Allied Health Accounting: GST, Payroll Tax & Structure Guide
Running an allied health practice in Queensland is genuinely different from running any other small business. You’re managing multiple income streams, Medicare, private health funds, NDIS, WorkCover, and self-pay, all at once, often inside a single week.
Each one plays by different rules.Allied health accounting reflects that complexity. The tax obligations, the GST classifications, the payroll questions around contractors, none of it maps neatly onto a standard small business setup.
This guide is for practice owners who want to understand what they’re dealing with, clearly and without jargon. Physios, psychologists, occupational therapists, speech pathologists, podiatrists, if you’re running a practice in Queensland, this one’s for you.
What makes allied health accounting different?
Allied health accounting sits at the intersection of healthcare regulation and tax law, which is what makes it genuinely complex. Unlike a retail store with a single revenue stream, a typical allied health practice might bill Medicare for chronic disease management items, invoice the NDIA for therapy supports, process private health fund rebates through HICAPS, and collect WorkCover fees, all in the same week.
Each of those payers has its own rules around GST, eligible fees, and documentation requirements. Managing the accounting across all of them is the unique challenge, and it’s why allied health practices benefit from an accountant who understands the sector, not just the tax code.
GST: Most of your services are GST-free (but not all)
The general rule
Most allied health services provided by AHPRA-registered practitioners are GST-free under Division 38 of the A New Tax System (Goods and Services Tax) Act 1999. According to Xero’s guide to healthcare practice finances, this includes physiotherapy, psychology, occupational therapy, podiatry, optometry, and other services, provided they relate to the practitioner’s scope of clinical practice and are performed by a recognised professional.
The ATO lists 21 “other health services” under section 38-10 of the GST Act that qualify for GST-free treatment, including chiropractic, dental, physiotherapy, psychology, optometry, nursing, podiatry, occupational therapy, speech pathology, naturopathy, acupuncture, audiology, dietetics, osteopathy, and social work.
When GST does apply
Not everything in your practice is GST-free. According to Xero, taxable supplies in a health practice typically include:
- Cosmetic procedures with no Medicare benefit
- Certain medico-legal reports
- Retail product sales (e.g. braces, orthotics sold separately)
- Room and administration fees charged to contractor practitioners
Getting these classifications right on every invoice keeps your BAS accurate. Misclassifying a taxable supply as GST-free, even accidentally, creates adjustments that are time-consuming and costly to fix. This is one of the most common allied health accounting errors we see.
Do you still need to register for GST?
Yes, once your annual turnover reaches $75,000. The ATO requires all businesses at or above this threshold to register for GST regardless of the nature of their supplies. Crossing the threshold means you register, lodge a BAS, and report your GST-free supplies, even though you remit little or no GST on the clinical services themselves.
Business structure: Get this right early
Your business structure affects your tax position, your asset protection, and your ability to bring other practitioners into the business. Most allied health owners pick their structure at the start, and then never revisit it as the practice grows. That’s where allied health accounting problems compound over time. The ATO recognises four main business structures: sole trader, partnership, company, and trust. Each has different tax, legal, and administrative implications.
Sole trader
Simple to set up and cheap to run. But your business income is assessed at your personal marginal tax rate, and your personal assets are exposed if the business is sued or incurs debt. According to the ATO, as a sole trader you are legally responsible for all aspects of the business, including debts and losses. Wallace Law Group, which advises allied health and healthcare professionals on corporate and commercial matters, notes that sole trader status may be cost-effective for a single-person practice, but presents two key risks: all income is taxed at personal rates, and personal liability is unlimited regardless of how many staff you employ.
Company (Pty Ltd)
A company is a separate legal entity. It can own assets, employ staff, enter contracts, and be sold. The company tax rate is 25% for base rate entities, those with turnover under $50 million and passive income below 80% of total income. Retaining profits in the company at the lower rate, then extracting them strategically, is one of the main tax planning advantages.
For any allied health practice with ambitions beyond solo clinical work, a Pty Ltd structure is worth a serious conversation with your accountant.
Trust
A discretionary (family) trust can offer flexibility in distributing income to beneficiaries, depending on the terms of the trust deed and applicable tax rules. However, trusts are more complex to establish and administer. Wallace Law Group cautions that trust structures have been subject to ATO scrutiny in recent years, and it is important that any trust structure is properly established and managed on an ongoing basis.
