Physicians in Ontario have a more complex financial picture than most professionals. Between OHIP billing, possible private fee income, locum arrangements, associate positions, and incorporation, there are a lot of moving pieces. A generalist accountant or bookkeeper who does not understand the medical billing environment will miss things that cost you money.
OHIP Billing and Income Recognition
Most Ontario physicians bill through OHIP, but OHIP payments do not always align neatly with when services were delivered. Understanding how to recognize income correctly for accrual versus cash basis accounting matters for your financial statements and your tax return.
Additionally, physicians who work in multiple settings — hospital privileges, clinic, private practice — need each income stream tracked separately to ensure accurate reporting and tax planning.
Locum Work and Subcontractor Income
Many physicians do locum work at different practices or hospitals. This income is typically paid as a subcontractor (T4A) rather than as an employee, which has different tax treatment. If you have both T4 employment income and T4A subcontractor income in the same year, your return requires careful handling to make sure CPP and income tax are calculated correctly.
Medical Professional Corporations in Ontario
Most physicians who have built a stable practice incorporate through a Medical Professional Corporation (MPC). MPCs in Ontario are governed by both the Corporations Act and the regulations of the College of Physicians and Surgeons of Ontario. From a tax perspective, they allow significant deferral of income and the ability to retain earnings inside the corporation at the lower corporate tax rate.
However, the rules around passive investment income, income splitting with family members, and the small business deduction threshold ($500,000) require active monitoring. If your MPC generates more than $50,000 in passive investment income, your small business deduction starts to phase out dollar-for-dollar — a significant cost that should be planned for, not discovered at tax time.
HST for Physicians
Most medical services rendered by physicians are HST exempt, which means physicians generally do not charge HST on their billings. However, if you provide any services that are not covered by OHIP and are not otherwise exempt (certain cosmetic procedures, independent medical exams, administrative services), HST may apply. This is worth confirming with an accountant who understands the medical billing environment.
Overhead Expense Sharing
Many physicians share clinic overhead with other practitioners. Whether those arrangements are structured as expenses paid directly or through a management company affects how they are reported and what HST treatment applies. The structure matters both for compliance and for tax efficiency.
Common Missed Deductions for Physicians
- Medical licensing fees and CPSO registration
- Medical journal subscriptions and CME courses
- Medical conference attendance
- Malpractice insurance (CMPA premiums)
- Home office expenses if applicable
- Vehicle use for hospital visits and house calls
We work with physicians and medical professional corporations across Ontario. Book a free 20-minute intro call to talk through your specific situation.