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Dentist guide · 2026
HST for dental and orthodontic practices: input tax credits after the 35% rule.
For more than thirty years, orthodontic practices could estimate the zero-rated part of their fees at up to 35% and claim input tax credits on that estimate. That arrangement is gone for every fiscal year starting on or after January 1, 2025. A registered practice now has to show, with its own numbers, how much of what it buys goes into zero-rated or taxable work. And the CRA does not treat crowns, bridges and dentures the way it treats braces.
What changed
The 35% estimate is gone. Actual use replaces it.
Since 1991 the CRA had an administrative arrangement with the Canadian Dental Association. A registered dentist could treat up to 35% of the total fee charged for an orthodontic treatment as the zero-rated supply of the appliance, claim input tax credits (ITCs) on that basis during the year, and reconcile to actual amounts at year-end.
In October 2024 the CRA published GST/HST Notice 339 revoking it, effective from the first day of a registrant's fiscal year that starts on or after January 1, 2025. The reason was a court loss. In Dr. Kevin L. Davis Dentistry Professional Corporation (2023 FCA 76, April 2023), the Federal Court of Appeal held that supplying an orthodontic appliance is a separate zero-rated supply even when it comes with exempt orthodontic treatment. The Supreme Court of Canada refused the Crown leave to appeal in December 2023. With the law settled, the CRA said the estimate was no longer needed and that dentists must claim ITCs based on their actual entitlement, without estimates.
Where that leaves your practice now
- December 31 year-end: fiscal 2025 was the first year without the estimate, and 2026 is the second. If the 2025 claim was made on the old basis, it is worth revisiting while the year is still well within the CRA's reassessment window.
- Any other year-end: you moved over on the first day of the fiscal year that started in 2025. A practice with a July 1 year start, for example, has been on actual allocation since July 1, 2025.
- Not registered: nothing changed for you directly, but read the registration step below before assuming it stays that way.
The short version
Dental services are exempt. No HST charged, and no ITCs on what you buy to provide them.
Orthodontic appliances are zero-rated. No HST charged, but ITCs are available on the inputs used to supply them.
Crowns, bridges, dentures and implants you fit yourself: the CRA treats the whole thing as one exempt dental service.
Purely cosmetic work is taxable. HST at 13% in Ontario once you are registered.
Two things this guide is not about
HST on an associate's fee split is a separate question — see associate dentists and taxes. HST when you buy a practice is covered in buying a dental practice.
What you supply
Four kinds of supply, three different HST results.
| What the practice supplies | HST status | ITCs on what you buy for it? | Where the rule comes from |
|---|---|---|---|
| Examinations, diagnosis, treatment and hygiene | Exempt | No | Excise Tax Act, Schedule V, Part II, ss. 5 and 8 (a "medical practitioner" there includes a dentist) |
| Orthodontic appliances, even when supplied with orthodontic treatment | Zero-rated | Yes, to the extent inputs are used to supply the appliance | Schedule VI, Part II, s. 11.1; Davis Dentistry, 2023 FCA 76; Notice 339 |
| Crowns, bridges, dentures and implants that the dentist prepares for and fits | Exempt, in the CRA's view — one supply of a dental service | No, in the CRA's view | CRA GST/HST Ruling 174773 (August 2024), following Axelrod, 2022 TCC 157. Artificial teeth are zero-rated in isolation (Schedule VI, Part II, s. 11), but not when they are part of an exempt treatment |
| Procedures done for cosmetic rather than medical or reconstructive purposes | Taxable (13% in Ontario) | Yes | Schedule V, Part II, s. 1.1 takes cosmetic service supplies out of the exemption |
The third row is where practices get caught. Some published commentary lists crowns, bridges and implants as a source of ITCs, and the statute does zero-rate "a supply of artificial teeth". But the CRA's stated position is that when a dentist does the preparatory work and installs the prosthesis, the patient is buying a dental treatment, and the tooth has no separate identity. Axelrod was an informal-procedure decision, which does not bind later courts, and the Federal Court of Appeal's reasoning in Davis was about orthodontic appliances, not artificial teeth. So claiming ITCs on prosthodontic work is a position you would have to defend on audit, not a settled entitlement. A dental lab selling you a finished crown or denture is in a different position: that sale is zero-rated in its own right.
How to claim now
Six steps to an ITC claim that holds up.
- Settle whether you should be registered. Exempt dental fees do not count toward the $30,000 small-supplier threshold; zero-rated appliance fees and taxable cosmetic fees do, together with those of associated businesses, over any four consecutive calendar quarters. Once you are past it, registration is mandatory, and HST must be charged on cosmetic work. Below it, registering is optional and makes sense when the recoverable HST outweighs the work of filing.
