GST & BAS Calculator

GST-free does not mean you lose your credits

This is the single most expensive misunderstanding in practice GST. A supply being GST-free means you do not charge GST on the way out — it does not mean you forfeit the GST you paid on the way in. You still claim input tax credits on purchases used to make GST-free supplies.

That distinction is the entire difference between GST-free and input-taxed. Input-taxed supplies, such as most financial supplies, genuinely do deny credits. GST-free supplies do not.

The practical consequence surprises a lot of practice owners: a practice whose income is mostly GST-free will usually receive a refund from the ATO rather than a bill. If your BAS always shows an amount payable despite almost entirely Medicare-funded income, that is worth investigating.

What is GST-free and what is not

Clinically necessary treatment provided by a registered health practitioner is generally GST-free under section 38-7 of the GST Act. Prescriptions dispensed on a valid prescription are also GST-free.

Cosmetic procedures are taxable. This is where practices most often get caught, because the line between a reconstructive procedure and a cosmetic one is not always obvious, and it turns on the purpose of the treatment rather than the procedure itself. A procedure performed to correct or reconstruct following illness, injury or congenital abnormality is treated differently from the same procedure performed purely for appearance.

Retail sales — skincare, supplements, devices — are taxable. Non-clinical services such as medico-legal reports, some corporate health work and room rental may also be taxable depending on the arrangement.

Apportionment is where the errors happen

You can only claim credits for the creditable portion of your purchases. Two things reduce that portion: private or non-creditable use, and use in making input-taxed supplies.

What does not reduce it — contrary to what many practices assume — is the GST-free share of your income. Apportioning credits by the ratio of taxable income to total income is a common error that leaves money unclaimed.

If you use a vehicle, a phone or a home office partly privately, reduce the private percentage here and the calculator will apply it.

The registration threshold catches practices out

The $75,000 registration threshold counts GST-free income. A practice billing $200,000 in Medicare-funded consultations has GST turnover of $200,000 even though it charges no GST at all, and is well over the threshold.

Registration is not optional at that point, and the obligation to register arises from turnover rather than from whether you are charging GST.

What this calculator does not do

It does not determine whether a specific procedure is GST-free. That is a judgement about the purpose of the treatment, and it is the part most likely to be disputed on review.

It also does not replace your BAS. It is a planning tool for understanding your position and sense-checking what your software produces.

Where a material amount turns on the classification of a procedure, get advice from your accountant or tax agent before lodging.