Registering before the threshold is a choice worth pricing
Our Tax Planning & Advisory work for foot clinics usually opens with a question the CRA never forces: should the clinic register for HST before the bench and the retail wall make it mandatory? Registration carries an unusual price in this practice. Custom orthotics are zero-rated, so registering changes nothing on what an orthotics patient pays, while every lab fabrication invoice stops arriving with 13% the clinic simply absorbs into the cost of the pair.
The genuine costs sit elsewhere. Off-the-shelf insoles and footwear start carrying 13% on the shelf price, and an HST return joins the calendar on whatever frequency is elected. So the decision reduces to arithmetic, the tax buried in a year of bench inputs weighed against the pricing hit on the retail wall, and we run it on your own purchase history before the first return is ever due.
Equipment recovery is all or nothing
Once registered, the recovery rules split by what you buy. Operating costs are apportioned, with the commercial share of revenue a reasonable proxy: a clinic doing a fifth of its business in orthotics and retail recovers roughly that fraction of the HST on rent, software and utilities. Equipment follows a harder rule: an asset used primarily, more than half, in commercial activity earns a full input tax credit, and one that is not earns none at all.
| Purchase | Mainly serves | HST outcome once registered |
|---|---|---|
| Lab fabrication invoices | Zero-rated custom orthotics | Recovered in full |
| 3D scanner and casting supplies | The orthotics program | Full credit while commercial use stays primary |
| Treatment chairs and the autoclave | Exempt foot care | No credit; the 13% stays in the cost |
| Rent, software, utilities | The whole clinic | Apportioned to the commercial share |
| Retail shelving and stock | Taxable retail | Recovered in full |
The split then flows into depreciation. Capital cost allowance runs on cost net of any credit recovered, so the scanner depreciates from its pre-tax price while a treatment chair depreciates from its tax-inclusive one, mostly through Class 8 at 20% declining balance, with clinic computers in Class 50 at 55% and a leased-space build-out in Class 13 over the lease term. A unit delivered and in service before year-end starts its claim a year earlier than one on backorder, so we look at the calendar before you sign the order, not after.
The rounds vehicle runs its own math
Nursing-home and mobile rounds put real kilometres on a vehicle, and how that vehicle is held decides the deduction. Held personally, the cleanest route is usually a per-kilometre allowance from the corporation for logged business driving, deductible to the clinic and tax-free to you at prescribed rates. Held corporately, the clinic deducts fuel, insurance and CCA in Class 10, but personal availability triggers a standby-charge benefit on your T4 that can quietly outweigh what the deduction saved. A passenger car above the federal cost ceiling also has its depreciable base capped in Class 10.1, one more reason the practical van often beats the nicer sedan on paper.
Either way, the logbook is the evidence. Driving between the clinic and a long-term-care home is business travel; the run from home to the clinic is commuting and never was. A season of rounds without a log becomes an estimate, and estimates lose reviews.
Pay, instalments and the profit that stays behind
Inside a chiropody professional corporation the shares sit with the member, so owner pay is a two-lever plan rather than a family one: salary, which builds RRSP room and CPP but carries payroll remittances, and dividends, which move cash simply and build neither. Profit left behind is taxed at roughly 12.2% on the first $500,000 of active income in Ontario, and that retained spread is what buys the scanner, the second chair or a quieter year without borrowing for it.
A strong orthotics season also moves instalments, corporate and personal, so we recalculate them when income shifts instead of letting February deliver the news. If the practice is still unincorporated, the deferral above does not exist yet, and our Incorporation work covers when the switch clears its costs. Either way the plan is set before year-end in a working session, quoted in writing after a free 15-minute discovery call, with the owner's return kept consistent through Personal Tax Filing. We build these plans for foot clinics in Mississauga and across the GTA.
Source: CRA — Input tax credits.
