How to Pay Practitioners in Your Clinic: Percentage Splits, T4A vs. T4

The Three Ways Clinics Pay Practitioners

If you run a group practice — say five or six psychotherapists, or a handful of chiropractors and RMTs under one roof — how you pay your practitioners is one of the first structural decisions you make. It’s also one of the easiest to get wrong in a way that surfaces years later at year-end.

There are three common models. Most clinics use one, and some blend them.

Percentage split. The practitioner keeps a set share of what they bill, and the clinic keeps the rest. A 70/30 split means the practitioner takes 70% and the clinic retains 30% to cover the room, front desk, booking software, and overhead. In psychotherapy group practices, splits in the 60/40 to 70/30 range are common; higher-overhead clinics with more equipment and staff often land nearer 50/50 to 60/40.

Room rent or a flat fee. The practitioner pays the clinic a fixed amount — monthly rent, a per-day rate, or a flat administrative fee — and keeps everything they bill. The clinic’s income is predictable and doesn’t rise with the practitioner’s caseload. This is common where practitioners are firmly independent and treat the clinic as a landlord plus service provider.

Employee salary or hourly. The practitioner is on payroll. You withhold and remit their source deductions, pay the employer’s share, and issue a T4. The clinic keeps all the billings and bears the practitioner’s compensation as a wage expense.

The model you pick determines three things: how you record revenue in your books, whether you run payroll, and whether HST applies to the clinic’s cut. Below is how each of those plays out.

Contractor or Employee: The Question That Sits Under Everything

Both the percentage split and the room-rent model usually assume the practitioner is an independent contractor, not an employee. That assumption is where clinics get into trouble, because the label in your associate agreement doesn’t decide the question. The actual working relationship does.

The CRA looks at the total relationship and weighs four factors. (These are the factors the CRA has long used and continues to apply in its current guidance, which replaced the old RC4110 guide in January 2026.)

• Control. Do you direct when, where, and how the practitioner works — their hours, their rates, their methods? The more you control, the more it looks like employment.
• Tools and equipment. Who supplies what the work needs? A contractor typically brings their own — or at least isn’t simply handed everything by the clinic.
• Chance of profit and risk of loss. Can the practitioner actually make more or lose money based on how they run their practice? A genuine contractor bears financial risk. Someone paid a steady rate with no downside looks like an employee.
• Integration. Is the practitioner running their own business that happens to operate in your space, or are they folded into yours as part of the operation?

No single factor decides it. A psychotherapist who sets their own caseload, carries their own liability insurance, invoices under their own name, and can lose money in a slow month is on solid contractor footing. One whose schedule, fees, and clinical approach you dictate — who looks and functions like staff — probably isn’t a contractor no matter what the agreement says.

Why clinics get this wrong, and what it costs

The pull is obvious. Treating a practitioner as a contractor means no payroll, no employer CPP/EI, no EHT, no vacation pay, and simpler admin. So clinics default to “contractor” and paper it with an agreement.

If the CRA later decides the relationship was really employment, it can reassess. The clinic — as the employer — can be held liable for the CPP contributions and EI premiums that should have been withheld and remitted, and in practice that can include both the employer and employee portions, plus interest, plus penalties. The exposure compounds the longer the arrangement ran, because each year is on the table.

There’s a provincial layer too. Ontario’s Employment Standards Act sets minimum entitlements — vacation pay, public holidays, termination notice — that apply to employees, not genuine contractors. Misclassify someone and you may be on the hook for ESA entitlements you never budgeted for. The ESA test isn’t identical to the CRA’s, which is part of why this area is easy to trip on.

If you’re not sure which side of the line a practitioner falls on, you or the practitioner can ask the CRA for a formal ruling. It’s worth doing before a structure becomes entrenched, not after.

Who Invoices Whom — and What It Does to Your Books

In a percentage split, there’s a question that sounds like paperwork but actually changes your financial statements: who collects the money, and who pays whom?

Two structures are common.

The clinic collects, then pays the practitioner their share. The patient pays the clinic, the money lands in the clinic’s account, and the clinic remits the practitioner’s percentage to them. Here the clinic is handling the practitioner’s share as it flows through.

