Tax Compliance

Fully licensed therapists are often working as subcontractors for other practices. In this case, they are considered self-employed for tax purposes and have to file their personal tax returns by June 15. It is important to remember that although the tax return has to be filed by mid-June, any tax payable has to be remitted by the end of April to avoid interest charges.

More experienced therapists often operate their independent practices. The common structures in this category are professional corporations or partnerships. These entities are more complex and often require additional returns and forms to be prepared and submitted. For example, clinics that hire subcontractors should issue forms T4A for the amounts paid to such service providers. Corporations have to file a separate tax return and report any compensation paid to the shareholders on forms T4/T5. Partnerships may have to file a specific tax return depending on several factors. 

In addition to regular tax filings, therapists working as subcontractors or operating independent practices must consider various GST/HST rules. Until recently most of the services provided by Registered Psychotherapists were subject to GST/HST. However, as Bill C-59 received a royal assent on June 20, 2024, psychotherapy and counselling services are no longer taxable. As always, it is difficult to navigate such changes for business owners. Some of the common questions we get asked are as follows: