NDIS services are often GST-free, but only if you meet the specific 2026 requirements under Section 38-38 of the GST Act. Many providers incorrectly assume all NDIS work is exempt — and that assumption can trigger an ATO audit. Here's what you need to know.
1. The "GST-Free" Supply Test
For your NDIS services to be classified as GST-free, all three of the following conditions must be met:
- Active NDIS Plan: The participant must have a current, approved NDIS plan at the time of service delivery.
- "Reasonable and Necessary": The support you provide must be specifically listed or fall within the scope of the participant's approved plan.
- Written Service Agreement: You must have a signed agreement between your business and the participant (or their plan manager/nominee) that states the services are NDIS supports.
If any one of these conditions is missing — for example, no written agreement exists — the ATO can reclassify your supply as taxable. We audit your service agreements quarterly to ensure they meet this three-part test.
2. Mixed Supplies and Administration Fees
This is where most providers get caught out. While direct care services are usually GST-free, the following are often not exempt:
- Administration fees charged separately from care (e.g., "plan management admin fee" billed as a standalone line item).
- Travel charges that exceed the NDIS Price Guide caps or are billed outside the participant's plan.
- Non-NDIS services bundled with NDIS work — for example, a cleaner who does NDIS cleaning and private residential cleaning under the same ABN.
- Cancellation fees where no service was actually delivered.
The safest approach is to separate your NDIS and non-NDIS revenue streams in your accounting software. We set up dedicated tracking categories in Xero so your BAS is always accurate.
3. Subcontractor GST Chains
If you subcontract work to another provider, the GST rules get complex. Here's the key distinction:
- Your supply to the participant → GST-free (if the three-part test is met).
- The subcontractor's supply to you → may be taxable, because the sub doesn't have a direct agreement with the participant.
This means you could be paying GST on incoming invoices that you can't pass through. We help you structure subcontractor agreements so the GST-free chain is maintained end-to-end.
4. Claiming Input Tax Credits
Even if you don't charge GST on your NDIS services, you can still claim input tax credits on your business purchases. Common claims include:
- Fuel and vehicle running costs for client travel.
- Software subscriptions (Xero, ShiftCare, CareView).
- Office rent, internet, and phone bills.
- Professional development and training courses.
- Insurance premiums (Professional Indemnity, Public Liability).
Many providers leave thousands of dollars in unclaimed credits on the table each year. We reconcile your purchases monthly to ensure every eligible credit flows through to your BAS.
5. Common BAS Mistakes for NDIS Providers
The ATO has flagged NDIS providers as a focus area for compliance reviews. The most common errors we see are:
- Reporting GST-free income at G1 instead of G3 — this overstates your GST liability.
- Not registering for GST when turnover exceeds $75,000 (even if all income is GST-free, registration is mandatory above the threshold).
- Mixing personal and business expenses in GST claims.
- Failing to apportion when a vehicle or phone is used for both NDIS and personal purposes.
Key Takeaways
- GST-free status requires an active plan, reasonable-and-necessary supports, and a written agreement.
- Admin fees, travel charges, and cancellation fees may still attract GST.
- Subcontractor chains can break the GST-free status — structure agreements carefully.
- Always claim your input tax credits, even on GST-free supplies.
- Register for GST once your turnover exceeds $75,000, regardless of GST-free status.