Psychotherapy Is Now Tax-Free

Psychotherapy Is Now Tax-Free

Big and exciting changes are coming for therapy in Canada! After years of effort, many therapy services will no longer have GST/HST, making these vital services more accessible. However, it’s important for practitioners to understand the specifics and implications of this change. Starting June 20, 2024, eligible services are no longer subject to GST/HST.


The Basic Rules of Tax Exemptions

In general, all goods and services are taxable unless there’s a specific exemption. For therapy services to be exempt (non-taxable), all of these criteria must be met:

Scope of Practice Requirements

The service must be within the scope of practice for the therapist, which varies by province. Generally, most services provided in a clinical setting would qualify.

Example: Alex is a registered psychotherapist in Ontario who provides Cognitive Behaviour Therapy plus other modalities outside the scope of what the CRPO covers. The CBT services won’t have HST apply, but the other modalities might.

Importance of the Practitioner-Client Relationship

There must be an established or ongoing relationship involving personal interaction with an individual.

Example: Online programs with no interaction with your clients will still be taxable.

Licensing and Qualifications

The practitioner must be licensed if their province requires it, or have the equivalent qualifications. Here’s a breakdown by province and practitioner:

  • Psychotherapists in Ontario and Quebec who are registered with CRPO or OPQ – This criterion is met.
  • Counselling therapists in New Brunswick, Nova Scotia, and PEI who are registered with the provincial regulator – This criterion is met.
  • Everyone else – This criterion is met if you have equivalent qualifications to what’s required to register with one of these regulatory colleges.

Health-Care Purposes for Service Exemptions

The service needs to be for the purpose of maintaining or improving health. For example, work performed on behalf of an insurance or legal firm generally wouldn’t be exempt and would be taxable.

Impact on Other Professions

Other professions, like registered social workers and registered nurses, are already able to provide non-taxable therapy services, as long as it’s within the scope of their profession. This change doesn’t affect them.

How Does This Affect Me?

Impact on Practitioners

If you’re not currently registered for GST/HST, this change won’t significantly affect you. You can continue to provide non-taxable services without needing to register for GST/HST.

For those already registered for GST/HST, there are several important considerations to address. Let’s go through them in detail.

Keep in mind that these changes took effect on June 20, 2024. From that date forward, eligible services are no longer subject to GST/HST.

Update your systems

Starting June 20, 2024, you will no longer charge GST/HST on therapy services that meet all the eligibility criteria. Here’s a quick checklist of systems you’ll need to update:

  • Your patient/billing software
  • Price lists on your website
  • Your bookkeeping processes
  • Any receipts you issue

Please note that if you provided a service before June 20, 2024, but collect the payment afterwards, you will still need to collect GST/HST for that service.

Prepare for increased costs

A downside of this new GST/HST rule is that your costs will increase. Previously, you could claim a refund for the GST/HST paid on your expenses (known as an Input Tax Credit). Now that your services are non-taxable, you will no longer be able to reclaim the GST/HST paid on your expenses starting from the effective date.


Rida is a registered psychotherapist in Ontario who rents an office. In January 2024, she paid $1,000 in rent, plus $130 in HST. She can claim a full refund of the $130 on her GST/HST return. In July 2024, she paid the same $1,000 in rent, plus $130 in HST. However, now that her psychotherapy services are non-taxable, she can no longer claim a refund of the $130 in HST. As a result, her rent costs will effectively increase by 13%.

This change applies not just to rent but to any expense where GST/HST is paid.

How can you manage this cost increase? Here are some suggestions:

  • Prioritize your pipeline – With the elimination of GST/HST, the effective cost of your services has decreased. This should lead to more visits from new and existing clients. Focus on marketing to help as many people as possible, aiming for the increase in visits to offset the rise in costs.
  • Review your pricing – Just like oxygen masks on a plane, you need to be in a stable position before helping others. Now may be the right time to revisit your pricing to ensure you’re covering your costs and maintaining enough profit to thrive
  • Offer other services– Adding additional services can broaden your reach. If you provide taxable services (like some online programs), you might still be able to reclaim some GST/HST. This can get complex, so consult with your accountant for guidance.

One-time tax

Unfortunately, there’s one more unpleasant tax surprise. If you bought capital goods in the past—such as expensive items intended for long-term use—you’ll need to repay some of the GST/HST you previously claimed as a refund.


Frank is a registered psychotherapist in Ontario. He bought an expensive desk for $2,000 at the end of 2023 and paid $260 in HST. He received a full refund for that $260 on his 2023 tax return. Fast forward to 2024 when this change takes effect. On his 2024 tax return, Frank will have to repay a portion of the $260 refund he previously claimed. Let’s say his desk is now worth $1,000. He’ll have to pay $130 in this one-time tax.

Why does this happen? The idea is that you previously received a refund because you were using that expense for providing taxable services. But now that you’re no longer using that item for a taxable service, you have to repay part of your GST/HST refund.

The good news is that this only applies to capital goods—not everyday expenses like rent and supplies—and it’s only a one-time payment when the new rules take effect

Deregistering for GST/HST

Lastly, you might be wondering if you still need to be registered for GST/HST. In most cases, if you only provide non-taxable services, it wouldn’t make sense to stay registered. Deregistering would remove an unnecessary administrative burden.

For most practitioners, we recommend deregistering by the end of 2024 to simplify administrative tasks.

However, if you still offer other taxable services (such as some online programs), the situation is more complex. In that case, you should consult with your accountant.


The elimination of GST/HST on eligible therapy services marks a significant shift for practitioners in Canada. This change makes therapy more accessible for clients but also introduces new administrative and financial considerations for practitioners. To navigate these changes effectively, practitioners should update their systems, prepare for increased costs, and consider deregistering from GST/HST if they only provide non-taxable services. Consulting with an accountant for complex situations, such as taxable services, will ensure a smooth transition. These adjustments will help streamline operations and continue providing essential therapy services to those in need.

Here’s to a smoother, more accessible future for therapy services in Canada!