GST Rules for Clinics: Staying Compliant as a Healthcare Provider
If you run a healthcare clinic in B.C., it’s important to understand how GST applies to your services. Many providers assume all their offerings are GST-exempt, but that’s not always the case—especially for multidisciplinary and wellness-focused clinics.
Services like cosmetic Botox, vitamin injections, or nutritional supplements may be taxable even if delivered in a healthcare setting. And when taxable services are combined with exempt ones, or when you claim GST on shared expenses like rent and utilities, the risk of getting it wrong increases.
Here’s what you need to know to stay compliant—and avoid audit surprises.
Change from previous administrative arrangement
The CRA revoked its previous administrative arrangement for dentists, and the new rules take effect for taxation years that start after January 1, 2025. The previous arrangement allowed dentists to claim up to 35% of total orthodontic treatments to be for the provision of orthodontic appliances and claim the corresponding ITCs. Going forward dentists will now be required to follow the same ITC rules as other GST/HST registrants.
Not all services are exempt from GST
Most core medical services provided by regulated professionals are exempt from GST. This generally includes services offered by physicians, nurse practitioners, physiotherapists, and naturopaths, among others, so long as they’re considered medically necessary by the CRA.
But when your clinic expands into wellness or aesthetic offerings, GST obligations may kick in. Cosmetic treatments, IV vitamin therapy, and retail products like supplements or non-prescription orthotics are typically considered taxable. If the service isn’t medically necessary, or the product isn’t prescribed by an authorized professional, you’ll likely need to charge GST.
Bundling services can lead to GST exposure
The way services are structured also matters. If a taxable service is bundled with an exempt one under a single fee, the CRA may consider the entire amount subject to GST, even if part of it would normally be exempt.
For example, if a consultation includes both exempt advice and a taxable cosmetic injection, and it’s all billed as one package, you may be required to collect GST on the full amount. Separating out services and listing them clearly on invoices helps ensure GST is only applied where it’s legally required.
GST and your clinic’s operating expenses
GST applies not only to the services you bill for, but also to how you handle expenses. If your clinic is registered for GST, you may be eligible to claim input tax credits (ITCs) on GST paid for operating costs like rent, equipment, and utilities, but only to the extent those costs relate to taxable services. No ITCs can be claimed if 90% or more of the practice is for the provision of exempt services, such as orthodontic services,
For mixed-use clinics, this means allocating expenses based on either revenue, square footage, or time use. If only a portion of your practice involves taxable activity, you’ll need to prorate your ITCs accordingly and keep clear records supporting your approach. The method you use to determine the percentage that an operating expense is used in your commercial activities has to be fair and reasonable, and used consistently throughout the year.
Different rules for ITCs from capital personal property and capital real property. The full GST ITC on those expenditures may be claimed if the asset is used more than 50% in commercial activities (capital personal property) and more than 90% for capital real property.
When you need to register for GST
You’re required to register for GST if your clinic earns more than $30,000 in taxable revenue in a single calendar quarter, or over four consecutive calendar quarters. This includes fees from taxable services as well as sales of products like supplements or non-prescription orthotics. Even if most of your revenue is from exempt care, crossing the $30,000 threshold from taxable sources triggers registration requirements effective no later than the day you exceed the $30,000 threshold.
Once registered, you’ll need to charge and remit GST on all taxable transactions, file periodic returns, and ensure your recordkeeping is audit-ready.
Common audit issues for healthcare clinics
The CRA regularly reviews clinics that offer both exempt and taxable services. The most common problems they flag include charging GST incorrectly (or not at all), bundling taxable services with exempt ones without proper separation, and claiming ITCs on 100% of expenses when only a portion of the clinic’s activity is taxable.
If your clinic has added new services or products recently, or if you haven’t reviewed your GST treatment in a while, it may be time for a closer look.
GST compliance is often more complex than it seems, especially for clinics offering a range of services. DMCL’s tax advisors work with healthcare providers across BC to assess their GST exposure, set up proper invoicing practices, and support them through CRA reviews or audits.
Whether you need help registering, claiming input tax credits correctly, or reviewing how GST applies to a new service line, your DMCL advisor is here to help you stay compliant and confident.