Proposed change from 1 July 2028
The Government has proposed a minimum 30% tax rate on certain discretionary trust income from 1 July 2028, with some exceptions. If your practice operates through a trust, this proposed change is worth discussing with your accountant now.
Payroll tax in Queensland: The issue allied health accounting can't ignore
Payroll tax has become one of the most significant compliance issues for allied health practices across Australia, and Queensland is no exception.
The QLD threshold
Queensland’s payroll tax threshold is $1.3 million in annual wages. If your total wages, including payments to employees and certain contractor payments, exceed this threshold, you’re liable.
Contractor payments: The key risk
The Queensland Revenue Office now applies payroll tax to payments made to or on behalf of practitioners, regardless of their employment or contracting status, where those payments may be considered “deemed wages” under the relevant contract provisions. This is known as the MedCo or service-entity model issue, and it applies to allied health centres, physiotherapy practices, and other health businesses, not just GP clinics.
In other words: if your practice pays contractors rather than employing practitioners directly, you may still have a payroll tax liability. The structure of your contracts matters, and this is precisely where specialist allied health accounting advice pays for itself.
What about the 2025 GP exemption?
On 20 February 2025, the Queensland Parliament passed new legislation providing relief from payroll tax for payments to contracted GPs. This is a significant development, but it is specific to GPs. According to Hillhouse Legal Partners, the exemption does not apply to specialists or allied health practitioners. If you’re running a physiotherapy, psychology, or occupational therapy practice, you need to assess your own payroll tax exposure
TaxDigital’s guidance for QLD health practices notes that payroll tax reviews and audits of health centres have increased sharply, and practices should review their arrangements well in advance of the 2026 compliance cycle.
The bottom line
Get your contractor agreements reviewed by an accountant or lawyer who understands the Queensland Revenue Office’s current position. Don’t assume your existing structure is compliant just because it worked a few years ago.
NDIS billing and accounting
If your practice delivers NDIS-funded services, there’s an additional layer of complexity in your allied health accounting.
GST treatment for NDIS services
Therapeutic supports delivered under NDIS plans are generally GST-free. Xero notes that the same allied health service provided privately rather than under an NDIS plan may attract a different GST classification depending on the provider’s health service registration, and that mixed-supply scenarios, where a single invoice covers both NDIS supports and taxable services, create the biggest BAS compliance risk.
Billing changes from 1 July 2026
From 1 July 2026, NDIS therapy billing was unbundled, what used to be one line item per discipline is now six. Travel, report writing, non-face-to-face time, and the session itself are now billed separately. This makes accurate documentation more important than ever.
The NDIS Commission introduced a Risk-Based Regulation Prioritisation Model in October 2025. According to ClinicComply, providers with inconsistent claiming patterns, high ratios of non-face-to-face billing, or documentation that doesn’t support their invoices are more likely to attract compliance scrutiny.
Record-keeping for NDIS
NDIS accounting requires specific item codes, participant spending limits, and detailed service records. True Tally Bookkeeping recommends using practice management software that integrates with your cloud accounting platform (Xero or MYOB) to ensure all NDIS revenue is coded to the correct service category and separated from other income.
Multi-stream income: The BAS challenge
Most allied health practices have several income streams running simultaneously. Each has its own GST treatment, fee schedule, and documentation requirement. This multi-stream complexity is at the heart of what makes allied health accounting different from general small business accounting.
| Income Stream | GST Treatment | Key Accounting Note |
|---|---|---|
| Medicare (chronic disease items) | GST-free | Schedule fees updated annually. Check current rates. |
| Private health fund rebates | GST-free | Provider numbers required. Reconcile bulk payments to individual invoices. |
| NDIS (plan and agency managed) | Generally GST-free | Specific item codes required. Document service delivery carefully. |
| WorkCover QLD | GST-free (services) | QLD allied health fee tables updated 1 July 2026. |
| Self-pay (private clinical) | GST-free if by recognised professional | Ensure classification matches ATO requirements. |
| Product sales / room fees to contractors | Taxable (GST applies) | Must be coded separately and reported on BAS. |
Getting your chart of accounts set up to separate these streams is step one. Reconciling them accurately every quarter is where the ongoing work lives.
