a cash or an accruals basis. The employee assistance program treatment decides whether a whole revenue stream is taxable, and the template records it as the single most consequential classification decision it makes.
What the chart does not settle
Some questions are open in the source material, and the template leaves them open rather than picking a side. Supervision defaults to taxable, and one ATO ruling snippet points the other way for supervision of provisionally registered psychologists in a narrow fact pattern.
Supervision Fees: This is a service that you provide to supervise a psychologist, hence it is not a health service. You need to add GST to your fee.7
Three more are left standing. Prepaid session blocks have no proven treatment yet, because the practice management system exposes no package usage per appointment. Gift vouchers are outside the research the template was built from. Report writing funded inside an NDIS participant's plan sits between a funded therapy support and third party work, so it asks for an item level override rather than one account for every report.
What Ledger Map does with it
This chart is a file the product applies, not a picture of one. A practice starts from it, works through the questions it raises, and approves a standing map before anything syncs. A line the map cannot resolve becomes a question with both candidate postings shown.
On the settlement side, each deposit is posted as one balanced document set against the rail's own account, with the sessions underneath it, leaving one exact match in the bank feed for a person to accept. How it works shows the map and the approval step, and the allied health chart is the version for a wider funding mix.
Questions
How many revenue accounts does a psychology practice need in Xero?
The canonical template opens fifteen: nine by funding source, covering private, Medicare, the three NDIS management types, WorkCover, CTP and TAC, employee assistance programs and other third party payers, and six by service category, covering reports, supervision and training, cancellations, group sessions, products and other income. A practice with fewer payers opens fewer.
Where does a booking deposit go in a psychology chart of accounts?
On a liability, not on income. The template posts it gross to account 245, customer deposits and booking fees held, at BAS Excluded on the day it is taken. It becomes revenue when the session invoice carries a negative Less deposit applied line, which dates the income on the session rather than on the booking.
What happens to a booking deposit when a client cancels?
If the practice keeps it, the money moves to the cancellation account, 422 cancellation and no-show fees, dated on the actual cancellation or no-show date. The fee takes the tax treatment of the appointment it replaces, so a forfeited private session is GST-free and a forfeited employee assistance program booking is taxable and posts to the program account, 407, which carries its own cancellation row. If the money goes back before it was applied, the liability is released.
Which psychology income is taxable?
In this template, five accounts default to GST on Income: employee assistance program contracts, reports and medico-legal work, supervision and training, products, and other income such as room rental. The clinical accounts default to GST Free Income on the listed health service test. Supervision is the contested one, and the template leaves it open for the practice's BAS agent.
Do I need a separate account for employee assistance program work?
It is the account this template would keep if it kept only one. An employee assistance program session is billed to a business, so it is taxable while the identical session for a private client is not. Splitting it out means the taxable share of the book is readable at a glance instead of being reconstructed from invoices at BAS time.
Sources
Open questions
- No search results snapshot exists for the templates family, so the current top five for this query and its People also ask set are unrecorded. The questions answered here come from the template's own decision points and BAS agent checklist rather than from search data.
- Supervision defaults to taxable, and the template records one ATO ruling snippet suggesting GST may not apply to supervision of provisionally registered psychologists in a specific fact pattern. The question is left open.
- The session block treatment is not proven. The product spec asks for one bookkeeper-approved treatment and a sandbox BAS test before go-live, because the practice management system exposes no package usage per appointment.
- Gift voucher treatment is not covered by the research behind the template, so the deposit type carries a confirmation for the practice's BAS agent rather than a treatment.
- NDIS report writing funded inside a participant's plan, and time billed for therapy assistants, are left unresolved by the corpus and are not settled here.
- The cancellation window in the template is a contract term the practice sets and publishes, not an accounting fact, and the template records that it is not drawn from the research. No window is stated on this page.
- The Sheridans booklet is one accounting firm's explainer, not a ruling. The quoted supervision line was read from the booklet itself on 3 Sep 2026, and it is cited secondary and backs no key fact here.
- None of the bank feed narration strings for these rails were confirmed from a primary source, so the matcher learns descriptors from the practice's own feed rather than holding a string.
- Psychology practice with booking deposits, the canonical template
Ledger Map. Retrieved 3 Sep 2026.
primary
- GST and health, other health services
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, National Disability Insurance Scheme
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 13 Jun 2024.
primary
- GST and health, appropriate treatment
Australian Taxation Office. Retrieved 3 Sep 2026. Source updated 12 Jun 2024.
primary
- Goods and Services Tax for Self Employed Psychologists
Sheridans Accountants and Financial Planners. Retrieved 3 Sep 2026. Source updated Jul 2022.
secondary
- Understanding GST on deposits, retainers and prepayments
Bond Financial. Retrieved 3 Sep 2026.
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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