🩺 Healthcare Professional Financial Services
Healthcare Practice Accounting:
For Doctors and Dentists in Canada
📌 Quick Summary
Canadian physicians and dentists share the distinction of having both the highest income potential and the most complex personal and corporate tax planning environments of any professional group. Between provincial health insurance billing reconciliation, professional corporation structuring, TOSI income splitting restrictions, GST/HST on insured vs. uninsured services, and health spending accounts, the accounting requirements of a medical or dental practice demand a CPA who specializes in healthcare. This comprehensive guide covers every dimension of accounting and tax planning for Canadian doctors and dentists — from choosing the right practice structure to year-end tax strategies that protect decades of professional earnings.
1. Healthcare Provider Types & Accounting Profiles
Canadian healthcare professionals encompass a wide range of practice structures and income sources — and the accounting approach must match the specific type of practice. Here are the main healthcare provider categories and the accounting considerations unique to each:
Family Physicians & GPs
- OHIP/MSP fee-for-service billing (exempt from GST)
- Roster capitation payments and incentive bonuses
- Locum income from multiple clinics
- Overhead expense sharing with clinic
- Professional corporation with retained earnings
Specialists (Surgeons, Cardiologists, etc.)
- High-volume OHIP/MSP billing
- Hospital privilege costs and OR fees
- Medical-legal and insurance report income (taxable)
- Academic/teaching income from universities
- Research grants and study funding
General Dentists
- All dental services are fully taxable (GST/HST applies)
- Insurance assignment vs. direct billing
- Patient credit balance management
- Dental equipment CCA optimization
- Professional corporation + holding company
Dental Specialists (Orthodontists, Oral Surgeons)
- Larger treatment plan values and longer contract periods
- Deferred revenue on multi-phase treatments
- Premium equipment CCA (CBCT, surgical tools)
- Referral source relationship expenses
- Higher practice acquisition and exit multiples
Mixed Billing Physicians (Insured + Uninsured)
- Split GST/HST treatment — exempt vs. taxable services
- ITC apportionment for mixed-use expenses
- Cosmetic and aesthetic medicine income (fully taxable)
- WSIB and third-party insurance billings
- Direct pay patient services pricing
Clinic Group Owners / Physician Entrepreneurs
- Multi-entity structure (PC + management co + holdco)
- Associate compensation model (overhead split or salary)
- Property ownership through separate entity
- Franchise or branded clinic expansion
- Practice acquisition and sale planning
For healthcare professionals who also operate agricultural land or rural medical facilities, our Agriculture Tax Services guide covers relevant considerations. Physicians with vehicle fleets or diagnostic equipment interests may find our Fractional CFO for Automotive Businesses guide and Engineering CFO guide useful for equipment-intensive operations. Healthcare businesses selling products online should review our E-Commerce GST/HST guide. For legal professionals serving healthcare clients, our Tax Planning for Legal Firms guide and Home Building Business Plan guide provide context on related professional services planning.
$160K
Annual tax deferral for a physician earning $400K above personal needs — by using a PC at 9% vs. 50%+ personal rate
Exempt
GST/HST treatment for most insured physician services — creating important ITC apportionment issues for mixed billing doctors
Taxable
GST/HST status for all dental services — dentists collect and remit GST/HST on every patient invoice
$1.25M
Lifetime Capital Gains Exemption on qualifying PC share sale — potentially $300K+ tax-free on practice exit
🩺 Is Your Medical or Dental Practice Getting the Full Benefit of Professional Corporation Accounting?
Custom CPA provides specialized accounting and tax planning for Canadian physicians and dentists — professional corporations, health spending accounts, billing reconciliation, and year-end strategies.
2. Professional Corporation — The Foundation of Healthcare Tax Planning
The Professional Corporation is the single most impactful tax planning decision in a physician's or dentist's career. With the ability to retain income in a corporate entity taxed at approximately 9% — rather than paying personal marginal rates of 50%+ — the PC provides a level of tax deferral that compounds dramatically over a 25–30 year career.
