An Australian psychology cancellation policy needs four things a downloaded template will not give you: a notice period and fee agreed with the client before the first session, an acknowledgement that Medicare pays nothing for a missed appointment, a position on GST for the fee itself, and terms that survive the unfair contract terms test.
What should a cancellation policy for an Australian practice cover?
Most cancellation policies online are American, written for a market with different funding, tax treatment and consumer law. A policy that works here has to settle how much notice the client must give, what is charged for a late cancellation as against a no-show, who bears that charge when a Medicare rebate would otherwise have applied, whether the fee includes GST, how and when the client is told, and who can waive it.
The last two matter more than practitioners expect. A cancellation fee is not really a billing question. It is a consent question, settled at intake rather than at the moment somebody fails to arrive.
Can you charge a cancellation fee for a Medicare-rebated session?
You can charge the client, but there is no Medicare money in it and the client cannot claim any of it back. Services Australia is unambiguous: "We can't pay Medicare benefits for services that were not provided, such as cancelled or missed appointments" (Services Australia, MBS and DVA billing).
So you cannot bill the item number: a Better Access session that did not happen is not a service. And the client carries the whole fee. Someone used to paying a forty dollar gap after the rebate receives an invoice for the full amount with nothing claimable against it, so missing a session can cost several times more than attending one. Clients rarely work this out in advance, and finding out by invoice is how fee disputes start.
Because no service was delivered, the session is also not consumed from the client's subsidised sessions for the year, though a run of missed appointments does belong in the letter you send the referring GP at the end of a course of treatment.
Is a cancellation fee GST-free if the session would have been?
Not automatically, and almost no practice policy addresses it. The Australian Taxation Office has a ruling squarely on the subject: GSTR 2009/3, Goods and services tax: cancellation fees, and its reasoning on appointments applies directly to clinical practice.
The Commissioner's view is that making an appointment is itself a supply, because the practice allocates resources, enters into obligations and refrains "from entering into an arrangement with another customer for the same or a similar intended supply at the same or a similar time" (paragraph 108). When the client does not attend, that facilitation supply was still made. Any cancellation fee is consideration for it, and "the GST status of this supply is to be determined independently of the GST status of the intended supply" (paragraph 111).
Independently is the operative word: the session being GST-free does not settle the fee. Paragraph 112 adds that where the arrangement gives the client a right to receive a GST-free supply, the fee is consideration for that right and is itself GST-free, illustrated with a patient contracting with a medical practitioner under section 38-7.
Psychological services reach GST-free status through a different provision, so that mapping is one for your accountant. The actionable point is narrower: whether the fee is GST-free turns on what your booking terms promise, so those terms need writing deliberately rather than borrowing.
What makes a cancellation fee enforceable?
The same ruling contains the sentence every practice owner should read before drafting. Paragraph 113 states that for a practitioner to recover a cancellation fee, "there must be consideration provided by the practitioner for the patient's promise to pay the fee if cancellation occurs", and identifies it as "an undertaking to set aside time to see the patient".
Read plainly, the fee is recoverable because the practice promised to hold the hour and the client promised to pay if they did not use it. Both promises must exist before the appointment. A fee announced afterwards rests on no promise the client ever made.
That matches what the regulator expects. The Ahpra shared Code of conduct treats fees as part of informed consent, asking practitioners to "get financial consent by discussing fees in a manner appropriate to the professional relationship", and to do so "preferably before the service is provided". Section 8.11 adds that practitioners "must be honest and transparent in financial arrangements with patients".
So the policy belongs with the intake paperwork. Our informed consent form guide sets out the structure this clause sits inside, and the psychology intake assessment guide covers the session where it is raised.
Could your cancellation clause be an unfair contract term?
It could. Fee and cancellation terms handed to every client in the same form, and not negotiated, are a standard form consumer contract. The ACCC states that terms are unfair if they "cause a significant imbalance in the rights and obligations of the parties under the contract", "are not reasonably necessary to protect the legitimate interests of the party who gets an advantage from the term", and "would cause financial or other harm to the other party if enforced" (ACCC, contracts).
All three limbs must be met, and only a court decides. But the ACCC also notes that from 9 November 2023, "proposing, using or relying on unfair contract terms in standard form contracts will be banned and penalties for breaches of the law will apply". Terms that were merely unenforceable now sit inside a penalty regime.
