Occupational therapist tax services: exempt treatment, taxable assessments

Two exemption questions, not one

The GST/HST exemption for a COTO-registered occupational therapist covers services rendered to protect, maintain, or restore a patient's own health — that is the ordinary treatment file, and it stays exempt regardless of whether SABS, WSIB, or the patient pays. A medical-legal assessment commissioned by an insurer or a lawyer sits on the other side of a real line: because the report is produced to inform that third party's decision rather than to treat the patient, CRA generally treats it as a taxable supply made to whoever ordered it. A practice that has always assumed "OT is exempt" and never separated assessment fees from treatment fees is the single most common gap we find in this file. The same home-safety review can fall on either side depending on who it is really for: a review done to help a patient function more safely at home is treatment, while a near-identical review done to support an insurer's decision on a claim is closer to a taxable assessment, and the invoice needs to say which one actually happened.

Retail and assessment revenue push you toward the $30,000 line

Assessment fees and adaptive-equipment sales both count toward the $30,000 small-supplier threshold, even in a practice where treatment revenue is many times larger. Once a practice's taxable revenue crosses that line over four consecutive quarters, it registers, charges HST on the taxable lines only, and files a GST34 built from running totals rather than a year-end reconstruction. Registration also opens the door to input tax credits — but only on the share of shared costs, like rent, software, and admin wages, that reasonably supports the taxable side, allocated by a consistent method rather than claimed in full. As an illustration, a practice where assessment and equipment revenue make up roughly a fifth of total billings would generally look to recover about that share of its shared overhead as input tax credits, not the full amount. Some small practices with a modest taxable slice find the quick method for GST/HST simpler than tracking input tax credits line by line, though it only ever applies to the taxable portion of the practice and needs to be elected deliberately rather than assumed.

Vehicle costs carry real weight in a mobile practice

For a practice built around home visits and community assessments, motor vehicle expenses are often the second-largest deductible line after wages, and the deduction is only as strong as the mileage log behind it. A trip-by-trip record supports a proportional claim for fuel, insurance, and capital cost allowance on the T2125 for a sole proprietor, or reimbursement through the payroll rules described on our OT payroll page if the vehicle belongs to an employed therapist rather than the owner. Equipment carried for home visits and assessments — testing kits, adaptive devices kept on hand for demonstration — is either a straight expense or a capital asset depreciated over time, depending on its cost and useful life, and either way it needs to be kept off the personal side of the ledger.

COTO dues, insurance, and CE are deductible either way

Annual COTO registration fees, professional liability insurance premiums, and continuing education that maintains or upgrades clinical skills are ordinary deductible practice expenses whether the OT bills through a T1 or a T2. What changes with incorporation is not whether these costs are deductible, but which return they land on and how the resulting income flows to the OT personally afterward, and at what tax rate along the way.

Sole proprietor T1 or a professional corporation's T2

Many OTs start on a T1 as a sole proprietor and move to a T2 once a Health Profession Corporation makes sense for their billing volume, a decision covered in full on our OT incorporation page. Either structure carries the same GST/HST split described above — incorporation changes how and when the income is taxed, not whether the underlying exemption analysis applies.

Where US continuing education or a US-trained credential is part of the picture, see our OT cross-border tax page for the specifics.