For both physicians and dentists, the PC must be established in compliance with the provincial regulatory body's requirements. In Ontario, the College of Physicians and Surgeons of Ontario (CPSO) and the Royal College of Dental Surgeons of Ontario (RCDSO) both permit professional corporations with specific ownership and naming requirements. Other provinces have equivalent regulatory frameworks.
| PC Strategy | How It Works | Annual Tax Benefit | Requirements / Notes |
|---|---|---|---|
| Small Business Deduction (SBD) | Active professional income up to $500K taxed at ~9% vs. 50%+ personal rate | $160,000–$200,000+/year on $400K above personal living needs | CCPC; active business income; SBD limit not eroded by passive income |
| Health Spending Account | PC funds an HSA for the professional and family — corporate deduction, tax-free personal receipt | $15,000–$50,000 in tax-free benefits annually | Formally established HSA plan; T4 Box 40 reporting; reasonable benefit amount |
| Salary/dividend optimization | Annual modelling of optimal mix — salary creates RRSP room; dividends may achieve lower combined rate | $5,000–$20,000 annually depending on provincial rates and income level | Annual CPA analysis required; considers RRSP room value, CPP cost, provincial rates |
| LCGE on PC share sale | Qualifying QSBC shares sheltered by $1.25M LCGE per shareholder on practice exit | $300,000–$350,000 tax saved per qualifying shareholder | QSBC qualification; 24-month holding; corporate purification 24+ months before sale |
| Retirement investment inside PC | Surplus income retained in PC taxed at 9%; invested and compounding for retirement | 30-year compound advantage of deferring $100K–$200K/year in personal tax | RDTOH tracking; GRIP for eligible dividends; passive income SBD grind monitoring |
3. Tax Rate Comparison — Incorporated vs. Unincorporated Healthcare
The numbers make the case for professional corporation structures more clearly than any explanation. This chart shows the effective tax rates at different income levels for an Ontario healthcare professional operating as a sole proprietor vs. through a PC:
Annual Tax Cost Comparison — Sole Proprietor vs. Professional Corporation (Ontario Physician, 2024)
The Compound Effect Over a Career: A physician who incorporates at age 35 and saves $100,000–$150,000/year in corporate tax vs. sole proprietor personal tax — and invests that deferred tax inside the corporation — will accumulate approximately $3M–$5M more in retirement assets over a 30-year career than an unincorporated colleague with identical gross income. This is not a small difference — it is the single most impactful financial decision most Canadian physicians make. Our Strategic CFO Advisory Services include healthcare professional corporation analysis as a core deliverable.
4. Medical & Dental Billing Reconciliation
One of the most practically important accounting functions for a healthcare practice is the monthly reconciliation of billing system data to accounting records and bank deposits. Physicians and dentists generate hundreds or thousands of billing transactions monthly — and without systematic reconciliation, revenue is routinely understated, overstated, or misclassified.
📋 Monthly Billing Reconciliation — Physicians (OHIP/Fee-for-Service) and Dentists
OHIP/MSP/AHCIP remittance advices reconciled monthly — match the provincial health insurance remittance statement to the claims submitted. Identify and refile any rejected or reduced claims. Any systematic reduction pattern (e.g., a specific billing code consistently denied) should be investigated. Monthly Priority
Dental insurance assignment deposits matched to patient ledger — each insurance payment (group benefit plan assignments) must be applied to the correct patient account and treatment plan. Unmatched insurance receipts accumulate as credits and distort the AR balance. Dental Specific
Patient credit balances (pre-payments) tracked separately — patient overpayments and pre-payments must be recorded as current liabilities (patient credits/deferred revenue) — not as income — until the corresponding treatment is delivered. Revenue Timing
GST/HST reconciliation for dentists and mixed billing physicians — confirm that HST collected on all taxable services (dental fees; uninsured physician services) matches the HST return filed. Any discrepancy must be investigated before filing. GST/HST Compliance
Uninsured/private fee income tracked separately — physicians with direct-pay (uninsured) income — medical reports, forms, insurance assessments, WSIB, OHIP-delisted services — must track this income separately as it may have different GST/HST treatment than insured services. Physician Specific
5. GST/HST — The Critical Difference Between Physicians and Dentists
The GST/HST treatment of healthcare professional services in Canada is one of the most misunderstood areas in healthcare practice accounting — and getting it wrong in either direction (collecting GST/HST when you shouldn't, or not collecting when you should) creates CRA exposure.
