For most NDIS therapy providers, GST-free treatment comes from section 38-10 of the GST Act, not the NDIS rules. Occupational therapy, physiotherapy, psychology and speech pathology are listed there and are GST-free. Music therapy, art therapy and exercise physiology are not listed, so they are usually taxable even when funded in a participant’s plan.

This is one of the most expensive misunderstandings in the disability services sector, and it almost always runs the same way. A therapist is told their work is an approved NDIS support, they see the funding land in a participant’s plan, and they conclude that their invoices must be GST-free. Two or three years later, an ATO review asks a question nobody has asked before, and the answer costs them one eleventh of everything they have billed.

This guide walks through the actual law: the four conditions in section 38-38, why the NDIS Determination does not cover clinic-based therapy, and the section 38-10 route that decides the outcome for almost every therapy business. Written by Mina Baselyous, Chartered Tax Advisor (CTA), CPA and Registered Tax Agent, who advises NDIS provider businesses across Melbourne.

Why NDIS therapy providers get GST wrong

The error is a category error. NDIS funding approval and GST treatment are two separate decisions, made by two separate agencies, under two separate sets of rules. The NDIA decides what it will pay for. The ATO decides whether GST applies. A support can be fully funded, properly documented and completely legitimate, and still be a taxable supply.

In our experience working with NDIS provider businesses, the providers most at risk are the ones doing everything else right. They have signed service agreements, clean plan documentation and careful records. None of that touches the question the ATO actually asks, which is whether the service is a kind of supply the law has made GST-free.

In practice, says Mina Baselyous (CPA, CTA, Registered Tax Agent), the mistake we see most is a provider assuming that because the NDIA funded it, the ATO must treat it as GST-free. Those are two different questions, and only one of them is answered by the plan.

The four conditions in section 38-38 of the GST Act

Section 38-38 of the GST Act makes a supply to an NDIS participant GST-free only where all four conditions are met. Miss any one of them and the supply is taxable. The first three are documentation. The fourth is the one that decides most therapy cases, and it has nothing to do with the participant at all.

• The participant has an NDIS plan in effect.
• The supply is of reasonable and necessary supports specified in the statement of supports in that plan.
• There is a written agreement between you and the participant, or another person, identifying the participant and stating that the supply is of those supports.
• The supply is of a kind determined by the Disability Services Minister.

That fourth condition points to the A New Tax System (Goods and Services Tax) (GST-free Supply, National Disability Insurance Scheme Supports) Determination 2021. The Determination applies to supplies made from 1 July 2021 up to and including 30 June 2027, and it contains two tables. Most providers have never read either of them.

Why Table 2 does not cover clinic-based therapy

Table 1 of the Determination lists nine kinds of supply that are GST-free on their own. Therapy is not one of them. Table 2 does include therapeutic supports, but only where the supply is also covered by one of three other determinations, all of which are tied to specific care settings. Clinic, school, home and community delivery falls outside them.

Table 1 covers specialist disability accommodation and accommodation or tenancy assistance, assistance in coordinating or managing life stages and transitions, household tasks, assistance with and training in travel and transport, interpreting and translation, assistance to access and maintain education and employment, assistive equipment for recreation, early intervention supports for early childhood, and management of funding for supports in a participant’s plan.

Table 2 covers assistance with daily personal activities, specialised assessment and development of daily living and life skills, assistive equipment for general tasks and leisure, behavioural support and therapeutic supports, and home modifications. Behavioural support and therapeutic supports is item 4, and it is the one every therapist points to.

The catch sits in the wording of the Determination. A Table 2 supply is GST-free only if it is also covered by Schedule 1 to the GST-free Supply (Care) Determination 2017, section 6 of the Residential Care (Government Funded Supplier) Determination 2015, or section 6 or 7 of the GST-free Supply (Health Services) Determination 2017. The Care Determination is a list of home and community care items such as home help, personal care, respite, community nursing and counselling, tied to keeping a targeted person living at home. The Residential Care Determination requires a residential care setting. The Health Services Determination covers two very narrow situations only, being a resident under treatment at a psychiatric hostel, and substance abuse prevention and control among Aboriginal and Torres Strait Islander people.

The ATO works this through with a published example. A participant named Bernie has fortnightly exercise physiology specified in his plan, delivered at a clinic, with a written agreement in place. The first three conditions are satisfied. The ATO’s conclusion is that the fourth is not, because the supply of exercise physiology services is not covered by the NDIS Determination. See the ATO guidance on GST and the National Disability Insurance Scheme.

Music therapy delivered in a clinic, a school, a participant’s home or the community sits in exactly the same position as Bernie’s exercise physiology. So does art therapy. So does most counselling delivered outside a home care or residential care program.

