One of the top tax tips for doctors? Make the most of your eligible CRA tax deductions.
What can doctors deduct from taxes?
While you should always consult a tax professional for your particular situation, this checklist not only covers common deductions for doctors — but a few surprising write-offs you may not even realize you’re eligible to claim:
1. Professional Membership Fees
Your licensing and membership fees for belonging to provincial and other professional medical groups are fully deductible.
2. Insurance Premiums
Doctors can deduct overhead, malpractice and property insurance premiums. Employee benefit premiums, such as health and dental, can be deducted as well.
3. Staff Wages
Any salaries or contract fees you pay for administrative, medical and support staff are fully deductible along with Canada Pension Plan and Employment Insurance premiums.
4. Professional Fees
Do you use Dr. Bill, a lawyer, bookkeeper or accountant? These and other business-related professional services are also deductible.
5. Rent and Maintenance
If you rent office space for your practice, it’s likely no surprise that you can write off the significant cost of rent. Don’t forget that you can deduct many related expenses such as repairs, property tax and utilities as well.
Generally, physicians may not claim home office expenses, even when they do paperwork at home, though there are exceptions for locums and other home-based doctors.
6. Leasehold Improvements
From installing brighter lighting to completely reconfiguring a space, when you customize your office for your practice, most costs are tax deductible—but not all at once. Leasehold improvements are considered capital assets and are written off over a period of time.
7. Interest/bank fees
In certain instances, such as where you borrowed money or secured property for the purpose of your practice, interest costs may be an eligible deductible expense.
8. Technology, Equipment and Furniture
Similar to leasehold improvements, items like your hardware, medical records software, equipment and furniture are considered capital assets that are tax deductible over a period of time, depending on the item.
9. Landlines, Cell Phones and Internet
A dedicated office landline and internet connection will be fully deductible. Cell phones have more nuances since doctors often use one mobile phone and plan for both personal and business purposes. In that case, only the portion used for business is deductible and the cost of the phone itself may be treated as a capital asset.
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10. Office Expenses
Smaller items, such as paper, pens, stationery and medical masks can be fully written off the year the expenses are incurred.
11. Conference Expenses
You can deduct travel, registration and accommodation costs for up to two conferences each year. (If you are a conference presenter, the two-conference limit does not apply.)
12. Courses/Continuing Education
Local and virtual courses to improve your skills or to maintain membership status in professional associations are deductible.
13. Professional Subscriptions
Medical journals and other related publications, whether online or offline, are tax deductible. Medical books are also deductible over time as capital assets.
14. Vehicle Expenses
Doctors can claim the percentage of their vehicle expenses related to business use. These expenses may include mileage, fuel, maintenance, parking, insurance and the cost of the vehicle itself. However, keep in mind that travelling from home to your office, clinic or hospital does not qualify as business use.
15. Business Gifts
Employee awards and gifts are permitted as deductions by the CRA, as long as they fall within certain guidelines. (Keep in mind that while cash and gift certificates are tax deductible for you, employees may be required to pay tax on them.)
16. Meals and Entertainment
You may claim 50% of reasonable meal and entertainment costs when professional matters are discussed. Meals for staff are also deductible when there is a business purpose. For up to six special events per year, such as staff holiday parties, 100% of meal and entertainment costs are deductible. When in doubt, always consult the CRA guidelines for meals and entertainment.
You can deduct advertising expenses for most forms of media, including print, broadcast and digital. (Some restrictions apply for periodical advertising.)
18. Limited Clothing
Specialized attire, such as scrubs and labcoats, are tax deductible because they are required and used exclusively for work.
Maximizing all the tax deductions you’re entitled to as a doctor is one of the most significant steps you can take to reduce your tax burden. Always consult with your accountant versed in the specifics of your practice to ensure you’re making the most of your deductions.
Of course, a seasoned accountant will also dig beyond deductions to explore additional tax savings strategies for doctors, such as incorporating your practice.
Get your Dr. Bill tax report in a couple of clicks
If you’re a Dr. Bill customer, you can easily access a tax report of your medical claims to give to your accountant. Click here or log into your account, click on reports, then income and expenses. Your report will show you accounts receivable and write-offs for whatever date range you specify (e.g. January 1, 2022 - December 31, 2022).
Have questions about creating accounting reports with Dr. Bill? Contact us.