Introduction
Dental associates often find themselves in a confusing tax position early in their careers. Many are paid as independent contractors rather than employees, which changes how income is taxed, reported, and paid to the CRA.
Understanding how dental associate income is treated helps avoid surprise tax bills, missed instalments, and compliance issues in the first few years of practice.
Key takeaways
Dental associates are often treated as self-employed rather than employees
Taxes are not withheld automatically from associate income
GST/HST may apply depending on the services provided
Tax instalments are commonly required after the first year
Who this applies to
This applies to dental associates working in Canada who are paid as independent contractors, including associates working in multiple clinics or under percentage-based arrangements.
Employment income vs self-employment income
Many dental associates assume they are employees, but in practice, associates are often treated as self-employed contractors. This means the clinic does not withhold income tax, CPP, or EI from payments.
Instead, associates are responsible for reporting income, paying tax, and remitting CPP themselves when filing their personal tax return.
The CRA looks at the working relationship rather than the job title. Factors such as control, ownership of tools, and financial risk influence whether income is considered employment or self-employment.
Income tax and instalments
Because tax is not withheld at source, dental associates must set aside money throughout the year to cover income tax owing at filing time.
After the first year or two, the CRA may require quarterly tax instalments if balances owing exceed certain thresholds. Missing instalments can result in interest charges.
CPP contributions for dental associates
Self-employed dental associates pay both the employee and employer portions of CPP. While this increases the immediate cost, it also increases future CPP benefits.
CPP is calculated and paid when the personal tax return is filed.
GST/HST considerations
Most dental services are exempt from GST/HST. However, some associates provide services that may fall outside exemption rules. Whether GST/HST registration is required depends on the nature of services and total taxable revenue.
Incorrect assumptions about exemption are a common issue for associates early in practice.
Common early-career mistakes
Problems often arise when associates fail to set aside enough tax, misunderstand instalment requirements, or assume they are employees without reviewing their contract.
Lack of bookkeeping and poor record-keeping can also create issues during CRA reviews.
Frequently asked questions
Are dental associates always self-employed?
No. Some associates are employees, but many are treated as independent contractors.
Do associates need to register for GST/HST?
Often no, but it depends on the services provided and revenue thresholds.
Do dental associates pay more tax than employees?
Not necessarily, but tax is paid differently and must be planned for.
Closing
Dental associates benefit from understanding their tax position early. Clear planning around income tax, CPP, and compliance helps avoid stress and allows associates to focus on building their careers.