Bookkeeping for Psychotherapists and Counsellors in Canada (2026)

Since 20 June 2024, psychotherapy and counselling therapy services rendered to an individual by a qualifying practitioner are exempt from GST/HST across Canada. That single change moved this profession out of the ordinary small-business tax rules: no tax on sessions, no input tax credits on the costs of delivering them, and for many practitioners a GST/HST account that no longer needs to exist. This guide is about the money that is specific to psychotherapists and counsellors: the exact wording of the exemption, what stays taxable, how to close an account cleanly, how packages and no-show fees get booked, and what a solo practice nets.

It is for Registered Psychotherapists in Ontario, psychotherapy permit holders in Quebec, licensed counselling therapists in New Brunswick, Nova Scotia and PEI, and counsellors elsewhere who meet the CRA's equivalence test. The general mechanics (chart of accounts, monthly routine, sole proprietor versus corporation) are in our bookkeeping guide for therapists and counsellors and are not repeated here. Psychologists and social workers have their own exemptions and are not the subject.

Who qualifies for the psychotherapy and counselling therapy GST/HST exemption?

The exemption lives in section 7 of Part II of Schedule V to the Excise Tax Act. Bill C-59 added two paragraphs to the list of exempt practitioner services, (j.1) psychotherapy services and (j.2) counselling therapy services, effective on royal assent, 20 June 2024. Section 7 exempts "a supply of any of the following services if the service is rendered to an individual by a practitioner of the service".

The word doing the work is "practitioner". Section 1 of the same Part defines it as a person who (a) practises the profession of psychotherapy or counselling therapy, (b) where the province requires a licence to practise it, holds that licence, and (c) where the province does not require a licence, "has the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province". CRA GST/HST Memorandum 25-3 (April 2026) walks through how this applies province by province.

For the unregulated provinces, Memorandum 25-3 (paragraph 35) records the associations that have confirmed equivalence with the CRA: the Association of Counselling Therapy of Alberta and the BC Association of Clinical Counsellors with CRPO; the Canadian Association for Couple and Family Therapy with CRPO; and the Canadian Counselling and Psychotherapy Association with both CRPO and the New Brunswick college. The reverse also holds: in Ontario, a person not registered with CRPO cannot rely on an association membership, because in a regulated province the licence is the test.

Three more conditions sit on top of the licence. The service must be rendered to an individual (family, couples and group sessions qualify when each participant is a client). It must be a qualifying health care supply under section 1.2: made to maintain health, prevent disease, treat or relieve a disorder, help someone cope with one, or provide palliative care. And it must be within the profession's scope of practice. Miss any one and the supply is taxable.

What stays taxable after 20 June 2024?

Most solo practices end up 100% exempt. Group practices, supervisors and anyone with a side business usually do not. Memorandum 25-3 and CRA Policy Statement P-256 put these on the taxable side:

The practical consequence: if your taxable supplies (workshops, legal reports, corporate work) stay under the $30,000 small-supplier threshold over four consecutive calendar quarters, you can stop being registered. Exempt supplies do not count toward the threshold. If the taxable side goes over $30,000, you stay registered, charge tax on that side only, and claim input tax credits only on the costs of the taxable side. Our guide on when and how to register for GST/HST covers the threshold arithmetic.

Do I need to deregister for GST/HST as a psychotherapist?

You are not required to. You are required to stop charging tax on exempt services from 20 June 2024, and CRPO's billing guidance adds that if you kept the total price the same and simply stopped remitting the tax portion, clients must be told. Whether you then close the account is your call, and the CRA's own sequence is:

1. Confirm you are 100% exempt or under the threshold. If you have any taxable supplies above $30,000 in four consecutive quarters, you keep the account.
2. Check the one-year rule. A small supplier who registered voluntarily must have been registered for at least one full year before asking to close.
3. Close it. Online through My Business Account, or Form RC145, Request to Close Business Number Program Accounts. You choose the cancellation date.
4. File the final return. Under subsection 251(2) the CRA lets you file one return to the day before cancellation and, if tax is owing, a second one for the rest of the month. Any instalments already paid are credited back.
5. Settle the property on hand. This is the step people miss.

