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Healthcare practice accounting starts with one question: which of the services you sell are exempt from GST/HST and which aren’t? Many health services from licensed practitioners are exempt, so you don’t charge the tax. The price of that is that you usually can’t claim back the GST/HST you pay on the rent and equipment used to provide them.
Which services are exempt and which are taxable?
The CRA says most health, medical and dental services from licensed physicians, dentists and certain other practitioners are exempt. Services paid or reimbursed under a provincial health plan are covered by a separate exemption, only to the extent the plan pays for them. And the purpose of a service can change the answer. A service from a health professional may be taxable or exempt depending on why it was provided, and the CRA’s guide on medical examinations, assessments, reports and certificates is where that line is drawn.
| Situation | What to do |
|---|---|
| Care for a medical reason by a qualifying practitioner | Usually exempt, confirm against the CRA guide |
| Service paid by a provincial health plan | Exempt to the extent the plan pays |
| Report, exam or certificate for another purpose | Check the purpose, it may be taxable |
| Records for any of the above | Six years from the end of the last tax year |
This page doesn’t list which professions count, because the CRA’s rules are detailed and differ by service. Check your own profession against the CRA pages before you set up your billing.
What happens to the GST/HST you pay on costs?
A registrant can claim input tax credits for purchases used in commercial activities. The CRA excludes taxable purchases bought to make exempt supplies. Its page on the type of supply you make says the same thing plainly: if your supplies are exempt, you generally can’t claim input tax credits on the GST/HST you pay. For a clinic that only provides exempt care, the tax on the lease and the software is a plain cost.
What does that look like? Say a dentist in Ontario rents space at $5,000 a month. At 13% the HST is $650 a month, or $7,800 over a year, and for an all-exempt practice that $7,800 is simply part of the rent. It’s worth knowing before you compare two leases.
A mixed practice is harder. If you bill exempt care and some taxable work, you’ll have to split the tax on shared costs in a way the CRA accepts, and the method depends on your facts. That’s a good moment to get an accountant who knows health practices, and to ask for a quote up front.
Say a practitioner sells a service that turns out to be taxable at $200 in Ontario. The GST/HST calculator gives $26 of HST and a $226 total. On exempt care, the same $200 has no tax added.
Do you have to register for GST/HST?
Not automatically. The small supplier rule looks at revenue from taxable supplies, and registration is required once it passes $30,000 in a single quarter or across four consecutive quarters. Exempt fees aren’t taxable supplies, so a practice with only exempt income may never reach the line. A practice that also sells taxable services may cross it without noticing, which is why you should add up the taxable part separately.
A quick example. A physiotherapy clinic bills $40,000 a quarter of exempt care and $6,000 a quarter of taxable work, such as reports for insurers or employers. Only the $6,000 counts toward the $30,000 line, and four quarters of that is $24,000. It’s under for now, but it’s the number to watch if the report work grows.
How should a healthcare practice set up its books?
Use separate accounts for each income source: patient fees, plan payments, third-party billings and any taxable work. Patient receivables deserve their own watch list, since unpaid invoices are income you’ve recorded and not yet received. Reconcile the bank account each month.
Staff are usually the biggest cost. The payroll remittance calculator estimates what an employer sends the CRA each pay period, and the take-home pay calculator shows what a staff member nets.
If the practice is incorporated, the federal small business rate in our data is 9% on the first $500,000 of active business income. Provincial rates differ, and the Ontario rate for 2026 is a blend that hasn’t been published as one figure, so treat any estimate from the corporate tax calculator as a ballpark.
How long do you keep the paperwork?
The CRA’s general rule is six years from the end of the last tax year the records relate to. A clinic should keep the billing ledger, remittance statements from the provincial plan, supplier invoices, payroll records and copies of filed returns together by year, so that an old question can be answered from one folder. Records kept only on a server outside Canada don’t count as kept in Canada, which matters if your billing software is hosted abroad.
What can go wrong?
Two slips stand out. Charging tax on an exempt service, or failing to charge it on a taxable one, is one. The other is claiming credits on costs that belong to exempt care. Records help either way. Keep the bill and the reason for the service, because the purpose of a supply decides its tax treatment.
Patient files and tax records aren’t the same. Privacy and professional-college rules cover patient files, and this page doesn’t. The tax records are the invoices, receipts, bank statements and contracts behind your income and costs.
How we checked the figures
The exemption, ITC and small supplier points come from Canada Revenue Agency pages checked in September 2026. The federal corporate rate comes from the CRA’s T2 guide as recorded in our data. The HST figure uses Ontario’s 13% rate. No level of government runs or endorses this site.
Frequently asked questions
Are healthcare services exempt from GST/HST?
The CRA says most health, medical and dental services from licensed practitioners are exempt. Purpose matters, so check the CRA guide for exams, reports and certificates.
Can a clinic claim input tax credits?
Not on taxable purchases bought to make exempt supplies. A clinic with only exempt care generally treats the GST/HST on its costs as an expense.
When does a practice have to register?
When revenue from taxable supplies passes $30,000 in one quarter or over four consecutive quarters. Exempt fees do not count as taxable supplies.
How long should a practice keep financial records?
The CRA says six years from the end of the last tax year the record relates to.
What is the federal small business rate?
The T2 guide gives 9% on the first $500,000 of active business income. The provincial part varies, and the Ontario 2026 rate is a derived blend, so treat estimates as approximate.
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