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Objective: The aim of this paper is to inform mental health professionals about Activity-based funding (ABF) and the implications for data collection and clinical practice, in particular for consultation-liaison (CL) psychiatry.Conclusions: Activity-based funding may provide an opportunity for mental health services to be more equitably resourced, but much needs to be done to demonstrate that the funding model works in mental health. It is important to ensure that data collected is meaningful and accurate and reflects the diverse roles of mental health clinicians, including in CL. Inpatient and community services should be integrated in the model, as well as safeguards against potential abuse. Clinicians, in partnership with initiatives such as the Australian Mental Health Outcomes and Classification Network, are best placed to guide the development of an ABF system for mental health which appropriately recognises the complexity and variability between patients in different settings. [ABSTRACT FROM AUTHOR]