The practitioner bills, then pays the clinic its cut. The practitioner collects their own fees and pays the clinic a fee or rent for the space and services. The clinic only ever sees its own portion.

This drives a gross-versus-net revenue recognition question. If the clinic collects everything, should the books show the full patient billings as clinic revenue (gross), with the practitioner’s share booked as an expense? Or only the clinic’s retained share (net)? The answer depends on the substance of the arrangement — whether the clinic is genuinely earning that revenue and merely paying the practitioner out of it, or whether it’s really collecting money that belongs to the practitioner and passing it through.

Getting this right matters beyond tidiness. It changes your reported revenue, which feeds your HST small-supplier threshold analysis, your financial ratios, and how a lender or buyer reads your numbers. Two clinics with identical economics can show wildly different top-line revenue purely based on how the split is structured and recorded. This is worth setting up deliberately with your accountant rather than letting Jane’s default reports decide it for you.

T4A vs. T4: Which Slip, Which Box, and When

Once you know whether a practitioner is a contractor or an employee, the year-end slip follows.

Employees get a T4. Through the year you withhold CPP, EI, and income tax from each payment and remit them to the CRA on your assigned schedule. The T4 reports the wages and the amounts withheld.

Unincorporated contractors get a T4A. Fees you pay a contractor for services go in box 048 (fees for services) of the T4A. You report the fee amount excluding any GST/HST.

Incorporated practitioners are the murky case. Common practice is to pay the corporation’s invoice and issue no T4A, with the corporation reporting its own income. But the CRA’s reporting-fees-for-service requirement as written covers fees paid to any business, incorporated or not — and when the CRA lifted its box 048 penalty moratorium for the trucking industry in December 2025, it was over missing slips for payments to incorporated drivers. The safe default is to report fees paid to a practitioner’s corporation on a T4A rather than rely on the old practice.

Both the T4 and the T4A are due to the CRA and to the recipient by the last day of February following the calendar year.

One nuance worth flagging on the T4A. For years, the CRA hasn’t assessed penalties specifically for failing to complete box 048, and many payers leaned on that administrative relaxation. That relief is still in place for clinics, but it’s administrative policy rather than law — the CRA lifted the same moratorium for the trucking industry in December 2025, showing it can be removed sector by sector. The practical takeaway: treat T4A fees-for-services reporting as a real obligation, track contractor payments through the year, and don’t assume the leniency is permanent. If you’ve been paying associates and skipping T4As, tighten it up now.

The HST Wrinkle Clinics Miss

Here’s the one that catches nearly everyone. Your practitioners’ clinical services may be HST-exempt — psychotherapy (since June 2024, when conditions are met), chiropractic, physiotherapy, acupuncture, and naturopathy all deliver exempt services. So clinic owners assume the whole arrangement is HST-free.

It isn’t necessarily. The exemption attaches to the health service delivered to the patient, not to the business deal between the clinic and the practitioner.

When the clinic charges a practitioner a fee or rent for use of the premises and administrative services — and invoices them for it — that fee is generally a taxable supply. The clinic is supplying the practitioner with something (space, reception, booking, billing support), and that supply can carry HST even though the practitioner’s treatments don’t.

The CRA’s guidance on payments within a medical practice organization (P-238) draws a careful line here, and it turns on how the arrangement is actually structured:

• Where there’s a genuine fee-sharing arrangement — the practitioner assigns their billings to the clinic, which collects and remits the practitioner’s share while retaining a percentage — the retained portion may not be treated as consideration for a taxable supply.
• Where the clinic invoices the practitioner for administrative or facility services as a distinct supply, that fee is generally taxable, and if the clinic is (or must be) registered for HST, it charges HST on it.

The distinction is genuinely fact-dependent, and P-238 itself is framed around specific arrangements between medical practitioners. So this isn’t a “your split is always taxable” or “never taxable” rule. It’s a “get the structure reviewed before you set it” situation. A clinic that quietly charges room rent to five contractors, assumes it’s all exempt because everyone’s a therapist, and never registers or remits HST can build up a real liability without noticing.

