Understanding GST for Exercise Physiologists

As a business owner in the allied health sector, understanding the Goods and Services Tax (GST) is essential. GST impacts your pricing, compliance, and cash flow management, so getting it right from the start will save you headaches and ensure your business operates smoothly and legally.

What is GST?

The Goods and Services Tax (GST) is a 10% tax applied to most goods and services in Australia. As an Exercise Physiologist, the GST rules can be complex because some of your services may be GST-exempt, while others may attract GST.

Why GST is Essential for EPs

  1. Compliance with Australian Tax Law

    • If your annual turnover exceeds $75,000, you are legally required to register for GST.

    • Failure to register, collect, and remit GST can result in fines and penalties.

  2. Knowing When GST Applies to Your Services

    • Allied health services are generally GST-free if they meet the criteria for "health services provided for the treatment of a patient."

    • However, GST may apply in the following situations:

      • Services that are not classified as treatment (e.g., group fitness classes, corporate health programs, or general fitness advice).

      • Selling products such as exercise equipment, supplements, or software.

    • Knowing when to apply GST ensures accurate invoicing and avoids compliance risks.

  3. Impact on Pricing and Profitability

    • If GST applies to your services, you need to include the 10% tax in your prices.

    • This can affect your competitiveness, especially if other allied health providers or competitors offer GST-free services.

    • Clear understanding allows you to price services appropriately, ensuring clients understand what they’re paying for.

  4. Cash Flow Management

    • GST is collected on behalf of the government, meaning you don’t keep the 10% you charge.

    • Failing to set aside GST can result in cash flow issues when it’s time to lodge your Business Activity Statement (BAS).

    • Understanding GST helps you manage your income and expenses effectively to avoid unexpected tax debts.

  5. Claiming Input Tax Credits

    • When you’re registered for GST, you can claim Input Tax Credits for GST paid on business expenses (e.g., equipment, software subscriptions, or clinic rent).

    • This reduces your tax liability and lowers your overall operating costs, making your business more efficient.

  6. Professional Perception and Credibility

    • Being registered for GST can demonstrate professionalism and legitimacy to clients and referrers, particularly in industries where GST registration is the norm.

How to Manage GST as an EP

  1. Register for GST

    • You can register for GST through the Australian Taxation Office (ATO) website or as part of your ABN application.

  2. Understand GST-Free vs GST-Taxable Services

    • Refer to the GST for Health Services guidelines provided by the ATO to determine which of your services are GST-free.

    • Keep clear records of all GST-free and GST-taxable services to avoid confusion.

  3. Keep Accurate Records

    • Use accounting software (e.g., Xero, MYOB, or QuickBooks) to track GST collected and paid.

    • Ensure invoices clearly state GST amounts where applicable.

  4. Lodge Your BAS Regularly

    • You’ll need to lodge your Business Activity Statement (BAS) quarterly or monthly, depending on your business setup.

    • BAS reports the GST you’ve collected and allows you to claim input tax credits.

  5. Work with a Tax Professional

    • GST can be complex, especially when dealing with mixed GST-free and GST-taxable income streams.

    • A tax accountant with experience in allied health businesses can help you stay compliant and maximise input tax credits.

Key Takeaways

  • GST registration is mandatory if your turnover exceeds $75,000, but voluntary registration can still benefit your business.

  • Allied health services are generally GST-free when meeting health treatment criteria, but not all services qualify.

  • Managing GST effectively protects your cash flow, ensures compliance, and allows you to claim input tax credits on expenses.

  • Investing time to understand GST will streamline your operations and keep your business financially healthy.

Resources for GST and Allied Health

  • ATO GST for Health Services Guide: Visit the ATO website

  • GST Registration and BAS Help: Speak to a registered tax accountant or bookkeeper.

By understanding GST, you can confidently manage your business finances, avoid compliance risks, and focus on delivering exceptional care to your clients.