Accountant for dentists

Four things a dental practice’s accountant has to get right

Dentistry is not a generic small business with a drill. Most of what a practice sells is exempt from HST, so the tax it pays on rent, supplies and equipment mostly never comes back. The corporation is a professional corporation with its own rules about who may own it. The clinical team is a mix of employees on payroll and associates paid on their billings. And the equipment is expensive, financed, and written off over years rather than deducted when it is bought. Each of those is routine once it is set up properly and expensive when it is not. This page explains how we handle each one, with the rules as they stand in 2026.

It is written for the owner: the dentist whose name is on the certificate of authorization, who signs the lease and runs the payroll. Multi-location groups with a finance team of their own are better served elsewhere.

What a dental practice’s books look like

The number on the practice-management screen is production: the fees for the work done. Revenue in the books is what was actually billed and collected — insurance assignments that arrive weeks later, patient portions paid at the desk, write-offs and adjustments. The two never match on any given day, and reconciling production to deposits is the core of dental bookkeeping. Lab fees are a cost of sales, not overhead; keeping them separate is what makes the clinical margin visible against the cost of running the building. Our dental bookkeeping page goes through a month in detail.

Your dentistry professional corporation

In Ontario a dentist practises through a corporation only with a certificate of authorization from the Royal College of Dental Surgeons of Ontario, renewed every August 31, and the corporation’s name has to carry your surname and the words “Dentistry Professional Corporation”. The ownership rules come from the Business Corporations Act and O. Reg. 665/05: voting shares may be held only by dentists; non-voting shares may be held by your spouse, children and parents, with a minor child’s shares held in trust until the child turns 18; directors and officers must be dentist shareholders. The College does not accept a holding company as a shareholder, even though the regulation’s wording leaves room for indirect ownership. Other provinces’ colleges set their own versions of these rules.

What the corporation does for tax is defer it. Practice income left in the corporation is taxed at the small-business rate — 12.2% combined in Ontario on the first $500,000 of active income in 2026 — against a top personal rate of 53.53%. That gap is a deferral, not a saving: the personal tax arrives when the money comes out as salary or dividends. It only helps a dentist who does not need all of the practice income personally. Dividends to the family members who hold non-voting shares are caught by the tax on split income rules unless an exclusion applies, so the income-splitting that sold a generation of dentists on incorporating is now narrow. On a sale, shares of a qualifying practice corporation can use the $1.25 million lifetime capital gains exemption, which an unincorporated practice cannot.

What it does not do is protect you from professional liability; that follows the dentist. The planning that actually matters is how you pay yourself, and our guide on salary versus dividends works through it.

HST for dentists: exempt, zero-rated, taxable

Dental services are exempt supplies under the Excise Tax Act. No HST is charged on them, and no input tax credit is available on what it cost to provide them. That is the dentist’s structural HST problem: the 13% paid in Ontario on rent, supplies and equipment is a cost, not a flow-through. On $120,000 of chairs and imaging it is $15,600 that joins the capital cost and comes back only through depreciation.

Two things a practice sells are zero-rated — taxed at 0%, with input tax credits available on the related costs: artificial teeth, and orthodontic appliances as a supply separate from the orthodontic service, which the Federal Court of Appeal confirmed in Davis Dentistry in 2023. And some things are taxable at the full rate: procedures done purely for appearance, such as whitening or veneers chosen for looks rather than function, and retail products sold at the desk. If the taxable and zero-rated supplies together pass $30,000 over four consecutive calendar quarters, the practice has to register, charge HST on the taxable items and file returns. Below that, registration is voluntary, and it is worth it only if the credits on the commercial share outweigh the filing.

Once registered, the credits are apportioned: the HST on a cost used for both exempt and commercial activity is recovered in proportion to the commercial use, by a method that is fair, reasonable and used consistently. For fiscal years beginning on or after January 1, 2025 the apportionment has to be on actual figures — CRA’s Notice 339 ended the 1991 arrangement with the Canadian Dental Association that let orthodontic practices treat 35% of treatment fees as the zero-rated appliance. Capital property has its own tests: equipment earns a credit only if more than half its use is commercial, and real property earns a full credit at 90% commercial use and none at 10% or less.

If CRA asks you to support the credits, our guide to the GST/HST post-assessment review sets out what the documentation has to show.

Payroll in a dental practice

Hygienists, assistants, the front desk and the office manager are employees: T4s, CPP and EI, vacation pay and statutory holidays under the Employment Standards Act, source deductions remitted on CRA’s schedule for your remitter type. Ontario’s Employer Health Tax has a $1 million exemption, so a single-location practice usually pays none, though the exemption is shared across associated corporations and disappears once the group’s Ontario payroll passes $5 million. WSIB coverage is not compulsory for dental offices in Ontario; a practice can apply for it, and many do.

Associates are the classification question. Most are independent contractors paid a percentage of their billings less lab fees, and the agreement should match the reality: an associate who sets their own schedule, carries their own insurance and could work elsewhere looks like a contractor; one who works the practice’s hours with the practice’s staff and is told how to work looks like an employee, whatever the contract says. CRA looks at control, tools, the chance of profit and the risk of loss, and when it reclassifies an associate, the unremitted deductions and penalties land on the practice. Fees paid to an unincorporated associate are reported on a T4A (box 048); an incorporated associate invoices through their own professional corporation. Our guide on T4 versus T4A sets out where the line falls.

Hygienists have been able to self-initiate in Ontario since 2007, but inside a practice they are employees almost without exception. The owner’s own pay is a salary-or-dividends decision made with the accountant each year; the payroll deductions calculator shows the take-home on a salary, and the remittance due-date lookup shows when the deductions are due.

Equipment and the capital side

Chairs, handpieces, sterilizers and imaging hardware are Class 8 assets, written off at 20% a year on a declining balance; computers and the software that runs the sensors are Class 50 at 55%; the fit-out of a leased suite is a leasehold improvement written off over the term of the lease. The first-year claim depends on the class and on the accelerated-investment rules in force when the asset is bought, which is why the purchase date matters as much as the price. HST that cannot be recovered is part of the cost and is depreciated with it.

Financing is split between principal and interest, and only the interest is an expense. A lease is a monthly expense with no asset; a purchase is an asset with depreciation and interest. Which is cheaper after tax depends on the rate, the term and whether the practice is in a loss position — a question for the accountant before signing, not after.

How taxifi handles a dental practice

The AI posts and reconciles every transaction daily from the bank and card feeds, with production reconciled to deposits and lab fees in cost of sales. On the accountant-reviewed plan, the exempt and commercial apportionment is applied the same way every period and documented for the HST return, which the accountant prepares and files; payroll for the clinical and administrative team runs on schedule with the remittances; T4s and T4As go out at year-end; and the same accountant who reviews the month prepares and signs the corporation’s T2. Everything is at a published price.

Published prices for a dental practice

Bookkeeping is $199 a month for AI-run, cash-basis books with a year-end package for your tax preparer, or from $299 a month for books a Canadian accountant reviews, closes and signs every month with the HST returns prepared and filed. A practice registered for HST fits the accountant-reviewed plan: the apportionment and the returns are the accountant’s work. Payroll is $49 a month plus $10 per employee. The corporate T2 is annual, from $1,000, prepared and EFILED by an accountant. Bundle bookkeeping, tax and payroll and the total comes down 10–15%. The pricing page has every tier.

Dentists by province and city: Ontario · Ottawa · Toronto · Mississauga · Hamilton · London · Kitchener-Waterloo · Windsor · Kingston. More for this industry: Taxifi Dental · Dental bookkeeping · Dental payroll · Dental hygienists · Health & wellness

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