The short answer: Physiotherapy practice finances come down to four things: getting the GST right (most physio treatment is GST-free, but retail sales and some equipment are not), reconciling a messy mix of private health (HICAPS), Medicare and DVA cleanly, watching your margin per clinician and treatment room, and connecting your practice-management software to Xero so the books match the diary.
Key takeaways
- Hands-on physiotherapy treatment is GST-free, but braces, pillows and gym memberships you resell usually are not.
- Your income arrives from at least five channels: private/HICAPS, Medicare CDM, DVA, WorkCover/TAC and retail. Each reconciles differently.
- Revenue per clinician and treatment-room utilisation tell you more about practice health than total turnover.
- Practice software (Cliniko, Nookal, Halaxy) should feed Xero as a daily summary, not as hundreds of duplicated invoices.
On this page
Is physiotherapy GST-free?
Yes, in almost every case. A physiotherapy service is a GST-free health service when it is performed by a recognised professional and is generally accepted as necessary for the patient's treatment, under the rules the ATO sets for GST. That covers your consults, treatment and most reports. Where practices trip up is the retail counter: a theraband, a support brace, a foam roller or a heat pack sold to a patient is a taxable sale, and so is a gym or reformer membership. If you sell any of those, you are running a mixed business and Xero needs a tax rate on each item so your BAS is right.
Across the Geelong and Bellarine region, most single-clinician physio rooms stay under the $75,000 GST registration threshold in their first year, but the moment you add a second practitioner or a busy retail line you usually cross it. Register before you have to, not after.
The income streams to separate
The single biggest bookkeeping job in a physio practice is untangling how the money actually lands versus what was billed. A $90 consult can arrive as an on-the-spot HICAPS rebate plus a card gap payment, a Medicare Chronic Disease Management (CDM) benefit paid days later, a DVA payment, or a WorkCover invoice paid weeks later. If you record the gross fee and the rebate as two unrelated lines, your income is overstated and your reconciliation never balances.
| Income stream | GST | How it is paid | Reconciliation tip |
|---|---|---|---|
| Private / HICAPS | GST-free | Rebate on the spot, gap by card | Match the HICAPS settlement to the day's takings |
| Medicare CDM | GST-free | Benefit paid to the patient or bulk-billed | Up to 5 subsidised allied health visits per patient per year |
| DVA | GST-free | Paid by DVA on accepted conditions | Reconcile the DVA remittance, not the invoice date |
| WorkCover / TAC | GST-free service | Insurer pays on invoice, often 30+ days | Track as a receivable, chase ageing weekly |
| Retail (braces, aids) | Taxable | Card / cash at point of sale | Give each product its own Xero tax rate |
The margin numbers that matter
Turnover hides problems. Two numbers expose them. The first is revenue per clinician per day: what one practitioner actually generates once no-shows and admin time are removed. The second is treatment-room utilisation: how many of your available room-hours are booked and billed. A practice can be fully booked and still lose money if the clinician cost sits above roughly 45 to 50 per cent of the revenue that clinician brings in.
| Metric | Healthy range | Why it matters |
|---|---|---|
| Clinician cost as % of their revenue | 40-50% | Above this, each booking barely breaks even |
| Treatment-room utilisation | 75-85% | Empty rooms are fixed cost with no income |
| Average fee per attendance | Rising with CPI | A flat fee is a real-terms pay cut every year |
| Debtor days (WorkCover/TAC) | Under 30 | Insurer work funds your wages, so chase it |
Connecting your software to Xero
Cliniko, Nookal and Halaxy all run the diary and take payments, but they are not your accounting system. The clean pattern is a daily takings summary posted to Xero (one journal per day, split by payment type and GST treatment), with the bank feed reconciled against it. Pushing every individual patient invoice into Xero double-counts income and buries you in reconciliation. If you sync anything, sync the summary. Xero handles the bank side; the practice software owns the clinical record.
Employees, contractors and payday super
Whether an associate physio is an employee or a contractor changes your PAYG, super and leave obligations, and getting it wrong is expensive. A practitioner who works set hours in your rooms, under your name and systems, is usually an employee even if you both call it a contract. Employees are covered by the Health Professionals and Support Services Award, which the Fair Work Ombudsman publishes. From 1 July 2026, super must be paid on each payday rather than quarterly, so clean payroll data matters more than ever, and the super guarantee rate is 12 per cent.
Cash flow: when insurer work funds your wages
The quietest risk in a physio practice is the gap between doing the work and getting paid for it. Private and HICAPS income lands the same day, but WorkCover, TAC and DVA work is invoiced and can sit unpaid for thirty, sixty or even ninety days. If a meaningful slice of your caseload is insurer funded, you are effectively lending those insurers money while still paying rent and wages on time. Two habits keep this under control. First, treat every insurer invoice as a receivable the day it is raised, and review the debtor list weekly so nothing quietly ages past sixty days. Second, hold a cash buffer sized to your slowest paying funder, not your average one. A practice that looks profitable on paper can still miss a payroll when a large TAC batch is late and there is no buffer behind it.
Reconciling to the remittance rather than the invoice also stops a common illusion. The invoice says one figure, the insurer pays another after adjustments, and if you booked the full invoice as income you now carry a phantom debtor that never clears and slowly overstates both your income and your receivables. Book the work, chase the money, reconcile to what actually arrived, and watch debtor days as closely as you watch the appointment book. In a growing Geelong practice, the month you add a second clinician is usually the month cash flow gets tighter before it gets better, so build the buffer before you hire, not after.
Looking for a bookkeeper in Geelong? True Tally provides fixed-fee bookkeeping, BAS lodgement and payroll for small businesses across Geelong and the Surf Coast.
Want your physio practice numbers actually working for you?
We set up the software-to-Xero flow, get the GST split right, and give you the per-clinician numbers that matter. Registered BAS agent, Xero certified.
Book a Free 20-Minute CallThe bottom line
A physiotherapy practice in Geelong is a mixed business hiding inside a health service: mostly GST-free treatment, a taxable retail edge, and income that lands through five different doors. Get the tax rates right on every item, reconcile to how money actually arrives rather than to the invoice, and watch revenue per clinician instead of raw turnover. Do that and the books stop being a monthly headache and start telling you which rooms and which clinicians are carrying the practice.