Is psychology counselling income GST-free?

Yes, services provided by a registered psychologist are GST-free medical services under the GST Act, whether billed privately, through Medicare's Better Access initiative, or via a workplace EAP or NDIS plan. Supervision fees charged to provisional psychologists and some corporate consulting work can fall outside this exemption, so practices offering mixed services need to check each income stream individually.

How does Medicare Better Access affect a psychology practice's bookkeeping?

Better Access rebates are paid either directly to the patient (who then pays the practice the full fee) or via bulk billing where Medicare pays the practice directly. These two billing models need to be tracked differently in Xero, bulk-billed sessions show as Medicare income with a payment lag of several days, while patient-paid sessions with a rebate show as full fee income at time of service. Blending the two makes it hard to see true cash flow timing.

How should a group psychology practice handle associate splits?

Most group practices pay associate psychologists a percentage of billings, commonly 60-70% to the associate. This needs to be tracked per practitioner in Xero, not as a single lump payroll or contractor expense line, so the practice can see billings, the split payment, and net practice margin per associate separately. Getting this wrong makes it very difficult to assess whether an associate arrangement is actually profitable for the practice.

Are associate psychologists employees or contractors?

It depends on the real working relationship. An associate who sets their own client hours, holds their own professional indemnity insurance, and bears the risk of no-shows may be a genuine contractor. One working set hours under the practice's direction, using the practice's booking system and following its clinical protocols, more closely resembles an employee, which carries superannuation guarantee and PAYG withholding obligations the practice needs to meet.

What KPIs should a psychology practice track monthly?

Sessions delivered per clinician, average fee per session, Medicare rebate turnaround time, cancellation and no-show rate, and net margin per associate after the practice split are the core five. Together they show whether the practice is fully booked but still unprofitable, a common trap when associate splits are generous and overheads aren't tracked against them.

Bookkeeping for Psychologists in Melbourne

Published August 2026By True Tally Bookkeeping8 min read

Two Billing Models, Two Different Cash Flow Patterns

Most Melbourne psychology practices run a mix of two billing models: patient-paid sessions where the client pays the full fee and claims a Medicare rebate separately, and bulk-billed sessions where Medicare pays the practice directly. These behave completely differently in your bank feed. Patient-paid income lands in full at time of service; bulk-billed income arrives from Medicare a few days later, often batched across multiple patients. Blending both into one "fees" account in Xero makes it impossible to see real cash flow timing or to reconcile confidently against your practice management software's session log.

GST Treatment for Psychology Services

Counselling and therapy services delivered by a registered psychologist are GST-free medical services. This applies whether the session is billed privately, through Medicare's Better Access initiative, via a workplace Employee Assistance Program, or under an NDIS plan. Where it gets less clear-cut is supervision income (charging provisional psychologists for clinical supervision) and corporate consulting or training work, both of which can fall outside the medical services exemption and may need GST applied. Practices offering these alongside clinical work should code each income stream separately.

Income type	GST treatment	Cash flow timing
Private session, patient claims rebate	GST-free	Full fee at time of service
Bulk-billed Medicare session	GST-free	Medicare payment, several days lag
EAP / corporate referral session	GST-free	Invoice terms, often 30 days
Clinical supervision (provisional psychologists)	Usually taxable	Direct invoice
Corporate training / consulting	Usually taxable	Direct invoice

Watch: Medicare & Associate Split Bookkeeping for Melbourne Psychology Practices

Read the video transcript

If you're running a psychology practice in Melbourne and your bank feed never quite lines up with your session numbers, it's usually because you're running two billing models at once, patient-paid with a Medicare rebate, and direct bulk billing, and they move through your bank account completely differently.

Counselling income is GST-free regardless of which model you use, but supervision fees for provisional psychologists and corporate consulting work often aren't, so those need separate income accounts in Xero to keep your BAS accurate.

For group practices, the biggest bookkeeping gap we see is associate splits tracked as one blended payroll number instead of per practitioner. If you can't see billings, the split, and net margin by associate, you can't actually tell which associate arrangements are working for the practice and which aren't.

Quick action items: separate patient-paid from bulk-billed Medicare income, code supervision and corporate work to their own taxable accounts, track associate splits per practitioner, and review associate contractor status against ATO tests annually.

If you're a Melbourne psychology practice and want your books to actually show which parts of the practice are profitable, book a free 20-minute call at calendly.com/truetally, or call us on 0468 159 950. No silly questions, we've heard them all.

Associate Splits: Track Per Practitioner, Not as One Number

Most group psychology practices pay associates a percentage of their billings, commonly 60-70% to the associate, with the remainder covering rooms, admin, marketing and practice management. If this is recorded as a single lump payroll or contractor expense line, the practice loses visibility into which associates are genuinely profitable once overheads are allocated. Tracking billings, the split payment and net practice margin per associate in Xero, using tracking categories, turns an opaque expense line into a decision-making tool.

Associate Psychologists: Contractor or Employee?

This is assessed on the real working relationship, not the contract label. An associate who sets their own hours, holds independent professional indemnity insurance, and bears the financial risk of cancellations may be a genuine contractor. One working scheduled hours under the practice's clinical protocols and booking system more closely resembles an employee, triggering superannuation guarantee and PAYG withholding obligations the practice needs to budget for and meet.

Practices with associates need reporting that goes deeper than a single P&L

We set up Xero tracking so you can see billings, splits and margin by practitioner, plus GST-free versus taxable income at BAS time.

Book a Free 20-Minute Call

KPIs Every Psychology Practice Should Track Monthly

✓ Sessions delivered per clinician, per week
✓ Average fee per session, by billing type
✓ Medicare rebate turnaround time
✓ Cancellation and no-show rate
✓ Net margin per associate after practice split

Compliance Calendar for Melbourne Psychology Practices

Standard BAS obligations apply (quarterly, due 28 days after quarter end), along with superannuation guarantee at 12% for any employed staff, paid quarterly. Practices with associates should review contractor classifications annually, and any practice paying contractors for cleaning, IT or admin support should confirm whether Taxable Payments Annual Report (TPAR) obligations apply.

True Tally Bookkeeping, Melbourne

We work with psychology and allied health practices across Melbourne and Victoria on Medicare income tracking, associate splits and BAS compliance.