If your clinic charges any kind of fee, rent, or admin charge to your practitioners, have the arrangement looked at. This is one of the most common — and most missed — HST issues in group practices.

Payroll Basics When Practitioners Are Employees

If you go the employee route, you’re running payroll, and a few things come with it.

Source deductions. You withhold CPP, EI, and income tax from each practitioner’s pay and remit to the CRA on your remittance schedule (monthly for most small employers). You also pay the employer’s share of CPP and EI. Missed remittances attract interest and penalties quickly, so this needs to run on time every period.

Employer Health Tax (EHT). Ontario levies EHT on employer payroll. Eligible employers get an exemption on the first $1,000,000 of Ontario payroll (available to employers with total Ontario payroll under $5,000,000). Most single-location clinics sit well under the threshold and owe no EHT — but if you’re running several locations or a large staff, it’s worth checking where you land, and larger payrolls trigger monthly instalments.

WSIB. Whether your clinic needs WSIB coverage for its practitioners is a separate question from the CRA’s contractor-versus-employee test, and the answer isn’t automatic. The WSIB applies its own analysis, and someone you treat as a contractor for tax purposes can still be considered a worker for WSIB purposes if they’re economically dependent on your clinic and integrated into it. If you pay contractors in a covered industry, you may also need to confirm their WSIB status before paying. Don’t assume your CRA classification carries over — confirm your clinic’s WSIB obligations directly.

How Jane App Tracks Splits — and Why It Isn’t Your Accounting System

Most of the group practices we work with run on Jane App, and Jane handles the compensation side well. You can set each practitioner’s percentage split (or flat rate) in Jane, and it calculates what each practitioner earns and what the clinic retains as billings come in. Jane’s compensation and payroll reports give you the per-practitioner numbers you need to actually pay people.

What Jane doesn’t do is keep your books. It’s practice-management software, not accounting software. It doesn’t maintain a general ledger, it doesn’t run formal payroll remittances to the CRA, and it doesn’t file your HST or income tax. The split it calculates is a number on a report, not a posted journal entry.

Does Jane App integrate with QuickBooks?

No — there’s no direct, automatic, real-time integration between Jane App and QuickBooks Online. Jane doesn’t sync to QuickBooks (or Xero) on its own.

What Jane does is export. Its billing, payments, and compensation reports download to CSV/Excel, and Jane publishes guides for importing sales into QuickBooks Online. Third-party connectors like Zapier can move some data between the two, but that’s a workaround, not a native integration.

In practice, here’s the monthly workflow most clinics use:

1. Pull Jane’s billing/sales summary, payments (or Jane Payments transactions) report, and the compensation report for the month.
2. Reconcile Jane’s payment totals against the actual deposits in your bank account, accounting for the timing gaps and Jane Payments processing fees that land net.
3. Record the month’s revenue, the practitioners’ shares (as expense, or as a pass-through, depending on your gross-vs-net structure), and processing fees in QuickBooks.
4. Run payroll for any employee practitioners through your payroll system, and set aside contractor payment records for T4A tracking.

It’s a summary reconciliation, not a line-by-line import of every transaction — which keeps the books clean without drowning your bookkeeper in Jane’s transaction detail. For the full Jane reconciliation process, see our Jane App accounting guide.

How Wellspring Helps Group Practices

Paying practitioners cleanly is where clinic bookkeeping gets genuinely complicated — the split structure, the contractor-versus-employee call, the HST question on your cut, and the year-end slips all interact. We set this up so it holds together.

We reconcile your Jane App compensation and payments reports to your bank each month, record the splits under a revenue structure that reflects how your arrangement actually works, flag the HST treatment of any fees or rent you charge practitioners, run payroll where practitioners are employees, and prepare the T4s and T4As at year-end.

We work with Ontario group practices in particular. See your profession’s page — psychotherapy, psychology, clinical social work, chiropractic, physiotherapy, and massage therapy — or read our bookkeeping guide for wellness clinics.

Related: Sole proprietor vs. incorporated clinic | Should I incorporate my clinic?