Accounting & Tax Services for Medical Clinics, Doctors & Dentists in Canada

Medical professional practice — incorporation is the foundation

Most established Canadian physicians, dentists, and other regulated medical professionals operate through a Medical Professional Corporation (MPC), a Dental Professional Corporation (DPC), or the equivalent corporate vehicle permitted by their provincial regulator. MPCs are permitted in every Canadian province under specific provincial regulator rules (College of Physicians and Surgeons in each province) combined with the provincial Business Corporations Act. The corporate structure unlocks the small business deduction, owner-manager remuneration flexibility, and (within TOSI constraints) some family income splitting opportunities.

The trade-off is complexity. MPCs face specific share structure restrictions (typically only the licensed professional and certain family members may hold voting shares, with non-voting share classes for family members where regulator permits), annual regulator compliance filings, and the same standard T2 corporate tax obligations. The accounting and tax work has to match the regulatory framework.

Who we serve

• Family physicians in solo, group, or clinic practice
• Specialists (surgery, internal medicine, anesthesia, radiology, pathology, psychiatry, etc.)
• Dentists in general or specialty practice
• Dental hygienists operating independently where permitted
• Optometrists
• Pharmacists operating pharmacy corporations
• Chiropractors
• Physiotherapists
• Veterinarians operating veterinary professional corporations
• Medical clinics (typically multi-physician arrangements with shared overhead or partnership structures)

The TOSI rules and family income splitting

Before 2018, paying dividends to a spouse or adult children who owned shares in the family MPC was one of the most common Canadian tax planning strategies. The 2018 Tax on Split Income (TOSI) rules effectively shut that down for most medical professional families. Dividends paid to family members of the active professional are now taxed at the top marginal personal rate unless they meet a specific exception. The main exceptions relevant to medical practice are:

• Spouse 65+ (allows full dividend sprinkling once the active spouse turns 65)
• Family members who actively work 20+ hours per week in the business (rare in medical practice since family generally isn’t licensed to provide clinical services)
• Capital gains on a qualified disposition
• Reasonable return on capital invested by the family member (limited)

Each MPC dividend payment to a family member requires a TOSI compliance review. We do this review every year for medical clients and document the basis for each dividend.

What we deliver for medical practice

• MPC incorporation in coordination with the provincial regulator (CPSO, CPSA, CPSBC, CMQ, etc.) and legal counsel
• Annual T2 corporate income tax return with optimized small business deduction
• Year-end Compilation Engagement financial statements (CSRS 4200)
• Owner-manager T1 personal tax return (and spouse where applicable)
• Annual salary vs dividend optimization with TOSI compliance documentation
• Monthly bookkeeping with clinic-specific chart of accounts
• GST/HST exemption analysis (most medical services are GST/HST exempt, but specific paramedical, cosmetic, and administrative services may be taxable)
• Payroll for clinic staff (front desk, MOAs, RN, hygienists, etc.)
• CCA on dental/medical equipment with optimized class assignment
• Leasehold improvement amortization for clinic build-outs
• Locum income reporting and proper structure (T4A vs T2125)
• Annual provincial regulator filings coordination

The GST/HST exemption — and where it ends

Most professional medical services performed for medical purposes are GST/HST exempt under the Excise Tax Act. The exemption covers consultations, diagnoses, treatments, and most clinical work. The exemption does NOT cover certain services that have grown in volume: cosmetic procedures (Botox, fillers, cosmetic surgery), most independent medical examinations (IMEs) for insurance and legal purposes, certain medical-legal reports, and various administrative services. Clinics with significant taxable activity may need to register for GST/HST despite being primarily exempt — and may need to apportion ITCs between exempt and taxable activities.

Practice transitions and exits

Selling or transitioning a medical practice is the single biggest tax event in most professionals' careers. The Lifetime Capital Gains Exemption (LCGE) on qualified small business corporation shares — currently approximately $1.25 million indexed annually — can shelter a substantial portion of the gain on sale. Eligibility requires careful planning in the years leading up to sale, including purification of any excess passive assets. We work with medical clients on pre-sale planning, ideally 2–5 years before the transition.

What Canadian businesses commonly miss about this service

Across the hundreds of Canadian businesses we work with, the same handful of issues come up repeatedly. Many small business owners delay engaging professional accounting until a crisis: a CRA review letter, an unfiled GST/HST return demand, a denied bank loan because financial statements aren't ready, or a Notice of Reassessment that arrived weeks ago. By the time we are first contacted, the cost to fix the problem is often several times what proper ongoing accounting would have cost from the start. Proactive engagement is dramatically cheaper than reactive cleanup.

