Allied health professionals — whether working in private practice, in a clinic, or as independent contractors billing under Medicare or private health — face a specific and often misunderstood set of tax obligations. Two questions come up more than any other: 'Are my services GST-free?' and 'Am I a contractor or an employee?' Both have answers that depend on the details — and both are worth getting right before your next tax return.
Are Allied Health Services GST-Free?
This is not a blanket yes or no. The ATO classifies health services as GST-free only if they meet specific criteria:
Conditions for GST-Free Health Services
The practitioner must be recognised by law (i.e., registered with AHPRA or the relevant body)
The service must be generally accepted in the relevant medical profession as a necessary treatment
The service must be for the treatment of an individual (not administrative or coaching services)
In practice, this means:
- Consultations, assessments and therapeutic treatment by a registered physio, psychologist or optometrist: typically GST-free
- Non-clinical services, coaching, wellness programs: likely taxable
- Optical products (glasses, contact lenses): taxable — separate from the professional consultation
GST Applies to Some Allied Health Income
Psychologists providing non-Medicare services such as coaching, workplace wellbeing programs or executive consulting — these are not automatically GST-free simply because the practitioner is registered.
Optometrists selling optical products must charge and remit GST on those sales regardless of their clinical service status.
If any portion of your income is taxable (i.e., has GST), you must register for GST once total turnover exceeds $75,000.
Contractor or Employee? The Most Consequential Question
Many allied health practitioners work in clinics under arrangements where they receive a percentage of billings — say 60–70% of what they bill Medicare or private health. They often refer to themselves as contractors. But the ATO looks at the actual working relationship, not the label.
You may be classified as an employee even under a contractor agreement if:
If you are incorrectly classified as a contractor when you are actually an employee, the employing clinic bears the superannuation and payroll obligations — but if you are the clinic owner engaging these practitioners, you carry the liability.
- The clinic controls your schedule, hours and patient load
- You cannot work for competing clinics
- You use the clinic's equipment, rooms and consumables
- You do not advertise independently or maintain your own client base
Do You Need an ABN?
If you genuinely operate as a contractor — invoice clinics, work across multiple practices, bear some business risk — yes, you need an ABN and should register as a Sole Trader (or company if appropriate).
If you are employed, you operate under your employer's ABN and should be on payroll with PAYG withholding applied.
What Deductions Can Allied Health Practitioners Claim?
The key points are below:
- Professional registration fees — AHPRA registration
- Professional indemnity insurance
- Continuing Professional Development (CPD) courses and conferences
- Professional memberships — APA, AIOP, APS, etc.
- Clinical equipment and supplies
- Clinic room hire or lease proportion
- Relevant textbooks, journals and clinical resources
- Work-related travel between sites
- Home office expenses for administration
- Everyday clothing — a polo shirt with a clinic logo is generally not deductible
- Gym memberships or general fitness (unless you are a practitioner treating in exercise physiology and it is directly required)
- Meals and entertainment without a clear business purpose
Should You Set Up a Company?
Many allied health practitioners at higher income levels benefit from operating through a company or trust. PSI rules do apply here — because the income is derived from personal clinical skills — but structuring still offers meaningful benefits:
- If you own and operate a practice employing others, PSI is less likely to apply to the business income
- Company tax at 25% vs personal rates of up to 47%
- Better asset protection — particularly relevant for practitioners with personal liability exposure
General information only
This article provides general tax information only and does not constitute personal tax, legal, or financial advice. Tax rules can change and individual circumstances vary.
If you would like advice based on your situation, please get in touch with the practice.
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