You run a medical or health practice. You see patients every day. You send invoices. You receive payments. Then you start thinking about GST. “Do I need to add 10% GST to my services?” The answer is not always yes.
Many medical and health services in Australia can be GST-free. But not every service provided by a health professional is automatically GST-free. The type of service matters. The health professional matters. And sometimes, the reason for providing the service matters too.
So let’s make it simple.
Are Medical Services GST-Free?
Many medical services can be GST-free when the requirements are met. This means you generally don’t charge GST to the patient.
For example, a qualifying medical service costs: $200.
GST: $0.
The patient pays: $200.
You don't add another $20 simply because you are running a medical practice.
But there are specific requirements. So don’t assume every service provided by a doctor is automatically GST-free.
What Makes a Health Service GST-Free?
There are generally a few things to look at. You need to consider:
1. What service was provided?
2. Who provided the service?
3. Is the service recognised as a relevant health service under the GST rules?
4. Was the service provided as part of the required professional practice?
5. Was the service generally accepted as necessary for the appropriate treatment of the patient?
These details matter. It is not enough to simply say: “I am a health professional, so everything I do is GST-free.” That is not always correct.
Examples of Health Services That Can Be GST-Free
Depending on the circumstances, GST-free health services can include certain services provided by:
- Doctors.
- Dentists.
- Nurses.
- Optometrists.
- Physiotherapists.
- Occupational therapists.
- Psychologists.
- Chiropractors.
- Podiatrists.
- Speech pathologists.
- Pharmacists.
The service must meet the relevant GST requirements. So the profession alone does not decide the GST treatment. The actual service matters.
Let’s Look at a Simple Example
Imagine you are a physiotherapist.
You provide a qualifying treatment to a patient.
Your fee is: $150.
If the service qualifies as GST-free: Service: $150.
GST: $0.
Total: $150.
You don't charge the patient $165.
The $150 is the amount payable.
This is one of the benefits of GST-free treatment for qualifying health services.
What About Dental Services?
Many dental services can be GST-free when the relevant requirements are satisfied.
For example, a qualifying dental treatment costs: $500.
GST: $0.
Patient pays: $500.
But a dental practice may also provide other products or services. Those may not all receive the same GST treatment. So a dental practice should not automatically mark every transaction as GST-free.
What About Physiotherapy?
Certain physiotherapy services can also be GST-free.
For example: A patient receives a qualifying physiotherapy treatment.
Fee: $120.
GST: $0.
Total: $120.
But if the practice sells products or provides services that fall outside the GST-free health service rules, the treatment may be different. This is why your practice should separate different types of transactions.
What About Psychology Services?
Qualifying psychology services can also be GST-free. For example: Consultation: $200. GST: $0. Patient pays: $200. Again, the specific requirements need to be met. The GST treatment depends on the service provided and the circumstances.
Not Every Service Provided by a Health Professional Is GST-Free
This is one of the most important points. You may be a doctor. You may be a physiotherapist. You may be a dentist. But that does not mean every service you provide is automatically GST-free.
For example, a service may be provided for a purpose that is not considered appropriate treatment of the patient. Or it may be a service that falls outside the relevant GST-free health service rules. In those situations, GST may apply. So always look at the actual service.
What About Cosmetic Procedures?
This is an area where you need to be particularly careful. Not every cosmetic procedure is GST-free. The GST treatment can depend on whether the service is considered appropriate treatment of the patient and meets the relevant requirements.
For example, a procedure performed purely for cosmetic reasons may not receive the same GST treatment as treatment provided to address a medical condition. So don’t automatically use a GST-free code for every procedure performed in a medical practice.
What About Health Checks?
Health assessments and checks can have different GST treatment depending on their purpose and circumstances. For example, a health service provided as part of appropriate treatment may qualify for GST-free treatment. But a service provided for another purpose may be taxable.
The reason for the service can matter. This is why you should look beyond the invoice description.
What About Reports and Medical Certificates?
Doctors and other health professionals may provide reports, certificates and other documentation. These services can have different GST treatment depending on why they are provided.