The middle limb is where a cancellation clause is tested. Charging for a slot you genuinely could not refill protects a legitimate interest. Charging the full fee for a cancellation given a fortnight out, when the slot was refilled that afternoon, does not.
How much notice should you require, and how much should you charge?
No Australian law sets a notice period for psychology, so this is a business decision:
- Match the notice period to how long it takes to refill a slot. A practice with an active waitlist can fill a Tuesday morning at short notice. A practice without one cannot, and its longer period is easier to justify.
- Separate late cancellation from no-show. A client who calls four hours out gave you some chance of using the time. One who does not appear did not.
- Consider a tiered fee rather than the full rate. A percentage scaling with how little notice you received tracks your actual loss, which is the ground the reasonably necessary limb turns on.
- Set the fee against your loss, not the client's behaviour. A fee designed to deter rather than compensate is most exposed to challenge.
Telehealth deserves its own line, since a client who never joins the video call is a no-show that is easy to dispute. Our guide to telehealth documentation requirements covers the records around it.
What about NDIS-funded and other third-party-funded clients?
Your practice policy does not govern these appointments, and applying it by default is a common and expensive mistake.
Where sessions are funded through the NDIS, cancellation is governed by the scheme's own rules in the NDIS Pricing Arrangements and Price Limits. That document defines what counts as a short notice cancellation, what proportion of the agreed price can be claimed, and what the service agreement must say for a claim to be valid. It is reissued regularly and the rules have changed more than once, so check the current version rather than a figure a colleague quoted. Insurers, employers and employee assistance programs each bring their own contract too.
When should you waive the fee?
Often enough that the policy should name who can do it. The Ahpra shared Code asks practitioners not to "exploit the vulnerability or lack of knowledge of patients". Someone who misses a session because they are acutely unwell, in crisis, or in the grip of the avoidance that brought them to therapy is not a debtor to pursue, and a rigid fee can end a relationship a waived one would have preserved.
Positions worth writing down: waive automatically for a first occurrence; waive where non-attendance is plausibly a feature of the presenting problem; waive for financial hardship, and say so rather than making the client ask; and require a clinician, not an administrator, to approve charging a client flagged as at risk. Record the decision and its reason in the file, as our guide to record retention covers.
A cancellation policy checklist you can adapt
Work through this and you will have covered what imported templates miss:
- The notice period in hours or business days, with a worked example.
- Separate consequences for late cancellation and non-attendance.
- The fee, as an amount or a percentage of the session rate.
- A statement that no Medicare rebate applies to it.
- Whether the fee includes GST, settled with your accountant.
- The undertaking you give in return: that the time is held.
- What happens when the practice cancels.
- How telehealth non-attendance is treated.
- A note that funded appointments follow the funder's rules.
- Named grounds for waiver, and who approves one.
- When the client receives the policy, and how acknowledgement is recorded.
PractaLuma is AI-native practice management software for Australian mental-health practices, and this is where software earns its keep: the calendar is where reminders reduce how often the conversation happens at all, billing applies the fee consistently, and client records is where the acknowledged policy and any waiver live. See pricing.
Frequently asked questions
Can a psychologist legally charge a cancellation fee in Australia? Yes, provided the client agreed before the appointment. The ATO's ruling frames recovery around the practice promising to set aside the time in exchange for the client's promise to pay, so the term must be in place beforehand.
Does Medicare cover a missed psychology appointment? No. Services Australia states that benefits cannot be paid for services that were not provided, including cancelled and missed appointments. The client pays any fee in full with no rebate.
Should a cancellation fee include GST? It depends on what your booking terms promise and how your services qualify as GST-free. GSTR 2009/3 treats the fee as consideration for a separate facilitation supply, whose GST status is determined independently of the session. Confirm your position with your accountant.
Is 24 hours' notice standard for psychology practices? It is common, but nothing in Australian law sets it. Choose a period you can justify by how long your practice needs to refill a slot, since that is what the unfair contract terms test turns on.
This article is general information for Australian practitioners, not legal, tax or financial advice. Confirm your GST position with your accountant and your contract terms with a lawyer.