Associates in the clinic: contractor or employee, and who decides

Whether the associates in your clinic are contractors is decided by how the clinic and the practitioner actually work, day to day — not by the associate agreement, not by the percentage in it, and not by your college. If the CRA reads the relationship as employment, the assessment lands on the clinic: both shares of the CPP and EI nobody withheld, penalties and interest, reaching back over years you consider closed. Two things make a clinic harder to read than an ordinary payer file: a fee split describes either arrangement equally well, and most of what a clinic bills is exempt for GST/HST, which changes what can move between you and an associate without tax on it.

The general test — the factors, the cost of a reclassification, how to ask for a ruling first — is the payer’s guide. This is what changes when the worker is a regulated practitioner and the payer is a clinic.

Your college licenses the practitioner; it does not classify the pay

A dentist, physiotherapist or optometrist is licensed the same way whether they are on your payroll or invoicing you. Registration, liability insurance, record-keeping duties and the standards of practice attach to the person, identically on both sides of the line. None of it is evidence either way — which is inconvenient, because “she is a licensed professional carrying her own insurance” is the first thing every clinic owner says. It answers a question the CRA did not ask.

Health practices generate a control fact other industries do not, and it cuts the other way. The practitioner must exercise independent professional judgment for the patient, and the clinic cannot direct it. That autonomy is imposed by the regulator rather than chosen by the two of you, so it generally carries less weight in the control analysis than owners expect — leaving the administrative facts to do the work. Who fills the schedule, whose list the patient came from, which days the treatment room is open, who the assistant answers to when the two of you disagree.

A fee split is a payment formula, not a classification

Forty-sixty is the default in most of these practices, and the number tells an assessor nothing on its own. What matters is what the percentage is a share of, and who is exposed underneath it.

A share of what the associate personally produced, paid on collections after write-offs and net of lab fees, with their own aide, supplies and liability insurance coming out of it, describes someone who can have a bad month. A share that never falls below a monthly floor, on patients the clinic booked from its own list, in hours the clinic set, with the clinic absorbing every no-show and paying every cost behind the chair, is a wage expressed as a percentage. The floor is usually the fact that decides it: a practitioner who cannot lose money has no risk of loss to point at.

Underneath sits the patient chart. The agreement almost always leaves the records, the recall list and the goodwill with the clinic and adds a restrictive covenant — ordinary commercial protection, and integration evidence, at once. Only one of those shows up on an assessment.

The associate’s corporation moves the risk; it does not remove it

Colleges in some provinces permit — sometimes expect — an associate to practise through a professional corporation, so the invoice arrives from a PC rather than a person. That changes what else is in play, not whether you are exposed: interposing the corporation does not by itself end your CPP and EI obligations, and both questions get asked off the same facts.

The second one belongs to the associate. A corporation serving one clinic, on that clinic’s schedule and that clinic’s patients, is where the personal services business test is live, and a finding there lands on their corporation — costing it the small-business rate and nearly every deduction. Associates splitting the week across two or three practices, with their own patients and their own costs, sit further from it. Neither answer decides yours.

Which slip you file follows the answer rather than setting it: a self-employed associate’s fees, or their corporation’s, go on a T4A — the non-employee’s fees-for-services slip — by the last day of February.

Exempt billings are why the GST/HST between you catches both of you

Most health care services supplied to patients are generally exempt for GST/HST rather than zero-rated, and the difference is the whole section. A zero-rated supply is taxed at 0% and the supplier still recovers the tax paid on the costs behind it. An exempt supply carries no tax and no recovery — the GST/HST on your rent, equipment, instruments and software is a cost the clinic absorbs rather than a credit it claims. Cosmetic and certain non-diagnostic services are generally taxable, so most practices recover part of the tax on their costs rather than none.

What that does to an associate arrangement is not intuitive. The supply between clinic and associate is not the supply either of you makes to a patient, and it is characterized on its own facts. Where the arrangement reads as the clinic supplying premises, equipment, staff and administration to a self-employed practitioner for a share of billings, that is a supply between two businesses, and it can be taxable even though every patient service behind it is exempt. The associate, whose own billings are exempt, generally cannot recover tax charged to them — a real cost on one of you rather than a wash between you. Where the facts point the other way, the answer differs.

Which characterization applies turns on the written arrangement, on who the patient contracts with, on who bills in whose name, and on administrative positions built up around these arrangements. It has been argued and litigated. This guide will not tell you which side you are on, and neither should anyone who has not read your agreement. Registration runs on the same distinction: the small-supplier calculation counts taxable supplies, not total billings, so a clinic can bill a great deal and carry very little in the number that decides it.

A worked example: three years of a 60/40 associate

Illustrative, round numbers, December 31 year-end. No rates applied — what matters is the base an assessment runs on, and where the second letter comes from.

A physiotherapy clinic pays an associate 40% of the billings she generates. She bills C$300,000 a year, so C$120,000 reaches her: C$360,000 over three years. She invoices monthly, carries her own liability insurance, and a two-page agreement calls her an independent contractor. The clinic books every patient from its own list, sets her days as Tuesday to Saturday, supplies the room, the equipment and the aide who preps it, absorbs every no-show, and tops her up to C$8,000 in a slow month. Her licence and her insurance are the only facts pointing away from employment, and neither is a fact about this clinic.

On reclassification the base is not the clinic’s profit for those years. It is the C$360,000 she was paid: both shares of CPP and EI on the pensionable and insurable portion of each year’s earnings, the penalty on what was never remitted, interest from each month’s original due date, three years of T4s filed late, and the workers’-compensation premiums the same facts generally imply provincially.

Now change the facts and the same 40% reads differently. She keeps her own patient list, is paid on collections after write-offs, pays her aide and her supplies out of her share, works two days at a second clinic, and sends a locum of her choosing when she is away. Same percentage, same invoice, opposite file — and the GST/HST question does not resolve alongside it. In the first set of facts the clinic runs a payroll; in the second, something moves between two businesses, and whether the clinic’s 60% was a taxable supply is a separate question with its own return behind it. Where a supply turns out to have been taxable, the tax is owed whether or not anyone charged it.

What Cadence does

We read associate arrangements before they start, and the existing ones at onboarding: how each practitioner is engaged, what the agreement says against what the schedule shows, and whether the filings match either story. Where the answer is payroll, we open the account and run the remittance calendar. Where it is contract, we keep the T4As on the February date and the file behind them current. That work sits in GST/HST and payroll, included in the year-round packages and available as an add-on to annual compliance. Where the GST/HST characterization between clinic and associate is the live question, we tell you what we think you are looking at, put it to the CRA in writing rather than guess, and bring in a specialist where the arrangement warrants one. Clinic owners usually arrive with practitioners, hygienists and front-desk staff paid three different ways; we read the three against what happens in the building before we change a slip.