Most medical services are GST-free, but many practices and some doctors are registered for GST. Practices typically charge GST on service fees, and GST-registered doctors can claim credits on costs such as service fees, equipment and rent. If activity statements have fallen behind, there is a deadline you may not know about.
GST you collected stays payable. If a BAS has never been lodged, the ATO's four-year review period hasn't started, so those quarters remain open and can still be assessed.
GST credits expire. Your entitlement to a GST credit ends four years after the BAS for the period in which you could first have claimed it was due. That's four years from the original due date, not from whenever you get around to lodging. After that date, the credit is gone.
Take a quarter with $55,000 of sales including $5,000 of GST, and $55,000 of business costs also including $5,000 of GST.
A nil BAS has become a $5,000 debt, before failure-to-lodge penalties and interest charges. Repeat that across several years of unlodged quarters and the cost adds up quickly.
For a doctor whose own services are all GST-free, the risk looks different but is just as real: credits on service fees and other costs simply expire, and with them any refund you were owed.
The ATO's ruling on these time limits, MT 2024/1, is strict, and the ATO states that it has no discretion to extend the four-year limit. Tribunal decisions have upheld the limit even where taxpayers had explanations for lodging late. The exceptions are narrow, and being late, a bookkeeper who went quiet or an accountant who didn't lodge are not among them.
If you have outstanding activity statements, credits still inside the four-year window can be saved. Anything outside it can't. Book a call before another quarter drops off the end, or see our medical practice accounting service.
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