Dental practice payroll: hygienists, associates, and paying yourself from the DPC

The associate question decides everything else

Every dental payroll conversation starts with the associate, because theirs is the one status CRA actually contests. The tests in CRA's guide RC4110 look at control, ownership of tools, the ability to subcontract, and the chance of profit or risk of loss — not at what the associate agreement calls the relationship. An associate paid a percentage of collections, less their share of lab fees, who funds their own RCDSO registration and professional liability protection has a real argument for self-employment. An associate on a guaranteed daily minimum, working a schedule you set, looks like an employee wearing a contractor label.

The paperwork follows the status. An associate who bills through their own dentistry professional corporation invoices the practice and you pay the invoices. A self-employed associate practising personally gets a T4A with fees for services in box 048. An employed associate goes on payroll with a T4 and full withholding. Guess wrong and CRA can reassess both the employer and employee shares of CPP and EI going back years, with penalties and interest — while the associate loses the expense deductions they claimed.

Hygienists, assistants, and admin are payroll — no grey zone

Your clinical and front-desk team are employees, and hygiene is usually the largest wage line in the practice after your own pay. The sequence is fixed: open an RP payroll account under the DPC's business number, run every pay through software such as Wagepoint or QuickBooks Online Payroll, and let it withhold CPP, EI, and income tax, remit to CRA, and build T4s that are due by the last day of February.

Remittances follow the standard calendar — the 15th of the month after payday for most practices, quarterly once average monthly withholding stays under $3,000 with a clean record. A departing hygienist needs an ROE within days, not at year-end. Two Ontario layers sit on top: the Employer Health Tax once annual payroll passes the $1 million exemption, and WSIB — most dental offices are not compulsorily covered, so coverage is by application, and we confirm your classification rather than assume either way.

Assistants and admin staff carry full ESA protections, so overtime applies after 44 hours in a week and public-holiday rules bite whenever the office opens on a stat. Dentists themselves sit under the ESA's professional exemption — relevant the day you employ an associate, because their overtime and holiday terms then live in the contract, not the statute.

Paying yourself from the DPC

Salary or dividends is a yearly modelling question, not an identity. Salary is deductible to the DPC, creates RRSP room, and builds CPP — including the CPP2 second ceiling, which adds an employer-side cost band — but it means running yourself through payroll like your staff. Dividends skip payroll and CPP entirely and arrive with a T5. Holding more than 40% of the voting shares makes you EI-exempt either way, so EI rarely tips the decision. Most of our dentist clients land on a blend, revisited each year against cash flow and RRSP goals.

Family adds a screen. The RCDSO permits family members to hold non-voting DPC shares, but the TOSI rules tax their dividends at top rates unless an exception applies — and the excluded-shares exception is unavailable to professional corporations, leaving the excluded-business test of roughly 20 hours a week of genuine involvement. A salary for real work at a market rate avoids TOSI altogether; it is tested for reasonableness instead, so keep a job description and hours on file. If a practice sale is on the horizon, owner pay also shapes the earnings a buyer normalizes, which is why we coordinate payroll choices with practice tax planning.

The cross-border edges

Hiring a US-trained associate changes nothing about Canadian payroll — work performed at your Ontario chair means a T4 or T4A with normal treatment regardless of citizenship — but a US-citizen hire carries personal US filing obligations worth flagging before their first pay. And when you are the one crossing the border for CE honoraria or US locum days, that income belongs in personal cross-border planning, not the practice payroll. Both threads run through our cross-border guide for dentists.

Source: CRA — RC4110, Employee or Self-Employed?.