Bookkeeper for Health Clinics in Geelong, Medicare, NDIS and Mixed Billing

Running a health clinic in Geelong, whether you're a GP, physiotherapist, psychologist, podiatrist or occupational therapist, means dealing with one of the most demanding income structures in Australian small business. You might bulk bill Medicare, accept NDIS-funded clients and charge private fees, sometimes all in the same day. Each income stream carries different GST treatment, different reconciliation requirements and different risks if your bookkeeping gets it wrong.

This article walks through the key bookkeeping issues for Geelong health clinics: GST on Medicare and NDIS income, mixed billing challenges, payroll obligations under the health sector award, and how Xero can be configured to make all of this manageable.

Why Health Clinic Bookkeeping Is Different

Most small businesses have a straightforward income structure: sell a product or service, charge GST (or not), reconcile the bank, lodge the BAS. Health clinics are different because their income comes from at least three distinct sources, each governed by separate legislation:

• Medicare bulk billing, governed by the Health Insurance Act 1973; GST-free under the A New Tax System (Goods and Services Tax) Act 1999
• NDIS funding, governed by the National Disability Insurance Scheme Act 2013; most supports are GST-free but not all
• Private billing, patient fees that may or may not attract GST depending on the nature of the service

If these income streams are coded incorrectly in your accounting software, you'll either over-claim GST credits you're not entitled to (triggering ATO scrutiny) or under-claim credits you are entitled to (costing you money). Neither is a good outcome.

Medicare Income and GST: The Rules in Plain English

Medicare benefits paid to providers are GST-free supplies under Division 38 of the GST Act. This means:

• You do not charge GST on a bulk-billed consultation
• You cannot claim input tax credits on expenses that relate solely to making GST-free supplies
• GST-free income must be reported at G1 (total sales) and G3 (GST-free sales) on your BAS, not at G2

The common error we see in Geelong clinic books is Medicare income being coded as either "BAS excluded" or even as taxable income. Both are wrong. GST-free income still counts toward your GST turnover threshold under section 188-10 of the GST Act, so if your Medicare income pushes you over $75,000 in annual turnover, you must be registered for GST even if you never collect a dollar of GST from patients.

For clinics that also employ non-medical staff, receptionists, practice managers, cleaners, who provide services that support both GST-free and taxable supplies, you'll need to apportion your input tax credits. The ATO accepts several apportionment methods under Division 11 of the GST Act; your bookkeeper should document which method your clinic uses and apply it consistently each quarter.

NDIS Funding: Not All GST-Free

NDIS-funded health supports are generally GST-free, but the rules are more nuanced than Medicare. Under the NDIS (Consequential and Transitional Provisions) Act 2013 and the GST Act, a supply to an NDIS participant is GST-free if it is a disability support as defined in the NDIS legislation and the provider is a registered or approved NDIS provider.

The key practical issues for Geelong clinics:

• Registration status matters. Unregistered NDIS providers who supply plan-managed or self-managed participants may still be making GST-free supplies, but the specific service category must qualify. Not every service listed in the NDIS Price Arrangements and Price Limits guide is automatically GST-free.
• Support coordination and plan management billed directly to the NDIA are typically GST-free. However, certain capacity-building supports may carry GST, review each line item against the NDIS Price Guide.
• Invoicing requirements. NDIS invoices must include your ABN, the participant's NDIS number, the support item reference number and the correct price. If you claim GST where none applies, the NDIA will reject or short-pay the invoice.

In Xero, we set up separate income accounts and tax codes for NDIS-funded services, Medicare income and private fees. This makes BAS preparation straightforward and gives the practice owner a clear view of which funding stream is performing.

Mixed Billing: The BAS Complexity Nobody Warns You About

Mixed billing, where a clinic charges some patients the full Medicare rebate, some patients a gap fee on top of the rebate, and some patients a fully private fee, creates a layered reconciliation problem. Here's how the income flows typically break down:

• Bulk billing: Clinic receives the Medicare rebate directly; patient pays nothing. Income is GST-free.
• Gap billing: Medicare pays the rebate; patient pays the gap. The rebate component is GST-free. The gap fee for a medical service is also GST-free. But a gap fee for a service that doesn't qualify as a medical service under the GST Act (e.g. some allied health items) may be taxable.
• Fully private: Patient pays the full fee; may or may not claim a Medicare rebate separately. The clinic's income tax treatment depends on whether the service qualifies as a GST-free medical service.

