Introduction

Many medical clinics assume that all health-related services are automatically exempt from GST/HST. In reality, the CRA applies very specific rules, and clinics often provide a mix of exempt and taxable services without realising it.

Incorrect GST/HST treatment is one of the most common compliance issues for medical clinics, particularly those offering cosmetic services, administrative fees, or non-medically necessary procedures.

This article explains when medical clinics must charge GST/HST, how exemptions work, and where clinics most often make mistakes.

Key Takeaways

• Most medically necessary health services are GST/HST exempt.
• Not all clinic services qualify for exemption.
• Cosmetic and non-medical services are often taxable.
• Incorrect classification can lead to CRA reassessments.
• Clinics may still need to register for GST/HST.

Who This Applies To

This applies to:

• Medical and multidisciplinary clinics
• Health practices with associates or contractors
• Clinics offering cosmetic or elective services
• Clinics charging administrative or facility fees

How the CRA Treats Medical Services

The CRA distinguishes between exempt health care services and taxable supplies. Exempt services are generally medically necessary services rendered by licensed health professionals.

According to the CRA, services that are not medically required or are cosmetic in nature generally do not qualify for exemption (Source: CRA, “Health care services”).

What the Rule Means in Practice

Exempt Services

Common exempt services include:

• Medically necessary diagnostic and treatment services
• Services provided by licensed physicians for medical reasons

Taxable Services

Common taxable services include:

• Cosmetic procedures not medically required
• Medical reports and forms for third parties
• Facility or administrative fees
• Products sold by the clinic

Clinics that provide both exempt and taxable services must carefully track revenue and expenses.

Common Mistakes Clinics Make

• Treating all clinic revenue as exempt
• Failing to register for GST/HST when required
• Claiming input tax credits on exempt services
• Not separating taxable and exempt supplies

When Professional Advice Is Needed

Professional advice is important when:

• A clinic offers multiple types of services
• Associates or contractors operate under the clinic
• Cosmetic or elective services are provided
• GST/HST registration thresholds are approached

Correct classification early prevents costly corrections later.

Frequently Asked Questions

Do physicians always charge GST/HST?
No. Most medically necessary services are exempt.

Are cosmetic procedures taxable?
Yes, unless they are medically required.

Do clinics need to register even if most services are exempt?
Possibly. Registration depends on the nature and value of taxable supplies.