Navigating The Cycle of Multiple Funders And State Compliance
For Australian allied health providers, each invoice you generate may be linked to a different regulatory body, a different pricing structure and a different set of compliance rules. Your bookkeeping system is a critical gatekeeper that protects your practice from financial and legal risk.
Here are four key bookkeeping and compliance priorities for all allied health practices to focus on in 2025.
1. Multi-Funder Invoicing: Accuracy Is Profit
You are dealing with more than just private fee-for-service. Your system must be configured to handle the nuances of each major funder:
Medicare (EPC/CDM): Accurate tracking of the number of services claimed against annual limits, proper use of item numbers and proper linkage to the practitioner are required. Audit of false billing risks by the Department of Health.
NDIS: Requires specific item codes, spending limits and detailed service records. Ensure your system can easily separate NDIS-funded income and expenditure.
Private health funds: Requires specific provider numbers and often involves integration with third-party claims platforms (e.g., HICAPS). Your bank reconciliation process should match bulk fund payments with individual client invoices.
WorkCover / CTP: These payers typically have state-specific fee schedules that change annually (e.g., WorkCover Queensland fees are updated mid-2025).6 Your system must be updated immediately to avoid claiming at outdated rates.
Bookkeeping best practices: Use practice management software that integrates with your cloud accounting platform (Xero, MYOB). This single-entry system reduces errors and ensures that all revenue streams are coded to the correct service category.
2. Payroll Tax Red Zone: Reviewing Your Contractor Model
The most significant financial threat to many Australian allied health businesses in 2025 is a crackdown on payroll tax. State revenue offices across Australia are actively investigating service contracts with contractor clinicians.
Problem: If a contractor is considered an “employee” for payroll tax purposes (based on their level of control, provision of equipment, etc.), the practice could be liable for years of backdated payroll tax, plus significant penalties and interest.
Bookkeeping priority: Accuracy in classification. You should take care to separate actual employee wages from contractor payments. Your accounting software needs specific general ledger accounts for each.
Actionable step: Get immediate legal and tax advice to review your contractor agreements. Bookkeeping alone cannot solve this, but accurate financial data will be essential for your advisor to assess your risk exposure and restructure if necessary.
3. ATO Compliance: Don’t Let Interest Cost You Too Much
The Australian Taxation Office (ATO) has tightened its rules on interest deductions on tax debts, making tax planning and timely compliance even more important for cash flow.
Change: From mid-2025, interest charged by the ATO (General Interest Charge/GIC or Shortfall Interest Charge/SIC) will generally no longer be tax deductible.
Impact: This significantly increases the real, after-tax cost of carrying ATO debts (e.g., overdue BAS or PAYG instalments). Relying on an ATO payment plan as a form of business financing is now too expensive.
Bookkeeping priority: Real-time tax liability tracking. Your bookkeeper should regularly forecast your upcoming GST, PAYG withholding and superannuation guarantee contributions. Use separate bank accounts to temporarily hold these funds, ensuring you are never short when the compliance deadline arrives.
4. Record Retention And Security
Compliance requires evidence. All financial and service delivery records should be stored securely and easily accessible for audit.
Five-year rule: All records (invoices, receipts, BAS, payroll records, service contracts) should be kept for at least five years from the date of their creation or registration.
Security and privacy: As a healthcare provider, you have sensitive patient data (financial and clinical). Your digital bookkeeping and practice management systems should comply with Australian privacy laws (e.g., the Privacy Act). Use reputable, cloud-based software with strong encryption and multi-factor authentication.
Next Point:
Bookkeeping is the engine of your allied health practice, but compliance is the fuel. By prioritizing accurate multi-funder invoicing, addressing payroll tax risk, proactively managing your tax obligations, and maintaining secure records, you are securing your business for a successful 2025 and beyond.
Read More: Moving Your NDIS Bookkeeping from Reactive to Proactive