The route that actually works: listed health services under section 38-10

Section 38-10 of the GST Act makes a health service GST-free where three limbs are met: the service is one of the kinds listed in the table in that section, the supplier is a recognised professional in relation to that listed service, and the service would generally be accepted in that profession as necessary for the appropriate treatment of the recipient. This is the route that decides most therapy invoices, whether or not the client is an NDIS participant.

The table lists 21 services: Aboriginal or Torres Strait Islander health, acupuncture, audiology and audiometry, chiropody, chiropractic, dental, dietary, herbal medicine, naturopathy, nursing, occupational therapy, optometry, osteopathy, paramedical, pharmacy, psychology, physiotherapy, podiatry, speech pathology, speech therapy, and social work.

Two things about that list matter enormously. First, it is closed. The ATO’s position on other health services is that the service must be one of the listed services and cannot just be similar to one of them. Its own worked example is remedial massage, which resembles physiotherapy, is delivered by qualified practitioners, and is still taxable because it is not on the list.

Second, being a recognised professional has a defined meaning. It requires registration under a state or territory law, or membership of a professional association with uniform national registration requirements that is genuinely representative of the profession. Holding a qualification, or belonging to a small association, does not automatically satisfy it.

Where music therapy, art therapy and counselling land

Music therapy is not in the section 38-10 table, and it is not psychology or speech pathology. It is not rescued by the NDIS Determination in an ordinary delivery setting. On the law as it currently stands, a registered music therapist who is registered for GST should generally be charging GST on their services, including services to NDIS participants.

The same analysis applies to art therapy and, in most delivery settings, to counselling provided by someone who is not a psychologist or social worker. Exercise physiology is the ATO’s own example of the outcome.

There are narrower situations worth testing on the facts rather than assuming away. Table 1 item 8 covers early intervention supports for early childhood, which is arguable where the participant is an early childhood participant and the therapy is genuinely funded and delivered as early intervention support. Therapy supplied as part of GST-free hospital treatment, or inside a government funded residential care facility, can also qualify. And a sole trader whose turnover sits below the GST registration threshold and who is not registered has nothing to charge in the first place.

One more point that catches people out. The GST registration turnover threshold is $75,000, or $150,000 for a non-profit body, as at September 2026. GST-free supplies still count towards that threshold. A therapist billing $90,000 of genuinely GST-free work is required to register, even though the registration changes nothing about what they charge. Our guide to GST registration in Australia covers the mechanics.

What to do if you have been treating taxable therapy as GST-free

The exposure is one eleventh of everything you have invoiced on the wrong basis, because the GST is treated as included in the price you already charged. On $400,000 of therapy fees billed over three years, that is roughly $36,000 of GST, before any general interest charge. The offset is that you can claim back the GST credits on your business purchases for those periods, which you may not have been claiming.

Work through it in this order, with your accountant, before you change anything on an invoice.

• Separate your revenue by service type and delivery setting, not by whether the client is an NDIS participant. The setting and the service are what drive the answer.
• Quantify the exposure on the taxable streams, and quantify the input tax credits available to offset it.
• Check how your fees sit against the NDIS Pricing Arrangements and Price Limits, so you know whether GST comes out of your existing price or can be added on top. This determines the commercial impact, and it is a separate question from the tax one.
• Decide on voluntary disclosure. Coming to the ATO before it comes to you materially reduces penalties.
• Fix the go-forward position first, so the problem stops growing while the historical question is resolved.

If your books are not currently split by service type, that is the first job. You cannot quantify an exposure you cannot see, and our post on GST cash versus accruals accounting is worth reading alongside this one, because the method you use changes which periods the correction lands in.

How to get certainty before the ATO asks

Where the position is genuinely arguable, apply to the ATO for a private ruling. A private ruling is binding on the Commissioner for the arrangement it describes, which means you stop carrying the risk personally, and it is the only way to get certainty on a point the ATO has not published guidance about.

A good application sets out the delivery setting, the participant cohort, the exact plan wording, the service agreement, and the professional registration held. A weak one asks whether music therapy is GST-free and gets an unhelpful answer. This is advisory work, not compliance work, and it is worth doing properly.

For the broader picture across an NDIS business, including SDA, PAYG withholding and the contractor rules, see our main guide on GST, SDA, PAYG and contractor rules for NDIS providers. If the GST question is really a symptom of a structure that has outgrown itself, our tax planning work is where that conversation starts.

A note on how current this is. As at September 2026 we could not find any court or tribunal decision changing the operation of section 38-38, and the Determination remains in force as a March 2025 compilation. Tax rules change, so confirm the position against the primary sources linked above, or with us, before you act on it.

Frequently Asked Questions

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