| Service Type | Provider | GST/HST Status | ITC Available? | Notes |
|---|---|---|---|---|
| Insured medical services | Physician | ❌ Exempt — no GST/HST charged | ⚠️ Partial ITCs only — prorated | OHIP/MSP-covered services are exempt. Physicians cannot claim full ITCs on expenses related to exempt services. |
| Uninsured physician services | Physician | ✅ Taxable — collect GST/HST | ✅ Full ITCs on related expenses | Medical reports, cosmetic procedures, third-party insurance assessments, WSIB. Register when uninsured income exceeds $30K. |
| All dental services | Dentist | ✅ Fully taxable — charge GST/HST on all fees | ✅ Full ITCs on all expenses | Dental services are not exempt. Register for GST/HST immediately — threshold will be reached quickly in any practice. |
| Cosmetic / aesthetic medicine | Physician | ✅ Taxable — Botox, fillers, laser, etc. | ✅ Full ITCs on cosmetic-related expenses | All cosmetic procedures (not medically necessary) are taxable. Mixed clinics must track exempt vs. taxable billings. |
| Registered nurse / physiotherapy | Other HC provider | ❌ Exempt if licensed and core clinical services | ⚠️ Partial ITCs | Many allied health services are also exempt under the Excise Tax Act. Confirm with CPA for each provider type. |
Mixed Billing Physicians — ITC Apportionment: Physicians who provide both exempt insured services and taxable uninsured services must apportion Input Tax Credits — claiming ITCs only on the portion of expenses related to taxable activities. For example, a physician with 80% insured (exempt) and 20% cosmetic (taxable) billings can only claim 20% of general overhead expenses as ITCs. Expenses directly attributable to the taxable activity (cosmetic clinic-specific equipment) are 100% ITC-eligible. This apportionment calculation must be documented and applied consistently. Failure to apportion results in overclaimed ITCs — a CRA assessment risk.
6. Health Spending Accounts for Physicians & Dentists
A Health Spending Account (HSA) is one of the most tax-efficient benefits available to an incorporated healthcare professional in Canada. It converts personal out-of-pocket medical expenses into tax-deductible corporate expenses — effectively providing medical coverage at a fraction of the after-tax cost of paying those expenses personally.
💊 How a Health Spending Account Works for a Medical PC
The PC establishes a formal HSA plan — the professional corporation sets up a Health Spending Account plan through an insurance company or administrator. The plan defines the annual benefit amount and eligible expense categories. Setup Step
The physician/dentist submits personal medical claims — dental bills, vision expenses, physiotherapy, specialist fees, prescription costs, and other eligible expenses are submitted through the HSA plan. The plan reimburses at face value. Tax-Free Receipt
The PC deducts the HSA funding as a business expense — the amount paid through the HSA is a deductible business expense for the professional corporation — reducing corporate taxable income at the 9% SBD rate. Corporate Deduction
No personal income inclusion on amounts received — the physician/dentist receives the HSA reimbursement tax-free. This is unlike a salary increase or dividend, which would be taxed at the personal marginal rate. No Personal Tax
Effective tax efficiency on a $25,000 annual HSA: paying $25,000 in medical expenses personally costs $25,000 after-tax income ($50,000 gross income at 50% marginal rate). Through the PC's HSA, the same $25,000 costs the corporation $25,000 (deducted at 9%) = $25,000 × 9% = $2,250 in tax. The saving is approximately $10,000–$12,500 annually on a $25,000 HSA. Powerful Example
💊 Are You Maximizing Your Health Spending Account and Tax Deferral?
Custom CPA structures Healthcare PC accounts, HSA plans, and annual compensation models for Canadian physicians and dentists — saving $50,000–$200,000+ in annual tax while keeping you fully compliant.
7. Key Tax Deductions for Canadian Healthcare Professionals
Physicians and dentists are entitled to deduct all expenses reasonably incurred to earn professional income. Here are the most significant deductions with healthcare-specific guidance:
| Expense Category | Healthcare-Specific Notes | Deductible Treatment |
|---|---|---|
| Professional dues & regulatory fees | CPSO, RCDSO, CMPA (medical malpractice insurance), Canadian Medical Association (CMA/CDA) membership, specialist college fees, hospital privileges fees | 100% deductible — current period operating expense |
| Continuing medical/dental education | CME conferences, dental study clubs, specialty courses, online learning platforms, medical journals and textbooks required for practice maintenance | 100% deductible including travel (airfare, hotel) if primarily for CME — documented business purpose required |
| Medical/dental equipment | Diagnostic equipment, dental chairs, handpieces, autoclaves, digital imaging, CBCT scanners, ECG machines, ophthalmoscopes, procedure tables | Class 8 (20%) or Class 12 (100%) depending on cost and type; immediate expensing for CCPCs up to $1.5M |
| Clinic overhead (associates) | Physicians working at multiple clinics often pay overhead (rent, staff share) to each clinic where they work — all overhead payments are deductible against professional income | 100% deductible when paid under a formal overhead-sharing arrangement with clinic |
| Home office (locums & home-based practitioners) | Physicians who do billing, charting, and administrative work from home may deduct a prorated portion of home expenses based on dedicated workspace area | Prorated by home office area ÷ total home area; limited to employment income if salaried |
| Vehicle expenses | Home-to-hospital travel, multi-clinic travel, house call travel, nursing home visits — all business travel deductible. Keep a mileage log. Regular commute (home to primary clinic) is not deductible. | Actual costs × business use %; CCA on vehicle; or CRA prescribed rates × km |
8. TOSI — Income Splitting for Doctors and Dentists
The Tax on Split Income (TOSI) rules introduced in 2018 significantly restricted income splitting through physician and dentist professional corporations. Understanding what is — and what is no longer — possible for healthcare professionals in this area is critical to avoid CRA assessments on family dividends.