On the property: input tax credits you claimed on capital property while your practice was taxable are partly clawed back through the change-in-use rules, and the trigger is the exemption date, not the closure date. Memorandum 25-3 works the example: a computer bought in January 2020 for $2,000 plus $260 HST, ITC claimed, worth $200 on 20 June 2024. Basic tax content is $260 multiplied by $200 over $2,000, so $26 to remit. On a commercial building the practice owns the number is large, because basic tax content scales with fair market value: the memorandum's building example lands at $133,875 owing when use drops from exclusive taxable use (90% or more, which the Act treats as 100%) to 15%. Run that one with an accountant before filing. Non-capital property on hand at closure (unused supplies, prepaid rent) is deemed sold at fair market value under subsection 171(3).

After closure every expense is recorded gross: a $100 plus $13 HST software bill is a $113 expense. That is the real cost of the exemption to you, and it is small next to what your clients stopped paying, as the worked example shows.

How do sliding scales, packages and no-show fees get booked?

Sliding-scale fees

A sliding scale is a pricing policy, not a discount to book. Set the fee per client at the agreed amount and invoice that. Invoicing full rate and posting a "discount" line inflates gross revenue and distorts your average fee. To see what the scale costs you, run sessions by fee level once a quarter.

Session packages and prepaid credits

Money received before a session is delivered is not revenue yet. A client who pays $1,400 for a 10-session package at $140 has given you a liability of $1,400 (unearned revenue). Each completed session moves $140 to revenue. At year-end the unearned balance is what you still owe in sessions. For income tax, paragraph 12(1)(a) of the Income Tax Act brings the prepayment into income and paragraph 20(1)(m) lets you deduct a reasonable reserve for services still to be rendered after year-end, which is what the deferred-revenue balance represents. Track the package balance inside your booking software so the books and the client file agree. There is no GST/HST on the prepayment because the sessions are exempt.

No-show and late-cancellation fees

Charge it as a separate line, not as a session. On the tax side, in Ruling 158637 (December 2016) the CRA confirmed that a fee for cancelling an agreement to make an exempt supply carries no GST/HST: compensation for a loss is not consideration for a supply, and section 182 of the Excise Tax Act, which deems tax into cancellation charges, applies only to taxable supplies. A no-show fee attached to an exempt psychotherapy session therefore carries no tax. A no-show fee on a taxable workshop booking is the reverse: section 182 treats the fee as tax-included. Keep the two streams apart in your chart of accounts.

Does insurance pay you or the client?

In most cases, the client. Extended health plans typically reimburse the plan member after they submit your receipt, which means your receivable is with the client and the receipt needs the details their insurer wants: your registration number, the client's name, the date, the service and the fee. Direct billing exists but is narrower than in physiotherapy or massage. TELUS Health eClaims lists psychotherapists, counsellors, psychologists and social workers among its eligible provider types, connects to more than 40 insurers, and is free for providers, with the caveat in TELUS's own words that eligible professions "may not be supported by all participating insurers". Counsellors were added to eClaims in June 2024.

When you do direct bill, the bookkeeping changes: the insurer's portion is a receivable from the insurer, the balance is a receivable from the client, and the eClaims payment arrives in a batch you reconcile against the explanation of benefits, never against individual sessions. Jane's TELUS eClaims integration handles submissions, reversals and eligibility checks inside the client's file, and it requires Jane's Insurance Billing add-on ($20 a month plus $5 per additional full-time practitioner, $2.50 part-time) on the Practice or Thrive plan.

Associates, fee splits and professional corporations

In a group practice the exemption applies per transaction. Memorandum 25-3, Example 24, describes a clinic contracting a Registered Psychotherapist to see the clinic's clients: the clinic's supply to the client is exempt because a practitioner rendered it, and the therapist's supply to the clinic is generally exempt too when the written agreement has the therapist rendering psychotherapy within scope. If the agreement instead describes room rental, administration or marketing services flowing the other way, that piece may be a taxable supply, and a clinic whose taxable supplies pass $30,000 must register. The split percentage, who holds the client relationship, and whether the associate is an employee or a contractor under CRA guide RC4110 are worked through in our post on associate agreements for health clinics.