For example, a service that is simply administrative or provided for a third party may not necessarily receive the same GST treatment as a consultation provided directly for the patient’s treatment. So don’t assume: “It’s a medical document, so it’s GST-free.” Check the purpose of the service.
What About Services Provided to Insurance Companies?
This can also be confusing. A health professional may provide a service involving an insurance company, employer or another organisation. The GST treatment depends on the nature of the actual service. The fact that the service relates to a patient does not automatically make it GST-free.
For example, a report prepared for an insurer may need to be considered separately from treatment provided directly to the patient.
What About Services Paid by Medicare?
The way a service is paid for does not, by itself, determine whether it is GST-free. A service can be GST-free if it meets the relevant GST requirements. This can apply whether the patient pays directly or another party is involved in the payment.
So don’t use: “Medicare paid it, therefore no GST.” Look at the underlying service.
What About Medicines and Other Products?
Medical practices and health businesses may also sell products. This is where things can get complicated. For example, a practice may sell:
- Medicines.
- Supplements.
- Medical equipment.
- Braces.
- Creams.
- Other health-related products.
These products can have different GST treatment. A product being sold by a doctor or health professional does not automatically make it GST-free. So keep services and product sales separate in your accounting system.
What About GST Credits?
Here is another important point. If your business makes GST-free health supplies, you may still be able to claim GST credits on eligible business purchases.
For example, your practice buys equipment for: $11,000 including GST.
GST included: $1,000.
If the purchase is eligible and relates to your business activities, you may be able to claim
the $1,000 GST credit.
So: GST-free service: No GST charged. Eligible business purchase: GST credit may still be available. This is different from input-taxed supplies.
GST-Free vs Input-Taxed Health Activities
These two should not be confused. A qualifying GST-free health service generally has: GST charged to patient: No. GST credits on eligible purchases: May be available.
An input-taxed activity has different rules. So if your health business has both GST-free services and other activities, you need to make sure your accounting system treats them correctly.
What If Your Practice Sells Both Services and Products?
This is very common. Imagine a physiotherapy clinic. It provides qualifying physiotherapy services. It also sells exercise equipment to patients. The treatment may be GST-free. But the equipment sale may be taxable.
For example: Physiotherapy treatment: $150.
GST: $0.
Exercise equipment: $110 including GST.
GST on equipment: $10.
You cannot assume both transactions have the same GST treatment just because they happen in the same clinic.
A Simple Example
Imagine your medical practice has: GST-free medical services: $100,000. Taxable product sales: $11,000 including GST. The GST included in the taxable product sales is: $11,000 ÷ 11 = $1,000. The medical services have: $0 GST.
So your records need to clearly separate the two. This becomes particularly important when preparing your BAS.
A Common Mistake
One common mistake is: “Everything in my medical practice is GST-free.” Not necessarily. You may have GST-free health services. You may also have taxable products. You may provide reports or other services that need separate consideration.
You may have other income streams. So don’t use one GST code for everything.
Another Common Mistake
Another mistake is looking only at who provided the service. For example: “A doctor provided the service, so it must be GST-free.” The profession alone is not enough. The type and purpose of the service also matter. Always look at the actual transaction.
A Simple Checklist
Before deciding whether a medical or health service is GST-free, ask:
1. What service was actually provided?
2. Who provided the service?
3. Is the service covered by the GST-free health service rules?
4. Was it provided as appropriate treatment of the patient?
5. Was the service provided for another purpose, such as a report or assessment?
6. Are you also selling products?
7. Are your taxable and GST-free transactions recorded separately?
These questions can help you avoid common GST mistakes.
The Bottom Line
Many medical and health services in Australia can be GST-free. This means you generally don’t charge GST to the patient when the relevant requirements are met. But don’t assume every service provided by a health professional is automatically GST-free. Cosmetic procedures, reports, assessments and product sales can have different GST treatment.
So if you run a medical or health practice, look at each type of service carefully. Keep your GST-free services separate from taxable sales. Use the correct GST codes. And keep your records organised. Because when you are busy looking after patients, the last thing you need is to discover at BAS time that your accounting system has treated every transaction the same way.