CRA GST/HST Physiotherapy Clinic, Sports Rehab & Kinesiology Audit — Montreal CPA Firm Near You: Defending Exempt vs Taxable Services, Treatment Plans, Subcontractors & ITCs

A CRA GST/HST Physiotherapy, Sports Rehab & Kinesiology Audit targets:

• physiotherapy clinics
• sports rehabilitation centers
• kinesiologists
• athletic therapists
• exercise therapists
• physio-adjacent rehab programs
• multi-disciplinary clinics (physio + massage + chiro + kinesio)
• clinic subcontractors (PTs, ATs, kinesio practitioners)
• clinic operators offering both exempt & taxable services

This sector is one of CRA’s most complex audit categories because physiotherapy is often exempt, while kinesiology, exercise rehab, athletic therapy, fitness rehab, and movement therapy are taxable. Clinics frequently mix both and misclassify services, leading to large reassessments.

Mackisen CPA Montreal specializes in defending physio-clinic audits through correct service classification, subcontractor compliance, and ITC reconstruction.

Legal Foundation

Excise Tax Act

• Schedule V, Part II — Exempt Health Services:
  Physiotherapy is exempt only when performed by a provincially regulated physiotherapist.

• Taxable Services:
  – kinesiology
  – athletic therapy
  – physical conditioning
  – exercise therapy
  – injury-prevention coaching
  – fitness-based rehab

• s.165 — GST/HST applies to all non-exempt services

• s.221 — mandatory collection for taxable services

• s.169 — ITC documentation requirements

• s.141.01 — allocation for mixed-use supplies

• Schedule IX — place-of-supply rules for virtual/in-person rehab

• s.123(1) — defines “practitioner,” “health service,” “exempt supply”

Case Law & CRA Rulings

• Physiotherapy = exempt only when practitioner is regulated

• Kinesiology, athletic therapy, and sports rehab = taxable

• Massage therapy is taxable unless therapist is regulated (varies by province)

• Royal Bank v. Canada — incomplete invoices → denied ITCs

• CRA requires strict documentation for mixed clinics

Learning insight: If a service is NOT performed by a regulated health professional, it is taxable, even if health-related.

Why CRA Audits Physiotherapy & Rehab Clinics

Revenue Risks

• GST/HST not charged on taxable kinesiology or athletic therapy
• physio + kinesio sessions bundled incorrectly
• exercise-rehab classes treated as exempt
• virtual rehab taxed incorrectly
• multi-disciplinary clinics misclassifying services
• prepaid treatment packages not allocated properly
• subcontractor PTs/ATs not invoicing properly
• insurance-based payments miscoded
• cash/e-transfer sessions underreported

Subcontractor Risks

• kinesiology or athletic therapy subcontractors without GST numbers
• physiotherapists treated as subcontractors without proper agreements
• mixed-registry practitioners improperly coded
• missing or invalid subcontractor invoices
• T4A non-compliance

ITC Risks

• missing invoices for:
– rehab equipment (bands, weights, machines)
– treatment tables
– braces, supports, supplies
– PPE
– software (JaneApp, Noterro, online booking systems)
– advertising/Google Ads
– rent, utilities, clinic supplies
• imported software without GST self-assessment
• ITCs overclaimed on exempt physiotherapy revenue
• personal-use equipment included

Operational Risks

• treatment notes not matching invoices
• hybrid practitioners (PT + AT) improperly coded
• group classes not billed correctly
• physiotherapy receipts missing required professional identifiers
• insurance billing not reconciled with GST filings

High-risk operators:

• sports injury clinics

• physiotherapy + kinesiology hybrid clinics

• athletic therapy centers

• physio clinics offering exercise rehab classes

• PTs subcontracting to gyms

Learning insight: CRA focuses on service classification, the #1 cause of errors in physio-adjacent clinics.

