Psychotherapist tax services for the post-exemption practice.

What changed on June 20, 2024

Bill C-59 made psychotherapy and counselling therapy services GST/HST-exempt effective June 20, 2024, when the service is rendered to an individual by a practitioner registered with the provincial regulator, which in Ontario means the College of Registered Psychotherapists of Ontario, or holding equivalent qualifications. Before that date, a practice past the $30,000 small-supplier threshold charged 13% on every session. After it, therapy fees carry no tax at any revenue level.

The overnight question was pricing. If your fee was $150 plus HST, clients were paying $169.50; keep the all-in number and you took a raise, drop to $150 flat and the savings went to clients. Neither answer is wrong, but it deserved to be a decision, and plenty of practices never made it consciously. We still meet fee schedules in 2026 that nobody has revisited since the law changed.

Exempt is not zero-rated

Exempt means you charge no tax and recover none, which is a different animal from zero-rated, where you charge 0% and still claim input tax credits. Since June 2024, the 13% on your office rent, your Jane or Owl Practice subscription, your laptop, directory listings and advertising is simply a cost of practising. For anyone renting a commercial room, that is the biggest financial effect of the whole change: commercial rent carries HST, and none of it comes back.

Deregistration is a decision, not a formality

If therapy is now your only revenue, you can ask the CRA to cancel your GST/HST registration and stop filing returns. The catch sits in your capital property: cancelling triggers a deemed disposition, so you repay tax based on the basic tax content of assets you claimed ITCs on and still hold, the laptop, the office furniture, the soundproofing. It is usually a modest number, but it belongs in the decision, and the final return has to get it right.

Side income complicates the picture. Clinical supervision billed to other therapists, corporate workshops, courses and speaking fees are generally taxable; the exemption covers therapy rendered to a client, not everything a therapist sells. Those revenues alone now measure against the $30,000 threshold. Below it you can deregister and drop HST entirely; past it you stay registered, charge 13% on the taxable slice, and claim ITCs only against it. We run both scenarios in dollars before touching any paperwork.

The return that moves the money now

With HST largely out of the picture, your income tax filing is where the money is. For a sole proprietor that means a T2125 inside the T1, return due June 15 with any balance due April 30 and instalments once net tax owing tops $3,000, prepared through Personal Tax Filing with the deduction discipline the practice earns: CRPO fees, liability insurance, supervision you pay for, CPD, room rent, the telehealth home-office share, and CCA on furniture and equipment with the unrecoverable HST folded into their capital cost.

For an incorporated practice, Corporate Tax Filing covers the T2, due six months after year-end with tax at roughly 12.2% on the first $500,000 of active income in Ontario, plus the T4 or T5 that moves your pay out of the corporation. Either way the return is built from books we already trust, not a March reconstruction of a year-old bank feed.

If the wind-down already went sideways

We meet two versions of this practice across Mississauga and the GTA. One kept charging HST after June 2024 and is now holding tax collected in error; the other stopped filing GST/HST returns without ever cancelling the registration, and the CRA wants to know where the returns went. Both are fixable, with corrected billing and remittances for the first and a properly dated cancellation plus final return for the second, and CRA Audit & Review Support takes over the correspondence if a review is already open. The fix costs the least the year it happens.

Source: CRA — GST/HST for businesses.