Are you a dentist, dental surgeon, or orthodontist working with other dental or medical professionals? 


If so, you may be surprised to learn that although most services you provide to patients are generally exempt from GST/HST, you may still have to register due to how your business arrangement is structured, including fee and cost-sharing arrangements with other practitioners.


If you are already registered for GST/HST, it is likely because your total zero-rated and taxable revenues have exceeded the $30,000 small supplier threshold. However, there is also a chance that you are not correctly reporting the sales tax relating to nuances in your business structure, putting you, your company, and your partner’s companies at risk.

As of the time of writing this post (November 2022), we have learned that the Canada Revenue Agency (“CRA”) is in the process of initiating a nationwide review of certain dental practitioners (the “Project”) to ensure their compliance with the various GST/HST rules that are specific to the industry.

We expect that CRA auditors will focus on dental practitioners that are currently registered for GST/HST purposes and claiming input tax credits (“ITCs”) for a portion of their practice that has taxable and/or zero-rated supplies such as cosmetic services (e.g., whitening, etc.) and orthodontics. We expect the CRA to also look at fee-sharing arrangements with locums and other practitioners operating out of the same clinic. 

The latter issue has been known to CRA for a long time, and CRA’s GST/HST audit manual highlights these issues for auditors to review in their audit process.  Over many years of practicing in this area, we often see significant GST assessments by CRA where medical professionals are in joint practice together.  You can read more about that in our article on our firm’s website and indirect tax pages by clicking here.

Over the years, there have been numerous changes in CRA’s audit policy around orthodontics. Currently, they are considered a zero-rated (i.e., taxable at 0%) supply whereby a dental practitioner could register for GST/HST purposes and claim ITCs on a portion of the practice overhead. GST/HST paid on operating expenditures was being claimed as ITCs at around 30-35% of the total operating overhead. In the absence of a clearly defined policy on these issues, every circumstance is based on particular facts, and court cases have gone both ways, depending on the circumstances of the case.

Perhaps the Project is going to aim to settle these issues once and for all, so if you’re a dental practitioner that is registered for GST/HST purposes and claiming ITCs, it is increasingly more likely that your practice may be selected for an audit of its GST/HST reporting. Such an audit could cover up to the last four years of returns filed, however, the CRA typically only selects the last full year filed for the initial review and can then add an additional year for a total of two.

How you respond to this initial review can make all the difference in how far the CRA digs, and if a review letter comes across your desk, we recommend that you reach out for help in responding to it immediately. The GST/HST legislation allows for up to four years (and sometimes more) of returns filed.


We recently held a webinar to go through this topic and take some questions. Click on the video below to watch the recording of the webinar.

If you would like to find out more and understand your risks (even if your practice is not registered for GST/HST) of a potential audit, please contact us for an initial consultation to understand your practice’s risks.

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