The definition of a medical service for GST purposes is set out in section 38-7 of the GST Act. It covers services supplied by a medical practitioner, nurse, midwife or other listed health professional, but only where the service is reasonably necessary for the appropriate treatment of the patient. Services that are purely cosmetic, elective or not clinically necessary may be taxable even if provided by a GP or specialist.

For allied health providers, physiotherapists, chiropractors, psychologists, occupational therapists, the GST-free status of private consultations depends on the individual's registration under the Health Practitioner Regulation National Law and the nature of the service provided. Getting this right on a line-by-line basis is exactly the kind of work a specialist health bookkeeper should be doing for you.

Payroll for Health Clinics: Award Obligations and Super

Most clinical and administrative staff in a Geelong health clinic fall under the Health Professionals and Support Services Award 2020 (MA000027), administered under the Fair Work Act 2009. Key obligations under this Award include:

• Minimum pay rates by classification (Health Professional Level 1 through 8, and support staff grades)
• Penalty rates for weekend, public holiday and overtime work
• Annual leave loading of 17.5% on top of ordinary time earnings
• Allowances for professional development, uniforms and travel where applicable

From 1 July 2025, the Superannuation Guarantee rate is 12% under the Superannuation Guarantee (Administration) Act 1992. Super must be paid on ordinary time earnings, including salary, wages and allowances, but not overtime in most cases. Payments must be made quarterly at minimum into a compliant superannuation fund. Late or incorrect super payments attract the Superannuation Guarantee Charge (SGC) under the SGA Act, which is not tax-deductible under section 26-95 of the Income Tax Assessment Act 1997, a painful double cost.

Many Geelong health clinics also engage contractor practitioners, GPs or allied health professionals who work under a service agreement rather than an employment contract. The ATO applies a careful contractor vs employee test under the ITAA 1997 and the SGA Act. If a contractor is found to be a de facto employee, the clinic owes back super, PAYG withholding and potentially penalties. Check your contractor agreements carefully, and refer to fairwork.gov.au if you're unsure of your obligations.

Practice Management Software and Xero Integration

Most modern health clinics in Geelong use a practice management system (PMS) to manage appointments, invoicing and claiming. The most common platforms we see include:

• Cliniko, popular with allied health; integrates with Xero via built-in sync
• Nookal, used widely in physiotherapy and chiropractic practices; Xero integration available
• Halaxy, strong Medicare and NDIS claiming features; Xero integration available
• Medical Director / Best Practice, GP-focused; typically requires manual export or a third-party connector for Xero

When the PMS is correctly integrated with Xero, daily payment receipts flow through automatically, Medicare bulk billing deposits reconcile against the bank feed, and NDIS payment advices can be matched to outstanding invoices. This reduces the manual reconciliation burden significantly, but only if the chart of accounts and tax codes are set up correctly in the first place.

We configure Xero with tracking categories for each billing stream (Medicare, NDIS, private) so practice owners can see at a glance which income source is performing, what their gross margin looks like per stream, and whether their patient mix is shifting over time. This is especially useful for Geelong clinics navigating the NDIS transition or expanding into new allied health disciplines.

What to Do Next

If you run a health clinic in Geelong, or you're setting one up, the most important thing you can do right now is confirm that your bookkeeping correctly separates Medicare, NDIS and private income, and that your GST coding reflects the actual tax treatment of each stream. If you're not sure, pull up your last BAS and check whether GST-free sales (G3) are being reported separately from taxable sales. If everything is sitting in one income account with no GST breakdown, that's a problem worth fixing before the ATO finds it for you.

True Tally Bookkeeping works with health clinics across Geelong, the Surf Coast, Bellarine Peninsula and the broader Barwon region. We're a Registered BAS Agent (meaning we can legally prepare and lodge your BAS) and a Xero Certified Advisor (meaning we can configure Xero properly for your billing structure). Call us on 0468 159 950, email info@truetally.com.au, or book a free 20-minute call at Calendly to talk through your clinic's situation.