- Split the fee, then document the split. After Davis, an orthodontic treatment fee is partly consideration for a zero-rated appliance and partly for an exempt service. The practice needs a reasoned basis for that split — not a flat percentage carried over from the old arrangement — because it drives everything else.
- Allocate directly where you can. An input used only to supply appliances is fully in commercial activity; an input used only for exempt treatment gets no ITC. A finished appliance bought from a lab is itself generally a zero-rated supply, so it usually carries little HST to recover. The money is in the shared overhead.
- Apportion shared costs by a fair and reasonable method, applied consistently for the whole fiscal year. CRA Memorandum 8.3 recognises direct allocation, input-based methods (time, space or other measures of actual use) and output-based methods. It warns that revenue-based methods should be used with caution, because margins differ between activities. Rent, utilities, practice software, supplies used for both kinds of work and shared staff costs all fall here.
- Apply the thresholds. If 90% or more of an input's use is exempt, no ITC; if 90% or more is commercial, the full ITC. Capital personal property such as clinical equipment and computers qualifies for an ITC only if it is used primarily — more than 50% — in commercial activities, and then in full. Real property is claimed in proportion to commercial use, in full at 90% or more, and not at all at 10% or less. For most practices, clinical equipment will fall on the exempt side.
- Review assets claimed under the old arrangement. The CRA's notice tells dentists to consider the capital property rules. If an asset's use in commercial activities has fallen, the change-of-use rules can require repaying part of an ITC claimed earlier.
Keep the working paper
The CRA reviews refund claims and denies ITCs that are not supported. Keep the fee split, the allocation method, the measurements behind it and the year-end reconciliation with the return, and use the same method all year.
Missed ITCs are not lost straight away
ITCs can generally be claimed up to the due date of the return for the last reporting period ending within four years after the period in which they could first have been claimed. The limit is two years for some larger registrants, generally those with more than $6 million of annual taxable supplies. An under-claimed 2025 can usually still be corrected — on a supportable method.
Quick answers
What dentists and orthodontists ask us.
Can orthodontists still use the 35% estimate for HST input tax credits?
No. The CRA revoked the arrangement in GST/HST Notice 339, effective from the first day of each registrant's fiscal year beginning on or after January 1, 2025. ITCs must now be claimed on the practice's actual entitlement, using a fair and reasonable allocation applied consistently through the year.
Are braces zero-rated for HST?
Yes. A supply of an orthodontic appliance is zero-rated under Schedule VI of the Excise Tax Act, and the Federal Court of Appeal held in 2023 that it stays a separate zero-rated supply even when it is supplied with exempt orthodontic treatment. The treatment itself is exempt.
Can a general dentist claim ITCs on crowns, bridges and dentures?
Not in the CRA's view. In an August 2024 ruling the CRA treated a dentist's supply of artificial teeth, prepared for and installed in the course of treatment, as a single exempt dental service, following the Tax Court's 2022 decision in Axelrod. Claiming ITCs on that work is a filing position that would need to be defended, not a settled right.
Does a dental practice have to register for HST?
Only if its taxable and zero-rated supplies, together with those of associated businesses, pass $30,000 in any four consecutive calendar quarters. Exempt dental services do not count. Orthodontic appliances and cosmetic procedures do. Below the threshold, registering is optional.
Do dentists charge HST on teeth whitening?
Procedures done for cosmetic rather than medical or reconstructive purposes are excluded from the health care exemption, so they are taxable. A registered practice charges HST on them — 13% in Ontario. Whether a particular procedure is cosmetic depends on why it is done.
How far back can a dental practice claim missed input tax credits?
Generally up to the due date of the return for the last reporting period ending within four years after the period in which the ITC could first have been claimed, or two years for some registrants with more than $6 million of annual taxable supplies. The claim still needs a supportable allocation behind it.
Sources: CRA GST/HST Notice 339, Input tax credits related to dental practices; Excise Tax Act, Schedule V Part II ss. 1, 1.1, 5 and 8, Schedule VI Part II ss. 11, 11.1 and 34, and s. 148; Canada v. Dr. Kevin L. Davis Dentistry Professional Corporation, 2023 FCA 76, and the Supreme Court of Canada's refusal of leave (case 40778); Axelrod v. The King, 2022 TCC 157; CRA GST/HST Ruling 174773 (August 21, 2024); CRA GST/HST Memorandum 8.3, Calculating input tax credits; CRA, Input tax credits. See also dentistry professional corporations. General information, not advice for your situation.
Registered for HST, or wondering if you should be?
Call 647-870-8498 or email info@ghayurtax.com. We will look at your fee mix, set up an allocation you can defend, and review what was claimed for 2025.