If you are a physician in Ontario, you know that Harmonized Sales Tax (HST) significantly impacts your bottom line.

For HST purposes, medical services are considered exempt.  That means you do not charge HST for treatment services, and you are not able to recover the HST on the goods and services you purchase to maintain your practice. But what if you do provide services that are subject to HST?  These could include:

Cosmetic procedures

Preparation of Medical – legal reports

Provision of office space and management services to other practitioners

Block and annual fees

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Driver’s License Reports

Once the value of these services exceeds $30,000 in your business year, you must register and continue to collect HST on the revenue from them. However, you are then eligible to claim HST input credits on the various costs associated with operating your practice.  The input tax credits are determined on a pro rata basis.  In other words the eligible credit is the same percentage that taxable revenues are to total revenues.

Proper structuring of your practice can significantly reduce the impact of HST on the fees charged to other physicians in your facility.  Legal and tax advice should be sought to it is correctly implemented and maintained.

For more information on this topic and other tax and planning issues related to physicians, contact Stan Swartz, CPA, CMA, CFP, CMC.

416 665 7735, x 224.

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