| Income Splitting Strategy | TOSI Status | When It Works | Documentation Required |
|---|---|---|---|
| Dividends to working spouse | ⚠️ Subject to TOSI unless excluded | Excluded if spouse provides services to the PC for reasonable compensation (bookkeeper, receptionist, clinic manager, hygienist) | Employment agreement; reasonable compensation analysis; T4 or T5 documentation |
| Dividends to physician/dentist 65+ | ✅ Excluded — no TOSI | Once the professional reaches 65, spouse can receive dividends excluded from TOSI | Age-based exclusion applies automatically; no additional documentation |
| Dividends to adult children | ⚠️ Subject to TOSI for most cases | Only excluded if child works in the practice for reasonable compensation and has been involved for 20+ hours/week | Employment documentation; time records; arm's-length compensation comparison |
| Dividends from professional corporation (spouse owns shares) | ⚠️ Subject to TOSI unless excluded | Reasonable compensation exclusion or source income exclusion (rarely available to professional corps) | Full TOSI analysis required; confirm available exclusions with CPA annually |
TOSI Is Reviewed Annually: The TOSI analysis for a healthcare professional corporation is not a one-time exercise. The availability of exclusions depends on facts that may change year to year — the spouse's actual hours worked, their compensation level, their other income sources, and the physician/dentist's age. CRA has increased its focus on TOSI in healthcare professional corporations since the rules' introduction. Every family dividend from a medical or dental PC should be reviewed by a CPA before it is paid.
9. Year-End Tax Planning Checklist for Doctors and Dentists
Year-end tax planning for a healthcare professional must begin at least 60–90 days before the fiscal year-end. Many of the highest-value strategies require action before the year closes. Our Core Accounting & Tax Services and Specialized Services include healthcare professional year-end planning as a priority annual engagement.
📅 Healthcare Professional Year-End Tax Planning Checklist
Model optimal salary vs. dividend split — calculate net PC income and model the tax-minimizing combination of salary (for RRSP room and CPP entitlement) and dividends. Must be done before December 31 — salary declared before year-end takes effect in the current year. Priority Action
Contribute maximum to RRSP based on salary drawn — the RRSP contribution limit is 18% of prior year earned income (salary). The current year's salary draws create next year's RRSP room — confirm the salary level achieves the desired RRSP room. Retirement Planning
Fund Health Spending Account before year-end — HSA contributions must be made before year-end to be deductible in the current fiscal year. Plan the annual benefit amount based on expected family medical expenses. Tax-Free Benefit
Purchase planned equipment before year-end — dental chairs, diagnostic equipment, and clinical technology purchased before fiscal year-end may qualify for immediate expensing (CCPCs, up to $1.5M) — full current-year deduction. Capital Strategy
Review TOSI positions for all family dividends — confirm that any dividends paid to family members during the year are supported by a qualifying TOSI exclusion with documentation in place. Annual Review
Confirm SBD limit — passive income grind-down — if the PC has passive investment income above $50,000, the SBD limit reduces. Calculate the impact and consider strategies to distribute excess passive income or structure holdings to protect SBD access. SBD Protection
Reconcile GST/HST for dentists and mixed billing physicians — confirm total HST collected matches returns filed; confirm ITC apportionment for mixed-billing physicians is correctly calculated for the year. GST/HST Compliance
Review QSBC qualification for LCGE planning — confirm the PC's assets are at least 90% active business assets. Address any disqualifying passive asset accumulation at least 24 months before a planned practice sale. Exit Planning
✅ Custom CPA — Complete Accounting Services for Canadian Doctors and Dentists
Professional corporation structuring, OHIP/dental billing reconciliation, health spending accounts, TOSI analysis, GST/HST compliance, and year-end strategies — the complete financial service for Canadian healthcare professionals.