Superannuation and payroll compliance
From 1 July 2025, the superannuation guarantee rate reached its final legislated level of 12% of ordinary time earnings for all eligible employees. This applies to all employed staff in your practice.
Single Touch Payroll (STP) is mandatory for all employers. You must report salary, wages, tax withheld, and superannuation information to the ATO each pay cycle through STP.
The contractor vs employee distinction matters here too. If you engage practitioners as independent contractors, the arrangement must genuinely reflect a contractor relationship, otherwise the ATO may reclassify the engagement and apply PAYG withholding and superannuation obligations retroactively.
Record-keeping requirements
The ATO requires healthcare practices to keep financial records for at least five years from the date they are prepared, or five years after the last transaction they relate to. For a health practice, this includes:
- Appointment books and patient invoices
- Receipts and bank statements
- BAS lodgements
- Payroll records
- NDIS service agreements and support records
Good record-keeping isn’t just about compliance, it’s the foundation for accurate BAS lodgements, tax planning, and informed business decisions.
Financial benchmarks to track
The following metrics are commonly used in allied health accounting and practice management to spot problems before they hurt cash flow:
Overhead ratio: What percentage of your revenue goes to running the practice? A high overhead ratio relative to your billing rate means your margins are under pressure. Track this monthly, not annually.
Debtor days: How long does it take you to collect payment? Private health fund bulk-bill payments and NDIS plan-managed invoices can take time to process. Knowing your average debtor days helps you manage cash flow.
Revenue per practitioner: Useful for assessing whether each member of your team is generating sustainable revenue for the practice.
Common allied health accounting mistakes in QLD
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Misclassifying GST treatment on mixed invoices, particularly where a single invoice covers both GST-free clinical services and taxable products or room fees.
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Assuming contractor arrangements are payroll-tax-free, The QLD Revenue Office's current position on contractor practitioners means this assumption needs to be reviewed, especially for allied health practices above the $1.3 million threshold.
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Not updating WorkCover fee schedules, WorkCover Queensland allied health tables were updated on 1 July 2026. Claiming at outdated rates creates overpayments or underpayments that are difficult to unwind.
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Using the wrong NDIS item codes, The 2026-27 billing unbundling means practices need to ensure their invoicing system is coded correctly to the new support categories.
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Staying in the wrong business structure too long, Remaining as a sole trader as revenue grows means paying more tax than necessary, and limits your asset protection options.
Frequently Asked Questions
What is allied health accounting?
Allied health accounting refers to the financial management, tax compliance, and reporting requirements specific to allied health practices, including physiotherapy, psychology, occupational therapy, speech pathology, podiatry, and related disciplines. It covers GST treatment of health services, BAS lodgement, payroll and superannuation obligations, NDIS billing, and business structure decisions. It is more complex than standard small business accounting because of the multiple income streams and sector-specific rules involved.
Is my physiotherapy practice GST-free?
Generally yes, if you are an AHPRA-registered physiotherapist and the services relate to your scope of clinical practice. However, product sales, medico-legal reports, and room fees to contractors are typically taxable. Always confirm your specific circumstances with your accountant.
Do I need to register for GST if most of my services are GST-free?
Yes, once your annual turnover exceeds $75,000, you must register for GST regardless of whether you charge GST on most of your services. See the ATO guidance.
Does Queensland's 2025 payroll tax exemption apply to my allied health practice?
No. The legislation passed in February 2025 exempts payments to contracted GPs only. Allied health practitioners, including physiotherapists, psychologists, and occupational therapists, are not included in the exemption and need to assess their own payroll tax exposure.
What's the QLD payroll tax threshold?
$1.3 million in annual wages as of 2025.
What business structure is best for an allied health practice in QLD?
There is no universal answer. The right structure depends on your revenue, growth plans, risk profile, and the number of practitioners you work with. This is a conversation worth having with an accountant who specialises in allied health accounting before you grow into a structure that is hard to change.
Elle Green, CA
Elle Green is a Chartered Accountant (CAANZ) and Co-Founder of Acctivate Business Accountants, with over a decade of experience supporting small businesses across taxation and cash flow management. Holding a Bachelor of Commerce and a Xero Advisor certification, Elle is known for translating complex financial concepts into clear, practical guidance for business owners.
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