Bookkeeping for Canadian Doctors: Avoiding Tax & Cash Flow Headaches

Running a medical practice in Canada means balancing two demanding roles: caring for patients and managing the business side of your clinic. While the first comes naturally, the second often causes stress. Bookkeeping and tax compliance aren’t just “back office” tasks—they directly impact your financial health and peace of mind.

Here’s a clear, practical guide for Canadian doctors on keeping books in order, staying compliant with CRA rules, and avoiding common money mistakes.

Why Bookkeeping Matters for Doctors

Doctors are high-income earners, but cash flow problems are still common. Why? Because expenses—clinic rent, staff wages, equipment, continuing education—add up quickly. Without accurate bookkeeping:

• Tax deductions get missed, costing you thousands.

• Cash flow blind spots lead to stress when CRA instalments are due.

• Audit risk increases if records are incomplete.

  
  

Good bookkeeping keeps you compliant and shows you where your money is going.

GST/HST: Do Doctors Need to Charge It?

Most physician services in Canada are exempt from GST/HST. That means:

• You don’t charge GST/HST on most medical services (diagnosing, treating, preventing illness).

• You cannot claim input tax credits (ITCs) on expenses used to provide exempt services.

Exceptions: If you provide non-medical services (cosmetic procedures, medical certificates for employers, etc.), those may be taxable.

The $30,000 Small Supplier Rule

If you provide taxable services or products and your worldwide taxable revenues exceed $30,000 in a quarter or over the last four quarters, you must register for GST/HST and begin charging it.

Example: If you sell cosmetic skin procedures in addition to regular medical services, track those sales carefully.

Income Tax Deductions: What You Can Write Off

The CRA allows you to deduct reasonable business expenses. For doctors, common write-offs include:

• Staff salaries & benefits (medical assistants, reception).

• Professional dues & malpractice insurance (CMPA, provincial college fees).

• Continuing medical education (CME) courses.

• Clinic rent, utilities, insurance.

• Electronic medical record (EMR) software subscriptions.

• Vehicle expenses if you travel between clinics or hospitals (log required).

• Meals & entertainment when meeting colleagues or referring partners—generally 50% deductible.

Pro Tip: CRA often reviews vehicle and meal claims. Keep detailed logs and note the business purpose on receipts.

Cash Flow Management: Keeping the Lights On

Many doctors earn well but still face cash crunches. Why? Because tax instalments and lumpy expenses (equipment purchases, staff bonuses) sneak up.

Best Practices

• Separate accounts: Have a business bank account for clinic income/expenses.

• Budget for taxes: Set aside 25–30% of income in a savings account for quarterly CRA instalments.

• Automate recurring expenses: EMR fees, insurance premiums, payroll.

• Review monthly reports: Cash flow, profit & loss, and receivables.

Practical Bookkeeping Checklist for Doctors

1. Confirm which services are exempt vs taxable.

2. Track any taxable sales against the $30k GST/HST threshold.

3. Categorize expenses properly (staff, CME, rent, insurance).

4. Keep logs for vehicles and meals.

5. Review financials monthly—don’t wait until tax time.

Final Word

As a doctor, your time is best spent with patients, not buried in receipts. But ignoring your books is risky. By setting up proper bookkeeping, understanding your GST/HST responsibilities, and claiming the right deductions, you’ll not only stay compliant—you’ll free up time and headspace for what matters most.

At Cloud Counting, we specialize in helping Canadian doctors manage their finances stress-free. Book a free consultation today to see how we can support your practice.