Physiotherapy has its own tax quirks, starting with the fact that your treatment fees are GST exempt. We work with physiotherapists and clinic owners across BC, Alberta, Saskatchewan, Manitoba, and Ontario on incorporation, GST, and tax, many of them remotely.
Key takeaways
- In BC, physiotherapists are regulated by the College of Health and Care Professionals of BC, and a corporation needs a Health Profession Corporation permit before it can provide services.
- Physiotherapy treatment is GST and HST exempt, so you do not charge tax on care and generally cannot recover the GST you pay on expenses.
- Retail products and services like braces, kinesiology, and fitness rehab are usually taxable, which can pull a clinic into GST on that side of the business.
- A corporation pays about 11 percent on the first $500,000 of active income, against a top personal rate above 50 percent.
GST is the part most clinics get wrong
Physiotherapy services provided to a patient are exempt from GST and HST under the health-care rules. That has two consequences owners miss:
- You do not charge GST on treatment, so you usually do not register on that income.
- Because the service is exempt, you generally cannot claim input tax credits to recover the GST you pay on rent, equipment, and supplies used to provide care.
Why this matters: most physio clinics also sell taxable things, braces and supports, or offer kinesiology, athletic therapy, and fitness rehab. Once those taxable sales pass $30,000, the clinic has to register and charge GST on that portion, while treatment stays exempt. Getting the split right is where a physio clinic saves money and avoids a reassessment.
Setting up a physiotherapy corporation in BC
A physiotherapist can incorporate, but the corporation must hold a Health Profession Corporation permit from the College of Health and Care Professionals of BC before it provides services. The share rules follow the standard pattern:
- All voting shares are held by licensees, who keep the right to vote them.
- Non-voting shares can be held by licensees or family members of a voting shareholder.
- All directors and officers must be licensees.
How incorporating is taxed
| On | Rate |
|---|---|
| Active income up to $500,000 (BC CCPC) | about 11% (9% federal + 2% BC) |
| Active income above $500,000 | about 27% (15% + 12%) |
The benefit is deferral: income left in the practice is taxed at about 11 percent instead of your personal rate. Two points specific to a physiotherapy corporation:
- Income splitting is limited. A physiotherapy corporation earns its income from services, so the excluded shares route used by other business owners to pay dividends to a spouse is not available. Splitting works only where a family member genuinely works in the practice, within a defensible reasonable return, or once you reach 65.
- Associate physios can trip the personal services business rule. An incorporated associate tied to one clinic can be reclassified as a personal services business, which loses the small business deduction, adds a 5 percent federal tax, and denies most deductions.
Equipment and selling a practice
Treatment tables, clinic furniture, and general equipment are Class 8 at 20 percent; computers are Class 50 at 55 percent. On a sale of qualifying shares, the lifetime capital gains exemption can shelter a large gain, $1,250,000 for 2025 and an indexed amount for 2026, subject to the asset and holding-period tests.
Common questions
Do physiotherapists charge GST?
No, not on treatment. Physiotherapy services are GST and HST exempt. The trade-off is that you generally cannot claim input tax credits on the GST you pay on clinic expenses.
What about products and fitness services I sell?
Those are usually taxable. Braces, supports, and services like kinesiology or fitness rehab can carry GST, and once your taxable sales pass $30,000 you register and charge GST on that portion.
Can I incorporate my physiotherapy practice?
Yes, with a Health Profession Corporation permit from the College of Health and Care Professionals of BC. Voting shares stay with licensees, family can hold non-voting shares, and all directors must be licensees.
How much tax does incorporating save?
A corporation pays about 11 percent on the first $500,000 of active income instead of your personal rate. The saving is a deferral on income you leave in the company, not a permanent giveaway.
Can I pay my spouse dividends?
Only within limits. Because the corporation earns its income from services, the excluded shares exception does not apply, so paying family generally requires them to work in the practice, a reasonable return, or the age-65 rule.
Work with a firm that knows physiotherapy clinics
We handle the GST split between exempt treatment and taxable sales, the corporate setup and permit coordination, and the tax. Offices in Abbotsford, Langley, and Brampton, serving physiotherapists across Canada. Call 778-779-4212 or use the form below.
General information only. Talk to us about your situation.