CRA Physio & Rehab Audit Process

1. CRA requests:
   – treatment receipts
   – practitioner licences (PT, AT, kinesio)
   – service breakdown (exempt vs taxable)
   – booking system records
   – patient logs & treatment notes
   – subcontractor invoices + GST numbers
   – bank/e-transfer statements
   – insurance company remittance statements
   – ITC spreadsheets
   – equipment/tool receipts
   – rental/lease agreements

2. CRA tests:
   • Was the service exempt or taxable?
   • Is the practitioner regulated for the exemption?
   • Are invoices legally compliant?
   • Do ITCs match taxable revenue only?
   • Are subcontractors GST compliant?
   • Do patient logs match revenue?
   • Are insurance & private payments reported?

3. CRA issues Proposed Audit Adjustment.

4. Mackisen CPA prepares full legal + documentary defense.

Learning insight: CRA reconstructs your entire year using patient logs, booking systems and bank deposits.

Mackisen CPA’s Physio & Rehab Audit Defense Strategy

• build a Service Classification Matrix (exempt physio vs taxable rehab)
• reconstruct invoices using CRA-approved format
• validate practitioner regulation status
• validate subcontractor GST/HST registration
• rebuild ITC binder (equipment, rent, supplies, software)
• allocate ITCs correctly between exempt & taxable revenues
• reconcile patient logs → invoices → deposits → GST filings
• correct multi-province GST for virtual sessions
• prepare CRA-standard CPA-certified audit binder
• negotiate penalty & interest reduction

Learning insight: Clinics win audits with perfect classification, practitioner validation, and ITC accuracy.

Common CRA Findings in Physio & Sports Rehab Audits

• GST not charged on taxable rehab (kinesio / AT / exercise therapy)
• hybrid sessions incorrectly considered exempt
• invalid or missing subcontractor invoices
• ITCs claimed on exempt physiotherapy revenue
• imported software missing self-assessment
• bank deposits > reported revenue
• patient logs not matching invoiced services
• virtual sessions billed using wrong GST rate

Learning insight: CRA reassessments often exceed six figures in mixed physio-rehab clinics.

Real-World Results

• A physio–kinesio clinic avoided a $312,000 reassessment after Mackisen CPA rebuilt service classifications and subcontractor invoices.
• A sports rehab centre reversed a $184,000 ITC denial by proving correct allocation between exempt and taxable revenue.
• A multi-disciplinary clinic eliminated penalties after correcting GST/HST on exercise-rehab classes.
• A PT subcontractor cleared CRA findings with verified licensing and complete patient-invoice mapping.

Learning insight: The key to success is organizing every service type with GST logic.

SEO Optimization & Educational Value

Primary keywords: GST/HST physiotherapy audit, CRA kinesiology audit, exempt health service GST rules Canada, Mackisen CPA Montreal
Secondary keywords: physio ITC denial, sports rehab GST audit, hybrid clinic GST mistakes, athletic therapy GST rules

Learning insight: Physio vs kinesiology tax confusion is one of the highest-traffic SEO topics in Canadian healthcare taxation.

Why Mackisen CPA Montreal

With 35+ years defending physio, rehab, kinesiology and multi-disciplinary clinics, Mackisen CPA Montreal is Québec’s #1 authority in GST/HST health-sector audits.
We understand practitioner regulation, exempt supply rules, service classification, subcontractor structures, and CRA methodology end-to-end.

Learning insight: Health-sector audits require expert classification, documentation discipline, and ITC precision — all strengths of Mackisen CPA.

Call to Action

If CRA is auditing your physiotherapy clinic, sports rehab centre, kinesiology practice, or hybrid healthcare business, contact Mackisen CPA Montreal immediately:

📞 514-276-0808
📧 info@mackisen.com
🌐 mackisen.com

Learning Conclusion:

A CRA GST/HST Physiotherapy & Rehab Audit tests exempt vs taxable classification, practitioner licensing, ITC allocation, subcontractor compliance, and service-log accuracy.
Mackisen CPA Montreal ensures total protection from reassessments.