10. Frequently Asked Questions
Should Canadian doctors and dentists incorporate as professional corporations?
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Most Canadian physicians and dentists whose net professional income consistently exceeds $100,000 benefit significantly from incorporating as a Professional Corporation (PC). The economics are compelling: Small Business Deduction: the first $500,000 of active professional income is taxed at approximately 9% combined federal/provincial corporate rate, compared to 47–54% personal marginal rates for high-earning healthcare professionals in most provinces. A physician earning $500,000 in net professional income who needs only $150,000 for personal living has $350,000 that can be left in the PC, taxed at 9% ($31,500) rather than at 50%+ ($175,000) — a $143,500 annual tax deferral. Career-long compounding: if that $143,500 annual deferral is invested inside the PC and compounds at 6% for 25 years, the difference in retirement wealth is approximately $7M. Health Spending Account: the PC can fund a health spending account providing tax-free medical benefits — a dentist with $25,000 in annual family dental and medical expenses saves approximately $12,000–$15,000 in annual after-tax cost. RRSP and retirement planning: salary paid from the PC creates RRSP contribution room (18% of earned income); the RRSP savings compound tax-deferred alongside the corporate retained earnings. LCGE at exit: qualifying PC shares are eligible for the $1.25M Lifetime Capital Gains Exemption on eventual practice sale — potentially $300,000–$350,000 in tax-free sale proceeds per shareholder. Important caveats: provincial medical/dental regulatory requirements for PC ownership and naming must be satisfied; TOSI rules significantly restrict family income splitting through medical PCs since 2018; the incremental compliance cost (annual T2, corporate bookkeeping) must be weighed against the benefit — though the break-even for most healthcare professionals is around $80,000–$100,000 of net professional income.
Is OHIP billing income subject to GST/HST in Canada?
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No — physician services billed through provincial health insurance plans (OHIP in Ontario, MSP in BC, AHCIP in Alberta, RAMQ in Quebec) are exempt supplies under the Excise Tax Act. This means: physicians do not charge GST/HST on insured medical services billed to provincial health insurance; and physicians cannot claim full Input Tax Credits on expenses related to those exempt services. The important distinction from zero-rated supplies: "exempt" is different from "zero-rated." For zero-rated supplies (like food exports), the seller charges 0% but can claim full ITCs. For exempt supplies, the physician charges 0% AND cannot claim ITCs on expenses related to those supplies. This means physicians who provide only exempt insured services effectively bear the cost of GST/HST on their equipment, supplies, and overhead as a permanent (non-recoverable) cost. When does a physician need to register for GST/HST? A physician who provides taxable uninsured services — cosmetic procedures (Botox, fillers, laser treatments), third-party insurance medical reports, WSIB assessments, workers' compensation reports, specialized direct-pay medical services — must register for GST/HST when those taxable services exceed $30,000 annually. Once registered, the physician collects HST on uninsured services and recovers a prorated portion of ITCs. Dentists are completely different: all dental services are taxable supplies (not exempt). Every dentist in Canada must register for GST/HST (the $30,000 threshold will be reached quickly in any practice) and must charge and remit HST on all patient fees.
What is a Health Spending Account and how does it work for doctors and dentists?
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A Health Spending Account (HSA) is a benefit plan established by a Professional Corporation that allows the physician or dentist (as both the shareholder-owner and an employee of their own PC) to have eligible medical, dental, vision, and paramedical expenses reimbursed by the corporation on a tax-efficient basis. How it works: The PC establishes a formal HSA plan through an insurance administrator or benefits company (required to qualify under CRA criteria); the physician/dentist submits eligible medical expenses (dental bills for their family, vision care, physiotherapy, prescription drugs, specialist fees, psychological services) for reimbursement; the plan reimburses the professional at face value, tax-free to the recipient; and the PC deducts the reimbursed amounts as a business expense at the 9% SBD corporate tax rate. Tax efficiency example: a dentist paying $20,000 in personal and family dental/medical expenses pays these from personal after-tax income — at a 50% marginal rate, this costs $40,000 in gross income to generate $20,000 after tax. Through the PC HSA, the $20,000 is a corporate deduction at 9% — the real cost to the business is $20,000 × 9% = $1,800 in foregone tax. Annual saving: approximately $18,200. Eligible expenses include most expenses qualifying as CRA medical expenses (Line 33200 of the T1) — dental procedures, prescription drugs, vision care, hearing aids, physiotherapy, chiropractic, psychological counselling, and many others. CRA compliance requirements: the HSA must be a bona fide benefit plan (not just a notional arrangement); it must be formally documented; and the amounts must be reasonable for the level of employment. CRA has specific criteria for owner-manager HSAs. Always establish the plan through a qualified administrator and confirm structure with your CPA.
