GOOD NEWS!
Canadian Dental Care Plan (CDPCP)
In 2024, the Government of Canada launched a dental care program for those under the age of 18, seniors, and Canadians holding a Disability Tax Credit certificate were eligible to apply for the CDCP. In 2025, the plan is being expanded for Canadian resident families with a gross household income of less than $90,000 and do not have dental insurance.
The amount of CDCP coverage will differ based on various income brackets. Those families with low household income will be eligible for greater dental coverage. This is great news for dentists because it will allow for larger client base and collection will be assured because the program is being administered by SunLife Insurance.
It is highly recommended your dental practice apply for the Canadian Dental Care Plan claim and processing payment agreement. In addition, your billing staff will need to learn and train themselves on the specific nuances to eliminate the possibility of bad debt expenses. Work with your accountant to ensure the billings are being captured in the right general ledger account and that you are compliant in the event of an audit.
Some more Good News! The public service dental care plan (PSDCP) effective January 1, 2025, will also improve! The annual basic dental coverage will increase from $2,500 to $3,000. Note: those who become eligible after July 1 will be entitled to only half of the $3,000 benefit. The lifetime maximum reimbursement for orthodontic services will increase from $2,500 to $3,000 per lifetime starting on January 1, 2025.
BAD NEWS!
GST/HST INPUT TAX CREDITS
Prior to 2025 the input tax credit was simplified by the CRA. 65% of all sales taxes paid to vendors were expensed and 35% was automatically claimed on the GST/HST input tax credit return. The allocation of sales tax eliminated the need of detailed tracking of each purchase made by the dental clinic. As of January 2025, this significant tax arrangement has been eliminated.
Moving forward each purchase will have to be tracked for commercial use vs. non-commercial use. The sales tax will have to segregated accordingly. This new rule will require more involvement from the dental practice to help track the use of each purchase. What’s more concerning is that bookkeepers are not trained in input tax credits. A dental practice engaging a bookkeeper not managed by a qualified CPA can lead to significant fees when corporate tax returns and GST/HST input tax credit returns are filed.
Another layer of complication is when investments are being made in the dental practice’s operation. At the end of the year the GST/HST will have to be allocated between exempt and non-exempt operations. It will be easier for large dental practices to invest in the necessary system upgrades in comparison to small or medium sized dental practices.
It is highly recommended you work with your accountant immediately to make the necessary changes to your processes and operations.
You focus on improving your client’s dental health while we focus on improving your financial health!