Many physicians incorporate their practices to enjoy the same benefits as other self-employed incorporated professionals. However, recent tax measures affecting Canadian private corporations can have significant implications to physicians with a professional corporation, or those physicians considering incorporation. As with other professionals – such as lawyers, accountants, engineers and architects – physicians have the opportunity to incorporate their practices, to realize many tax and other benefits. However, recently-introduced tax legislation may impact the planning that many physicians with professional corporations undertake, and may impact the decision whether to incorporate for those not currently incorporated. Tax Planning for Physicians – Professional Corporations provides a brief overview of the benefits of operating your medical practice through a professional corporation, and the possible implications of the recent tax changes
By incorporating your practice, you can take advantage of certain financial benefits and opportunities:
Defer personal tax Income-splitting Remuneration flexibility Pay non-deductible business expenses from the corporation Capital gains exemption
Operating your medical practice through a professional corporation can offer many benefits, but introduces additional complexities and tax considerations, especially in light of the recent tax changes affecting private companies. Because of the potentially reduced tax benefits and the additional complexities associated with a corporation (since each provincial governing body has its own rules and requirements), you are encouraged to consult with independent tax and legal advisors for direction in your particular circumstances.
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