He also faced charges of engaging in sexual contact with her at her home, and suggesting the threesome - when he should have known at the time she was vulnerable.
She was described as a "current and former client".
Joseph denied the charges, but after receiving evidence in a four-day hearing in early December, the tribunal found the charges were "established on the balance of probabilities".
"The tribunal is satisfied that Mr Joseph engaged in this conduct with [the patient] when he knew or ought to have known by virtue of the current and past therapeutic relationship with [her], that she was vulnerable at the time he encouraged and engaged in sexual intimacy with her," the decision said.
"In acting in the manner established in the charge, Mr Joseph abused his position of power and trust and breached his professional and ethical obligations as a registered psychologist."
The conduct fell "seriously below" the standards expected of any registered psychologist, and was considered malpractice.
It was "immoral and unethical conduct and a serious neglect of professional duty", the decision said.
The tribunal did not consider any penalty short of cancellation was suitable in Joseph's case, "given the serious nature of the charge and particularly given the fact that the practitioner has failed to acknowledge his serious misconduct".
Because of this, the tribunal could not consider rehabilitation for Joseph.
The tribunal censured Joseph and cancelled his registration from January 15. The delay in cancellation was to allow time for Joseph to hand over his case load of ACC clients.
He is not allowed to apply for re-registration for a period of two years, and when or if he does reapply, he must complete an approved course of study around ethics and professional boundaries, and must undergo a psychological examination to assess his risk of re-offending in a similar manner.
The examination and the study must be paid for by Joseph.
He was also ordered to pay 30 per cent of the costs for the investigation and hearing - which will leave him more than $64,000 out of pocket.
The full reasoning for the tribunal's decision is yet to be released.