Dental accountant for Canadian practices
Dentistry has three accounting problems a generalist gets wrong: the HST exemption split, how associates are classified, and what the professional corporation is actually for.
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The HST split that catches practices out
Most basic dental services are exempt supplies for GST/HST purposes. Cosmetic procedures generally are not. That single distinction creates the most common accounting error in dentistry, because a practice supplying both exempt and taxable services cannot simply claim all of its input tax credits.
Input tax credits have to be apportioned between the exempt and taxable sides of the practice, and the method has to be reasonable and applied consistently. Get it wrong in your favour and a GST/HST review will find it. Get it wrong the other way and you are leaving credits on the table every quarter on rent, supplies, and equipment.
If CRA does ask you to support those credits, our guide to the GST/HST post-assessment review explains exactly what the documentation has to show.
Associates: employee or contractor
Associate arrangements are the live classification question in dentistry. Some associates genuinely operate independently, set their own hours, carry their own liability insurance, and bill the practice. Others work fixed schedules, use only the practice’s equipment and staff, and are directed in how they work.
CRA looks at the substance of the relationship rather than what the agreement calls it. If an associate treated as a contractor is later reclassified as an employee, the unremitted source deductions and the penalties land on the practice, not on the associate. Our guide on T4 versus T4A sets out where the line falls and what each slip means.
This is worth getting right before it is tested, not after.
What the professional corporation actually does
Incorporating as a professional corporation lets practice income be taxed at corporate rates and left in the corporation rather than taken personally in the year it is earned. That deferral is the main benefit, and it only matters if you do not need all of the income personally.
What it does not do is give you the liability protection an ordinary corporation offers. Professional liability follows the practitioner. The planning question is therefore about tax timing and how you pay yourself, which is covered in our guide on salary versus dividends.
Equipment and the capital side
Chairs, imaging equipment, and practice fit-out are capital assets, depreciated through capital cost allowance rather than deducted in the year of purchase. Financing arrangements need splitting between principal and interest, and equipment acquired part-way through a year has its first-year claim restricted.
Lab fees are a cost of sales rather than overhead, and separating them is what lets you see the real margin on the clinical work as distinct from the cost of running the building.
How taxifi handles a practice
Books reconciled daily so you know where the practice stands, the exempt and taxable apportionment applied consistently every filing period, payroll for hygienists and administrative staff, T4 and T4A slips at year-end, and your corporate tax return prepared by the same team. One flat monthly price, with a Canadian accountant signing every filing.
What’s included
- Daily bookkeeping with the exempt and taxable HST split applied consistently
- HST returns prepared with input tax credits apportioned and documented
- Payroll for hygienists, assistants, and administrative staff
- T4 and T4A slips prepared at year-end, including associates
- Capital cost allowance on chairs, imaging, and fit-out
- Lab fees tracked as cost of sales so clinical margin is visible
- Year-end corporate tax return for the professional corporation, included
Also: Dentists in Ontario · Dentists in Toronto · Health & wellness. More for this industry: Dental accounting · Dental bookkeeping · Dental payroll
All four services: Bookkeeping · Tax · Payroll · Business advisory
Common questions
Is dental work subject to HST?
Most basic dental services are exempt supplies, while cosmetic procedures generally are not. A practice supplying both cannot claim all of its input tax credits and has to apportion them between the exempt and taxable sides using a reasonable, consistently applied method.
Should my associate be a T4 employee or a T4A contractor?
It depends on the substance of the relationship, not what the agreement calls it. CRA looks at control over how the work is done, whose tools and staff are used, and who carries the financial risk. If an associate treated as a contractor is reclassified, the unremitted source deductions and penalties fall on the practice.
What does a professional corporation actually give me?
Mainly tax deferral. Practice income is taxed at corporate rates and can be left in the corporation rather than taken personally in the year earned, which only helps if you do not need all of it personally. It does not shield you from professional liability.
Can I deduct new equipment in the year I buy it?
No. Chairs, imaging equipment, and fit-out are capital assets claimed over time through capital cost allowance, and equipment bought part-way through a year has a restricted first-year claim.
Your practice, books and filings handled
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