Running payroll for a medical clinic is more straightforward than most clinic owners expect.
You’re likely paying a mix of hourly staff, salaried roles, and contract positions. Each worker type comes with different obligations, but once you understand the core requirements, clinic payroll becomes very manageable.
Here’s what running payroll for a Canadian clinic actually involves:
- Registering a CRA payroll deductions account
- Classifying each person as an employee or contractor
- Withholding income tax, CPP, CPP2, and EI from each pay
- Remitting those amounts to the CRA on schedule
- Filing a Record of Employment (ROE) when required
- Issuing T4s or T4As at year-end
What are a Canadian clinic’s payroll obligations?
Before you can legally pay an employee, you need a payroll deductions account with the CRA. This registers you as an employer and is what you’ll use to remit deductions. You can register online through the CRA’s My Business Account portal, and If you don’t already have a business number, make sure you get one first.
Running payroll involves four core responsibilities
Classifying your team correctly
The way you categorize each worker (employee or contractor) determines what you deduct, what you remit, and what paperwork you issue at year-end.
Making source deductions from every paycheque
Source deductions are the amounts you withhold from an employee’s pay before it reaches their bank account: income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums. As the employer, you also contribute your own share of CPP and EI on top of what you deduct. These amounts get remitted to the CRA together.
Remitting to the CRA on time
Remitting means transferring those withheld amounts, plus your share as the employer, to the CRA on a set schedule. Most small businesses start as regular remitters. Late remittances attract penalties.
Pro tip: Wagepoint tracks your remittance schedule and submits on your behalf, and generates your T4s and T4As at year-end, ready to distribute and file
Employee or contractor: getting the classification right
Deciding whether someone is an employee or a contractor determines a lot more than just paperwork. It determines whether you need to deduct and remit payroll taxes, whether employment standards apply, and how the CRA assesses you.
The CRA doesn’t just look at what your contract says. It starts by asking what both parties intended when they set up the arrangement, then checks whether the day-to-day reality actually matches that.
The factors it looks at include:
- Who controls the schedule and how the work is done?
- Who provides the tools and equipment?
- Does the worker take on genuine financial risk?
- How integrated is the worker into your clinic’s operations?
If someone is an employee → you deduct income tax, CPP, and EI from their paycheque and remit those amounts, plus your employer contributions, to the CRA. At year-end, you issue a T4.
If someone is a contractor → you pay their gross amount without deductions and issue a T4A at year-end if they earned more than $500. You don’t contribute to CPP or EI on their behalf.If the CRA reclassifies someone you’ve treated as a contractor as an employee, you can owe both the employer’s and employee’s share of CPP contributions and EI premiums for the full period, plus penalties and interest.
Small clinic payroll: at a glance
Locum physicians: where misclassification happens most often
Many clinics treat locums as independent contractors by default, but as noted, the CRA looks at the substance of the relationship.
A locum may be considered an employee if they work regular shifts in your clinic, see your patients, use your systems and equipment, and don’t operate a genuinely independent practice. This can happen even if the contract says “contractor” and even if the physician is paid a day rate.If you’re unsure, the safest step is to request a CPT1 ruling. This is a formal request for the CRA to review your specific arrangement and confirm how it should be classified. It’s free, and getting it upfront is considerably less work than resolving a misclassification after an audit. An accountant who works with medical practices can help you prepare the request.
Source deductions: what you’re withholding
Every time you pay an employee, you’re responsible for three types of source deductions before the net amount reaches their account:
Income tax
Calculated based on the employee’s earnings and the credits they’ve declared on their TD1 form. A TD1 is a short form employees fill out when they start.
CPP contributions
Require both an employee and employer portion. You deduct the employee’s share and match it as the employer. In addition to CPP there is a second additional CPP contribution (CPP2), which applies to earnings above the first maximum annual pensionable earnings CPP tier and is relevant for many full-time clinical roles.
EI premiums
Deducted from each paycheque and remitted to the CRA, but the employer’s contribution isn’t a direct match. You contribute 1.4 times the employee’s premium amount.
Pro tip: Wagepoint calculates all three deductions automatically and remits the combined amount to the CRA on your behalf. The rates change every year, and the software updates accordingly.
Provincial employment standards
Most medical clinics fall under provincial rather than federal employment standards. The rules governing overtime, vacation pay, and statutory holidays all depend on which province you’re in.
Pro tip: Regulated health professionals like nurses and nurse practitioners are still subject to these standards. Their designation doesn’t change your obligations as their employer.
When does a clinic need to issue a Record of Employment?
A Record of Employment (ROE) must be issued any time an employee has an interruption of earnings, whether that’s leaving the clinic, taking parental or medical leave, or a significant reduction in hours. It’s what employees need to apply for Employment Insurance (EI) benefits, and the timelines are strict: generally within five calendar days of the interruption.
Clinics tend to file ROEs more often than many other small businesses. Locum arrangements shift, short-term contracts end, and turnover can be higher in healthcare settings. Wagepoint supports electronic ROE submission through Service Canada’s ROE Web system directly, so you’re not filing manually every time it comes up.
How Wagepoint supports small clinic payroll
Wagepoint is built for Canadian small businesses, including clinics with mixed worker types. Here’s what it handles for you:
- Employees and contractors in the same payroll run. Hourly, salaried, and percentage-of-billing pay structures all supported.
- Automatic source deductions. CPP, EI, and income tax calculated using current CRA rates, remitted on your schedule.
- T4s and T4As at year-end. Generated automatically, ready to distribute and file.
- Electronic ROE submission. Filed directly through Service Canada’s ROE Web system.
- Timesheets connected to pay runs. No manual data entry between systems.
- Wagepoint employee portal. Your team accesses their own paystubs and tax forms without involving you
Getting it right from the start
Payroll is one part of running a clinic you shouldn’t have to think about twice. Once it’s set up, it runs. Wagepoint handles your deductions, remittances, and year-end filings automatically, so every payroll goes out on time and on the right side of the CRA.
Book a demo and see how simple it can be.
FAQ
It depends on the substance of the working relationship. If the locum works in your space, uses your systems and equipment, and sees your patients without operating an independent practice, the CRA may consider them an employee.
No. The payment structure doesn’t determine classification. The CRA looks at the nature of the arrangement, not how the invoice is presented.
A T4 is issued to employees and reports employment income, CPP, and EI. A T4A is issued to contractors paid more than $500 in a calendar year.
The CRA can reassess up to three years back. You could owe the employer’s share of CPP and EI for the full period, plus penalties and interest.