The Canadian tax landscape also changes constantly. Recent changes that affect most Canadian taxpayers include the 2023 anti-flipping rule (residential real estate sold within 365 days is automatically business income, not capital gain); the Underused Housing Tax (UHT-2900 annual filing requirement for many corporations, partnerships, and trusts holding residential property even when no tax is owing — with $5,000 to $10,000 per-property failure-to-file penalties); the Quebec QST joint registration changes since 2021; the post-2018 Tax on Split Income (TOSI) rules that effectively eliminated casual income splitting through family dividends; the post-2021 $200,000 stock option vesting limit on the 50% deduction for options granted by non-CCPCs; the CSRS 4200 Compilation Engagement standard replacing the older Notice to Reader engagement; and ongoing CRA increased scrutiny on pre-construction assignments, short-term rental businesses, and cash businesses.

How BOMCAS Canada delivers this service

Every engagement begins with a written, fixed-fee engagement letter signed before any work is performed. The engagement letter describes exactly what is in scope, what deliverables you will receive, when those deliverables are due, what your monthly or project fee is, and what (if anything) is outside scope. This eliminates the hourly-billing surprise that most accounting clients fear. The only time we use hourly billing is for genuinely unpredictable items such as CRA audit response or complex one-off projects — and even then we agree to a maximum cap before starting.

Once the engagement letter is signed, you e-sign the CRA authorization (RC59 for businesses or AUT-01 for individuals), and we onboard you to the encrypted client portal with multi-factor authentication. All document exchange flows through the portal — no emailing of sensitive financial documents. Meetings happen by video conference or phone at times that work for you, including outside normal business hours when needed.

Our Canadian tax compliance philosophy

BOMCAS Canada is structured around four operating principles:

1. Tell the truth. If a tax position is aggressive, we say so. If a deduction will not survive a CRA review, we say so. If the engagement is going to cost more than originally quoted because the scope changed, we say so before doing the work.
2. Bill what we said we would bill. No surprise invoices. No scope-creep billing. If something legitimately changes scope, we discuss it and re-quote before doing the additional work.
3. Answer the phone. One-business-day response standard on client communications during normal business hours. No voicemail backlogs.
4. Specialize. Canadian tax and accounting is too complex to be a generalist. We do not do US-only tax, UK tax, or any other foreign jurisdiction in isolation. We are Canadian. Our cross-border work is always anchored by deep Canadian compliance.

What ongoing engagement with BOMCAS Canada looks like

For most clients, the ongoing relationship is structured around predictable monthly deliverables. For an incorporated small business client, that typically includes: monthly cloud bookkeeping with full bank and credit card reconciliation; quarterly or annual GST/HST returns prepared and filed; monthly payroll for owner-managers and any employees, with CRA source deduction remittances; year-end Compilation Engagement (CSRS 4200) financial statements; T2 corporate income tax return; owner-manager T1 personal tax return (and spouse where applicable); annual salary-vs-dividend optimization with written recommendation; unlimited email and phone support during business hours; one quarterly check-in call to review numbers and discuss the business; and CRA correspondence handling for routine review letters.

For a personal tax client, the ongoing engagement includes: annual T1 preparation; any required Quebec TP-1 (for Quebec residents); CRA pre-assessment and post-assessment review response when CRA requests additional documentation; Notice of Assessment reconciliation; and proactive tax planning conversations during the year about RRSP, TFSA, and FHSA contributions, major life events (marriage, kids, retirement, real estate), and any planned business or investment changes.

Frequently asked questions about engaging BOMCAS Canada

Why Canadian businesses choose specialized accounting over generalist accounting

The Canadian tax and accounting landscape has become significantly more complex over the past decade. The 2018 TOSI rules, the 2021 changes to stock option taxation, the 2022 mandatory reporting changes for trusts, the 2023 anti-flipping rule, the Underused Housing Tax, the changes to the small business deduction phase-out for passive investment income, the new CSRS 4200 Compilation Engagement standard, the continued expansion of digital sales tax rules, and the ongoing post-COVID CRA focus on cash businesses and unreported income have all required accountants to specialize more deeply. A generalist firm trying to cover personal tax, corporate tax, US tax, real estate, trusts, cross-border, and every industry vertical inevitably falls behind on the depth of expertise that any one client needs.

BOMCAS Canada is structured deliberately to maintain depth: we are Canadian-only by design; we work in industries where we have genuine specialized experience; we maintain ongoing professional education in Canadian tax law; we use Canadian-experienced staff at every level; and we coordinate with specialized partners (US-licensed cross-border, legal counsel for corporate restructuring, audit-engagement licensed practitioners) where required rather than trying to handle everything in-house.

Talk to a Canadian accountant who knows your industry

Call 780-667-5250 or submit the contact form. We respond within one business day.

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