What expenses can a doctor or dentist deduct in Canada?
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Canadian physicians and dentists can deduct all expenses reasonably incurred to earn professional income. Here is a comprehensive list of common deductible expenses: Professional dues and regulatory fees: CPSO, RCDSO, CMPA (medical malpractice insurance), provincial medical/dental associations, specialist college dues, hospital privileges fees, and professional liability insurance. All fully deductible. Continuing medical/dental education: CME conference registration and travel (airfare, hotel, meals at 50%), dental study club fees, online learning subscriptions, medical textbooks and journals, specialty training courses. Medical and dental equipment and instruments: diagnostic equipment, dental chairs, handpieces, instruments, autoclaves, digital X-ray and CBCT, procedure tables, ophthalmoscopes — subject to CCA rules (Class 8 at 20%; Class 12 at 100% for small tools; or immediate expensing for CCPCs). Office and clinic expenses: rent paid to the clinic (if the physician pays overhead), staff wages (nurses, hygienists, receptionists, dental assistants), cleaning services, utilities, general office supplies, telephone, and internet. Accounting and professional fees: CPA fees for tax preparation, financial statements, and planning advice; legal fees for practice matters. Vehicle expenses: business travel between clinics, to hospitals, to nursing homes, or on house calls — actual costs prorated by business use, or CRA prescribed per-km rates. Keep a detailed mileage log. Home office: for locum physicians or those doing billing/charting from home, a prorated portion of home expenses based on workspace area. Marketing and patient communication: practice website, online patient booking systems, patient communication software, practice management software subscriptions. One important note for physicians: expenses related to exempt insured services are generally not recoverable through ITCs (GST/HST), though they are still income tax deductible. Dentists recover full ITCs on all clinic expenses.
How should a dentist reconcile billing software to accounting records?
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Dental billing reconciliation involves systematically matching the practice management software (Dentrix, Carestream, Tracker, ABELDent, etc.) to the accounting/bookkeeping system (QuickBooks, Xero) and to the bank statements. Here is the monthly reconciliation process: Step 1 — Pull production report from practice management software: total fees charged to patients in the month, broken down by procedure code/category. This is the gross billings figure before adjustments. Step 2 — Pull collections report: total cash and payments received in the month — from insurance company assignments, patient direct payments (credit card, cheque, cash, e-transfer), and any pre-payments applied. Step 3 — Reconcile collections to bank deposits: the total collected should match (within a day or two of timing) the bank deposits for the month. Any discrepancy requires investigation — missing deposits, uncleared payments, or refunds processed but not reflected. Step 4 — Account for insurance assignment payments: group benefits plan payments (insurance assignment) arrive as bulk payments from insurance companies, not individual patient amounts. Each bulk payment must be applied to the correct individual patient accounts in the practice management software. Unallocated insurance receipts accumulate as unapplied credits, distorting the AR balance. Step 5 — Track patient pre-payments and credit balances: any patient who has paid in advance (orthodontic down payments, treatment plan deposits) must be tracked as a liability in the accounting system — not revenue — until the treatment is delivered. Step 6 — GST/HST reconciliation: confirm total HST collected on all patient fees matches the amounts that will be reported on the HST return for the period. Any discrepancy in the billing system's HST codes must be corrected. Step 7 — Write-offs and adjustments: amounts written off as uncollectable (bad debt), courtesy discounts, and insurance write-offs must be separately tracked and reconciled to confirm they reduce AR appropriately and are correctly handled for income tax purposes (only accrual-basis write-offs are deductible).
Disclaimer: The above contents are provided for general guidance only, based on information believed to be accurate and complete, but we cannot guarantee its accuracy or completeness. It does not provide legal advice, nor can it or should it be relied upon. Please contact/consult a qualified tax professional specific to your case.