Ontario RPs can incorporate. CRPO issues a Certificate of Authorization to a corporation formed under the Ontario Business Corporations Act; only CRPO registrants may hold shares, officers and directors must be shareholders, and the certificate costs $680 plus HST to obtain and $453 plus HST a year to renew, on top of the $641 plus HST annual registration fee. The corporation does not change the GST/HST answer, since the exemption follows the practitioner rendering the service. Whether it is worth it depends on how much you earn beyond what you spend, and on the personal services business risk if most of your billing runs through one clinic; both are covered in our guide to professional corporations for health professionals.

Which software runs a psychotherapy practice in Canada?

Four tools, each doing a job the others do not.

Jane App is the practice layer: booking, SOAP and custom charting, 1:1 telehealth on every plan, invoicing and the receipts your clients submit to their insurers. Jane runs no free trial and publishes no coupon codes of its own; the one way to a free month is the code LEDGERLOGIC1MO, entered in the Grace code field at signup. Jane Payroll exists for Canadian clinics ($40 a month plus $6 per active staff member) but not in Quebec. Our Jane App review covers what the plans include in detail.

Jane does not connect to accounting software directly. Its guide says so plainly: reporting is exportable, and the Daily Transactions Report is formatted for import into Xero or QuickBooks. So the monthly flow is: export Jane's Daily Transactions Report (totals by payment method by day), import it into Xero as a summary, then reconcile against the Jane Payments deposits and eClaims batches that hit the bank. Xero is $25, $60 or $80 a month with unlimited users, and our partner link gives 80% off for 6 months. Set up two revenue accounts from day one, exempt psychotherapy and taxable other; if you ever pass the threshold again, the return builds itself. The step-by-step is in Jane App bookkeeping.

Dext handles receipts. Since HST on expenses is now part of the expense, Dext reads and codes each bill so nothing is claimed by mistake; the 14-day trial started through the LedgerLogic link gets 90% off for 3 months, and no promo code exists. For the first admin hire, Wagepoint is $20 a month plus $4 per employee for one pay run a month, or $40 plus $6 for unlimited runs, with CPP, EI and income tax calculated and remitted to the CRA, T4s, T4As and ROEs filed, a sync to Xero, QuickBooks Online and FreshBooks, and a $50 gift card after your first payroll through our link. The Canadian payroll price index compares the alternatives. Practitioners on QuickBooks Online can run the same Jane export into it.

Worked example: a solo RP in Ontario at $150 a session

Take a Registered Psychotherapist in Ontario, sole proprietor, $150 a session, 25 sessions a week, 46 working weeks. That is 1,150 sessions and $172,500 of revenue. All figures are an example, and 1,150 completed sessions assumes no no-shows and no unfilled slots, which is optimistic.

Before 20 June 2024 a registered RP billed $150 plus 13% HST, so the client paid $169.50 and the RP remitted $19.50 a session, $22,425 a year, less input tax credits. From 20 June 2024 the client pays $150. The RP's gross did not change; the client's cost dropped 11.5%. RPs who instead moved the fee to $169.50 all-in kept the $22,425, and CRPO says clients had to be notified of that choice.

Net before income tax and CPP: $172,500 less $21,942, about $150,560. The $2,455 column is what the exemption costs the practitioner each year: HST on expenses that used to come back as input tax credits. Set against the $22,425 clients no longer pay, the trade is one-sided in the client's favour and small for the practice, about 1.4% of revenue. The practitioner pays income tax and CPP on the net, keeps a receivables list for any clients on package balances, and files no GST/HST return at all.

A practitioner in the same position who also runs paid workshops at $35,000 a year keeps the account open, charges 13% HST on the workshops, claims input tax credits only on the workshop share of costs, and needs the two-revenue-account setup in Xero described above. That split is where a bookkeeper earns their fee in this profession. For a second set of eyes on your own numbers, ask us.