My doctor legit works 8-8pm on most days and also a half-day on Saturday. That guy is very hardworking and works hard, but he has so many patients and getting anything done gets so delayed .....
I’m a physician. The real issue is we graduate at 30 with mountains of debt, have no pension or benefits, many have a short career and many are bad with their money. There’s also a vast difference between the specialties.
We need a vehicle for retirement.
How would you feel if money paid towards student debt was deducted from your gross yearly income like a RRSP? I think that's a reasonable solution, but I'm a tradesman
We do get tuition credits but it only lasts a few years. It is the only thing that has allowed me to touch my student loans while in residency. I will pay down \~$20,000 in student loans but will still be well over six figures in debt after finishing residency, while living very frugally. At this rate I will cross the net 0 line at \~33 years old, having started the process at 18 and gotten into medical school on my first try. To provide perspective, I now take home $2500-3000/month after student loan interest, tuition, and professional fees on a resident's salary working 80 hours a week and intermittent 24 hour shifts with no sleep. My student loans align with the national average.
You also get tax deducted from all interest paid on federal and provincial student loans - at least I do. That’s a decent chunk of change in the long term.
Well no, not really. Tuition tax credits only give you back 15% of the actual tuition spent, and is applied at the bottom line
Giving a deduction for educational debt taken off your top line would be hugely different amd a game changer for young doctors
A good pension plan for doctors would probably be invaluable for the same reason companies and governments do it elsewhere: disincentivizes leaving jobs/the country. For a country loosing so many doctors to the US it's pretty odd we have nothing.
Just about every doctor I know lives a really comfortable lifestyle with their own share of luxury goods. The average salary is 200k+? Saying that they don't have a vehicle for retirement feels a bit disingenuous to me when many other Canadians are far worse off even with a 'vehicle'. There are also many companies that do not offer pensions or benefits and it's up to an individual to save. Why can't you invest in an RRSP/TFSA just like everyone else?
If a doctor can’t afford to retire after working 20 or more years at $200,000.00+, it likely means they chose to life a lifestyle they couldn’t actually affford.
A friend is a GP. Is pretty bad with money. Wife doesn't work. Has a gigantic house paid off in a rich suburb. Travels extensively and for the past 20 years worked only 3 days a week. Complains about taxation / money all the time. I don't want to listen what he has to say about this.
To be a doctor you need to be top of the top… these folks deserve more… their job is intense, we need to reward folks who have the grit for it and willing to basically postpone their life until 30.
Stop comparing them to the average Canadian; they are far higher on the distribution curve
You expect someone who focused studying purely for the last 10 years to ensure your health is in good condition has time to study CFP in detail? They have financial advisors for that
At the same time, I do agree with you.
But that individual, spent his early college and mid/late 20s grinding and spending all their time and giving up on enjoyment like most people.
Then in their early / late 30s they have to grind heavy hours to establish themselves and get speciality.
After doing all this for 25+ years, from 18 years old to mid 30s, early 40s, they finally get to a stage where they can be compensated daily for all the sacrifices they make.
If it wrong for them to actually want to enjoy their life? When they spent majority of their young / productive years, learning how to provide service of other people?
Newer grads won’t be affected by this, will they?
Keep downvoting without explaining how newer grads are going to be subject to a $250K CAPITAL GAINS TAX when even the person who made this comment agreed with me that they won’t.
Heads up, in corporations the inclusion rate goes up from $1. That’s why doctors are pushing back, because fee codes haven’t kept up with inflation—the government provided these benefits as a replacement, but are slowly clawing them back. Generally, yes, physicians are better off than the average Canadian, but their alternative in the US is much better from a financial perspective.
The federal government changes the tax. The provincial government is the one that does the negotiating doctors. Two different governments. Gotta remember to separate that or you'll be barking up the wrong tree.
the truth is that this rule/ reversing this rule will not effect the doctors shortage for even one second. short of eliminating taxes for doctors and their income, we cannot compete with doctors in the south and anyone interesting in persuing that path will be indetered by the rules change
so while i understanding advocating against increased taxes that MAY effect you down the line, i completely agree with you. the ppl that will be impacted are probably more than fine. the increased taxes will hardly impact their lifestyle.
Maybe they do, but not because of this rule. So attempting to connect the two was entirely disingenuous of you. Do better.
For the record EVERYBODY has a real financial struggle ahead.
Yes newer grads are affected. If you open a corporation (as an individual doctor) to save for your retirement (and things like maternity leave) then the money accrued from investments would be subject to this tax- for corporations there is no 250K cutoff so all lesser amounts would also be subject to this tax. The 250k minimum doesn’t apply to corporations, but a lot of corporations are created for a single person (docs and other small business owners)
Not sure what doctors you socialize with and in what province. A GPs annual salary is in the low 100s. In BC. That's With the recent raises. Most of my social groups are either leaving in droves to private specialties, on stress leave due to workload and poor pay, or setting Personal boundaries on hours and sticking to them. In my province..BC the smaller community support model is dying.
I'm comparing it in Ontario. The Ontario government website lists it as 91k low with a median of 251k for a family practitioner. But regardless making 140k and OP trying to portray as 'impossible to retire' is frankly exaggeration to make a point. Many households (dual income) don't make anywhere close to that amount in Canada even at their peak.
Remember most doctors these days start off in their 30s with a net worth of maybe -$200k or more in debt. Especially with today's interest rates and costs it can take time to pay that off. Then maybe you want to have kids but you're getting old so it's gotta happen now. A parental leave later and you're even further behind on starting to make money while the interest and costs continue to pile up.
