Accounting for health & wellness practitioners.

Questions worth getting ahead of

• Knowing which services are exempt and which are taxable
• Selling products alongside treatments
• Cancellation fees and mixed fee packages
• Paying or receiving fees as an associate
• Recovering GST/HST on clinic costs

Exempt services are not the same as zero-rated

The CRA lists most health, medical and dental services performed by licensed physicians or dentists for medical reasons as GST/HST exempt, and its guidance treats a defined list of other practitioners’ services the same way when they are rendered to an individual. Exempt means you do not charge the tax, but it also means you generally cannot claim input tax credits for the GST/HST you pay on costs tied to those services. That differs from a zero-rated supply, where credits are available. Whether your profession and your particular service qualify depends on the provincial regulation of your profession and the wording of the law, so bring your licence details and a list of what you offer.

Treat products and cosmetic services as separate questions

Guidance on acupuncture, as one example, explains that selling products such as supplements, tapes or equipment is generally a separate supply from the treatment and is generally taxable, even when the treatment itself is exempt. It also notes that a cosmetic service not provided for medical or reconstructive purposes is outside the exemption. If you sell retail items or offer services that sit near the line, keep them in separate accounts or categories so the tax treatment can be reviewed item by item. Describe the purpose of each service to your accountant rather than relying on a label.

Check cancellation fees and bundled packages

The CRA treats a cancellation fee as payment for the service that was booked. In its example, if the service is exempt the fee is not subject to GST/HST, and if the service is taxable, tax applies to the fee. A single price covering several services can raise the same question, because exempt and taxable parts may need to be separated. Look at how your intake forms, booking system and invoices describe fees. Bring a sample invoice for each type of appointment, along with any package pricing, so the treatment of each charge can be considered before returns are filed.

Be clear about associate and fee-sharing arrangements

Many clinics have a principal practitioner and associates who work from the same premises. The CRA’s policy says that when an associate pays a principal a share of fees for exempt health care services, the payment is generally an apportionment of the fee and is outside GST/HST. If the payment is instead for the use of facilities, equipment or administrative services, it can be consideration for a taxable supply by the principal. The written agreement matters, so bring it and a month of statements showing how fees and expenses are split. Whether each associate is an employee or self-employed is a separate question.

Decide employee or self-employed for each team member

Receptionists, assistants and some practitioners may work for a clinic under very different arrangements. The CRA says the facts of the whole working relationship decide the status, and it points to factors such as control, tools and equipment, the ability to subcontract or hire helpers, financial risk and the chance of profit. If a worker is an employee, you must deduct CPP, EI and income tax, and an employer who fails to deduct the required CPP and EI may have to pay both shares plus penalties and interest. Gather contracts, invoices and a description of how each person actually works.

Support to discuss with Sora