Choosing the right tax calculation method ensures your billing aligns with tax obligations and meets your practice’s needs. Cliniko offers two calculation methods: tax exclusive and tax inclusive.

This change will adjust how invoices display tax calculations, but it won’t modify the tax settings of your billable items or products. Any items that are already marked as taxable will remain so, and those without tax applied will continue to be tax-free.

Below is a breakdown of how each method works to help you decide which one suits your practice best as well as what happens when you switch between methods.

Tax exclusive calculation method

In tax exclusive invoices, the tax amount is added separately after the invoice’s line items have been totalled. This means:

Each product or service’s line item displays only its base price without tax.
The subtotal (total of all line items) is listed first, followed by the tax amount underneath, calculated based on the subtotal.
Finally, the total amount is the subtotal plus the tax amount.

Here's an example of a billable item with a 10% tax rate:

The billable item details show the tax exclusive amount, plus the tax that will be added once invoiced.

Here's what this looks like when added to an invoice:

The invoice line item total shows the tax exclusive amount of the billable item. The tax amount is shown separately, under the subtotal. The tax amount is then added to the subtotal to give the total amount.

Tax inclusive calculation method

In tax inclusive invoices, the tax amount is already built into the line item prices. This method ensures that what the customer sees on the invoice matches the amount they pay. What they see is:

Each line item reflects the total amount (including tax).
The total tax for all items is summarised at the bottom of the invoice to show transparency.

In Cliniko, a tax inclusive billable item will look similar to this:

The billable item details show the tax inclusive amount, along with the amount of tax that is included in the shown price.

When this is added to an invoice:

The invoice line item includes the tax. The tax amount is shown under the subtotal, but this is telling you how much tax the subtotal already includes and is not separately included again in the total amount.

Which calculation method should you choose?

Selecting the right method depends on your country’s tax regulations and how you want to present prices to your patients.

Tax exclusive: best for practices in countries like the US, where taxes are typically added at the end and shown separately on invoices.
Tax inclusive: ideal for practices in regions with VAT or GST (e.g., Australia, the UK, or New Zealand). This method ensures the total price shown to patients already includes tax.

We recommend checking with your accountant to make sure you choose the right tax calculation method for your practice.

How to change your calculation method

Head to Settings → Finances → Invoices to change the tax calculation method:

Then, hit save invoice settings at the bottom to confirm the switch.

These tax calculation methods are available to most users except those whose Cliniko accounts bill in these currencies:

Click here for a list of unsupported currencies

BHD - Bahraini Dinar

BIF - Burundian Franc

CLP - Chilean Peso

DJF - Djiboutian Franc

GNF - Guinean Franc

HUF - Hungarian Forint

IQD - Iraqi Dinar

ISK - Icelandic Króna

JOD - Jordanian Dinar

JPY - Japanese Yen

KMF - Comorian Franc

KRW - South Korean Won

KWD - Kuwaiti Dinar

LYD - Libyan Dinar

MGA - Malagasy Ariary

MRU - Mauritanian Ouguiya

OMR - Omani Rial

PYG - Paraguayan Guaraní

RWF - Rwandan Franc

TND - Tunisian Dinar

UGX - Ugandan Shilling

VND - Vietnamese Đồng

VUV - Vanuatu Vatu

XAF - Central African Cfa Franc

XOF - West African Cfa Franc

XPF - Cfp Franc

Support for these currencies may be added at a later stage.

Older calculation method

The older method of tax calculation which we call the legacy method has been in place for some time but is being phased out. It lacks support for newer features, like decimal quantities (useful for billing in smaller units, e.g., 0.5 hours). If your practice is still using the legacy method, now is the time to switch to tax exclusive or tax inclusive to avoid disruptions when we move all users to one of the newer methods.

Why you should switch from the legacy method

Switching from the legacy method is important to avoid future disruptions. We recommend making the switch for these reasons:

Decimal quantity support: enables you to bill in increments, like 0.5 hours or 1.25 units, offering more flexibility.
Proactive control: ensures your practice stays aligned with changes as Cliniko phases out the legacy method. Once phased out, we’ll automatically move your account to a suitable method. It's best to choose the one that meets your requirements before this happens.

If an invoice created under the legacy method is edited, decimal quantities will not be applied, even if your account now uses the updated calculation method. You'll need to create a new invoice to have decimals enabled.

Once you switch to one of the newer methods, it's not possible to switch back to legacy so please only perform the switch once you're sure.

If you have more questions about the different tax calculations methods, our support team is happy to assist. Contact us if you have any questions or concerns!