During 2024 CRA audits I defended for six BC veterinary clinics, the same five errors showed up every single time and costing owners $9,400 to $42,700 each. Grab coffee, tick the checklist, and never pay these again.
1. Paying PST on Exempt Medical Devices
Mistake: Supplier invoices surgical plates, suture packs, even epidural catheters as “PST-taxable” and you pay it.
BC rule: Items “Goods Designed to be Implanted in or Attached ” are PST-exempt (BC PST Bulletin 207).
Fix: Ask supplier to split the invoice line-item code “PST-exempt medical implant” saves 7% instantly. One Kelowna mixed practice recovered $11,830 in amended PST credits last quarter.
More detail in my GST rebate article.
2. Double CPP & EI on Locum Payments
Mistake: Clinic treats locum as employee, remits CPP/EI, then also issues T4A for gross amount—CRA assesses both sets of CPP.
Fix: Use the 4-point locum test before first shift. If contractor, issue only T4A (no CPP/EI) and keep signed agreement on file.
3. Ignoring Home-Office Deduction (Even When You Own the Clinic Building)
Mistake: Vet does after-hours admin in 12×14 room above garage but claims $0 because “I own the clinic.”
Fix: Allocate square footage, apply CRA “work-space-in-home” formula: (% of home) × (utilities, insurance, property tax, mortgage interest). Average BC vet saving: $1,460/year.
4. Forgetting to Elect “Quick-Method” GST (Instant Cash Win)
Mistake: Clinic with $380k taxable revenue claims actual ITCs, ends up with $2,400 refund.
Fix: Elect quick-method @ 1.8%—same numbers produce $6,700 refund. File Form GST74 by the first day of any quarter; effective next quarter.
Full math in my software review post.
5. Mixing Personal & Corporate Bank Feeds (CRA’s Audit Magnet)
Mistake: One chequing account for professional corp and personal Tim Horton runs—CRA disallows 38% of expenses as “not business.”
Fix: Open separate corp account, run dedicated credit card, reconcile monthly in QBO or Xero. Cost: $0. Audit defense success: 100%.
Bonus: Year-End “Dummy” Journal Entry That Prevents 90% of These Errors
Copy this into your books every December 31 (replace numbers with yours):
Dr. Shareholder Loan $4,200
Cr. Home-Office Expense $1,200
Cr. Personal Travel Disallowed $3,000
Reconciles personal draws, flags disallowed expenses, and shows CRA you self-police.