Incorporating a psychotherapy practice in Ontario

The incorporation advice that works for Ontario's physicians fails for its psychotherapists at the first share certificate. A doctor's professional corporation can issue non-voting shares to a spouse, a child, a parent. A psychotherapist's professional corporation cannot issue a single share to anyone who is not registered with the College of Registered Psychotherapists of Ontario. The exception everyone has heard about was drafted for exactly two Colleges — the College of Physicians and Surgeons of Ontario and the Royal College of Dental Surgeons of Ontario — and CRPO is not one of them.

Ontario wrote the distinction into O. Reg. 39/02 under the Regulated Health Professions Act, 1991. Paragraph 2 of s. 1(1) requires that, for every College other than those two, all of the issued and outstanding shares be legally and beneficially owned, directly or indirectly, by one or more members of the issuing College. Paragraphs 2.1 and 2.2 then carve out physicians and dentists, whose non-voting shares may go to a "family member" — defined as a spouse, child or parent — or to trustees for minor children. There is no paragraph for psychotherapists. An accountant who sets up your corporation the way they set up their physician clients' corporations has built something CRPO will refuse to authorize.

Who needs a certificate of authorization — and who doesn't

Incorporation is optional. Nothing in the Psychotherapy Act, 2007 or CRPO's rules requires it, and a Registered Psychotherapist employed by a hospital, an agency or an employee assistance program is treated as practising personally, so none of this applies to them. The requirement bites the moment you practise through a corporation: bill clients from it, contract through it, run the practice inside it. At that point sections 85.8 to 85.14 of the Health Professions Procedural Code require the corporation to hold a certificate of authorization from CRPO, per CRPO's business practice requirements.

One threshold rule catches people who incorporate online before reading anything: only a corporation incorporated under Ontario's Business Corporations Act qualifies. CRPO cannot issue a certificate of authorization to a federally incorporated company. The online services default to federal incorporation because the name protection is national and the fee is lower. Do that, and your application comes back refused — you are left continuing the company into Ontario or starting over, with the first set of filing fees spent.

Who can own shares in a psychotherapy professional corporation?

Only CRPO registrants — at every level of the structure. The OBCA says it once in s. 3.2(2): every issued share must be legally and beneficially owned by members of the profession. O. Reg. 39/02 says it again as a condition of the certificate. "Legally and beneficially" closes the trust workaround: a registrant cannot hold shares in trust for a spouse. "Directly or indirectly" is not an opening for a family holding company either — the holding company would itself have to be a College member, which a corporation cannot be. I have set out how each College treats holding companies and share ownership generally elsewhere; psychotherapy sits in the strictest category.

If it softens the disappointment: the family-share door, where it exists, no longer leads anywhere much. The tax on split income has applied to adult family members since 2018; most dividends paid to a non-working spouse are now taxed at the top marginal rate. Physicians kept the structure; the income-splitting benefit it was built for is mostly gone. You are not missing what the brochure says you are missing.

What the certificate costs

CRPO's fees are the smallest numbers in the project, but they recur, and missing the renewal has a sharper consequence than missing most filings.

Renew late and CRPO issues a notice of impending revocation; 65 days after that, the certificate is revoked and the corporation can no longer practise. The corporation fees sit on top of the ordinary costs of incorporating — government filing fees, the name search, the minute book — which I have priced out in what it costs to incorporate a professional corporation in Ontario.

What incorporating actually gets a psychotherapist

Not liability protection from clients. CRPO is blunt about this: a professional corporation does not shield a registrant from professional liability, and the College has the same authority over the corporation as over the registrant personally. A client who sues names you. What the corporation does block is personal exposure to the practice's trade creditors — the office lease, the equipment supplier, the software contract signed in the corporation's name.

The real prize is tax deferral. Since July 1, 2026, Ontario's small-business rate is 2.2 per cent, which puts the combined federal-provincial rate at about 11.2 per cent on the first $500,000 of active practice income — against a top personal rate of 53.53 per cent. Earn more than you spend, leave the difference inside the corporation, and roughly 42 cents of extra working capital per dollar stays invested instead of going out as tax. If you draw every dollar out to live on, the deferral evaporates and the corporation is an expense with a minute book.

One more figure belongs in the plan: psychotherapy services have been GST/HST exempt since June 20, 2024. Your corporation does not charge HST on therapy fees — and it cannot claim input tax credits on what it buys. A practice billing only exempt services can close its GST/HST account entirely.

The sequence

Incorporate first, authorize second. The articles of incorporation must restrict the corporation to practising psychotherapy and activities related or ancillary to it — the condition in paragraph 1 of O. Reg. 39/02 s. 1(1) — and the name must contain the surname of at least one shareholder, identify the profession, and end with "Professional Corporation." Numbered companies are not permitted. You can run the practice under a separate business name for marketing, but it must be on file with CRPO and the legal name goes on contracts and invoices.

Then the CRPO application: the form, the $680 fee, copies of the certificate and articles of incorporation, and a corporation profile report, no more than 30 days old, that shows the corporation active. Change the shareholders or the name later and the College expects to be told.

Group practices: one corporation or several?

Two or more RPs can share one professional corporation — every shareholder must be a registrant, and every director and officer must be a shareholder. Sharing a corporation means sharing everything in it: liability to its creditors, the consequences of one shareholder's suspension, and a buyout problem whenever someone leaves, because the shares can only ever be sold to another CRPO registrant. Most group practices are probably better served by separate professional corporations under a cost-sharing agreement than by co-ownership. If you do co-own, the agreement that governs it is not a standard template — I have written about why a professional corporation's shareholders' agreement is its own species.

The College's rules are not hostile to incorporation; they are indifferent to the reasons most people want it. Incorporate for the deferral and the creditor protection, and the structure earns its fees. Incorporate for the family shares, and you have bought a company that is not allowed to do the one thing you bought it for.