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Client appointment cancellation fees and GST - should I charge GST or are they GST Free?

Updated: 5 days ago


This post relates to Allied Health businesses and the provision of Allied health services to clients including cancellations fees. We are using the example of a Psychology practise but the principles should broadly apply to other Allied Health Businesses as well (eg: OT's, Physio's, Social Workers, Speech Pathologists etc)






The APS guidelines relating to cancellation fees for Psychologists are outlined on their National Schedule of recommended fees and state:


"Cancellation fees Fees for cancellation of appointments made for psychological services can be justified if no replacement service is billed for the lost time. The policy for charging of cancellation fees should be discussed with the client or the service requester. Written information detailing the policy on cancellations should be available for clients and referring agencies (e.g., on a printed information sheet or detailed on appointment cards). The following is a general guideline only. In the instance of a 46–60 minute service, the recommended cancellation fees are: • 0–24 hours notice: Full fee • 24–48 hours notice: 50% of fee • 48 hours–7 days notice.


Keeping that recommendation in mind (that a cancellation fee can be justified if no other appointment fee was charged for another replacement service or another client appointment) what then is the GST status of the cancelation fee - is it a GST applicable service and needs GST added on top or is it GST Free similar to an actual client appointment fee for counselling and psychological services?


There is a detailed response to this question from an ATO team member on their community website that can be accessed here:


https://community.ato.gov.au/s/question/a0J9s0000001DtoEAE/p00029735


The gist of it seems to be that surprisingly the cancellation fee is a GST free service even though it is primarily regarded from a Bookkeeping and accounting perspective as an administrative fee. According to the ATO's response on the above website the fee is GST Free "even if it also covers the costs of organising the time slot and preparations for the appointment because these activities relate to supplying the appointment (which is GST-free).


In thinking through the above 2 sources of information (the APS guidelines on cancellation fees and the ATO staff members response to the GST status question) it seems that for the the cancellation fee to be GST Free it would need to be for having set aside a guaranteed appointment time for the client that was not filled by another client or used for anther service provision that was billed BUT that's something that would need clarification as well from the ATO.


For more detailed information see the below link from a Psych Practise regarding cancellations fees and their own experience in using them and the GST status of cancellation fees, including links to detailed ATO GST rulings that apply.


https://clinpsychcentre.com.au/gst-and-psych-when-and-how-to-charge-tax/



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