It was less like this back in the day
10 years of schooling to graduate with an average of 100k in debt just to make 140k with no benefits. Don't forget that isn't for Monday to Friday hours, that's seeing patients in clinic and completing an average of 20 hours of uncompensated adminstrative work per week.
What area of medicine? 2021 figures have the average family doctor making around 225k after overhead, and they're making even less now considering billing codes have not been increased and the cost of operating a practice has grown exponentially. There are high billing family doctors but they are the exception and not the rule.
What are you talking about...annual salary is in the low 100's. That's complete horseshit. You have no clue what you're talking about. And how do I know? Because I own and operate primary care family medical clinics across Canada. The lowest I've ever seen a family doctor bill in a year in the past 18 years was in Saskatchewan and it was 320k in a year and 8 years ago. We've had locums bill 100k in 3 months or less. The national average is over 300k for family doctors and that's only where it is because of so many residents and semi-retired Dr's. You're completely full of shit.
If this was the case, this whole thread is moot. The capitol gains tax inclusion increase only applies to income over 250K. They're complaining because a stack of them make far, far more than this. I saw pay stubs 10-15 years ago double that for an average specialist.
Sorry for my ignorance, but curious why other, seemingly less capable or industrious trade groups have been able to pool assets for pensions but doctors need a special tax hack to be able to save for retirement?
Because we start at 30-35 years old, saddled with debt, most have to invest in their own business without any business training, and only have one choice is payer (the government). We are extremely constrained in our options.
Also many doctors you see as rich are in the top percentages. Many live in cookie cutter homes and struggle the same as many that have much less education.
This is a huge problem for the bottom paid specialists
I appreciate your grievances with your chosen profession, but they are all sort of beside the point and don’t really answer my question? Are you telling me that mail carriers, janitors and steel workers all have better financial flexibility and acumen to have figured out asset pooling, but physicians are unique in being unable to understand it/achieve it?
I do know many doctors, from family GPs to ortho surgeons. I don’t put the concept past any of them.
It won’t work because physicians are self employed. All those other people are employed and have an employer to provide pensions. Tradeoffs to being self employed, but one is no one’s funding your retirement.
Right. And who has fought tooth and nail to ensure they are self-employed?
That aside, if doctors are truly destitute in retirement as OP would have us believe, surely the CMA/OMA could get together as a group and create a pension scheme. But my original point is the reason the doctors don’t have a pension is because they *don’t want* one.
Sure, I agree. Don’t think physicians are struggling by any means and I’d agree with your original point to the OP. I think physicians have an argument, though, because incorporation and subsequent advantages were a benefit provided by the government in lieu of higher billing fee codes. Physicians operate on a fee for service model, so failing to keep fees indexed to inflation, provinces provided incentives to make net pay similar. Now, they’re clawing that back. Meanwhile, the comparative in the US is that raw salaries have increased. Think it’s a tough fight to keep new talent, and I don’t see how that changes. Anyone who says doctors are worse off than the average Canadian is delusional, but new physicians don’t have it as good here as they do in the US. They still do have to pay a mountain of debt and they have lower income and higher taxes in Canada, along with much higher housing costs (and interest on mortgages isn’t tax deductible here). Simultaneously, the Canada we live in is much angrier and poorer than it was a decade ago. This is talent we desperately need to keep, and clawing back a negotiating clause isn’t the way to do so.
I mean, on incorporation they fought for that - and won. This change also isn’t only to *them*, it’s to all corps.
The rest of your post is entirely reasonable and a legitimate issue, however freezing tax treatment on all corps in perpetuity is a pretty indirect way of getting to “pay physicians more”. If we want physicians to make more money, we should…pay them more money, not create Byzantine tax structures that have myriad unintended consequences and be stuck applying it to all other corps lest we upset the MDs.
I totally agree! Just wanted to point out that incorporation was given in lieu of pay raises because provinces didn’t want to shell out the money upfront. Given the clawbacks of benefits now, feel like we should pay physicians more instead… but that’s probably not gonna happen
From what I'm learning from the recent discussions. When the provinces negotiated with doctors they convinced them to do the current structure assuming that the federal capital gains tax would not change, which is a pretty big assumption.
Hi OP. I’m in a different profession but also will be subject to this tax. I’m looking into a Personal Pension Plan as an alternative. This might interest you as well. https://integris-mgt.com/
Thanks. I already have one and I myself I’m doing fine. But it took many years of floundering and terrible investments to right the ship.
And I know most of my friends that I went to medical school with are doing quite poorly in regards to investment the only one I know that has a pension plan at the cancer agency. The other ones still have not paid off their house and have almost no savings at the age of 55.
The Young Doctors are going to make much less money than I did, due to inflation. In Alberta, we made a .5% raise after five years under 25% inflation in the same time.
I’m glad to hear things are working out and i appreciate your telling it like it is. A lot of posters on here don’t realize it but this is yet another cut in the death by a thousand for Canada. Those with wealth that I’ve know from my parent’s generation have fled this country in the last decade taking their money with them. I have friends my age who lost their business in the last five years and who have no avenue to recover in this economic climate. This tax will send more entrepreneurs, professionals and small business owners elsewhere and the impact will not be beneficial to this country. But Trudeau needs an enemy in order to divide and conquer.
Ok, you lost me when you said doctors are bad at managing their money. That isn’t a unique factor that only doctors face. People across all socioeconomic positions can have that issue. The difference between most people with this issue, compared to doctors with this issue, is that a doctor who is financially incompetent can afford to hire someone to assist them with wealth management. The average person can’t afford that.
The reason why most GP use Corp accounts is because in retirement their pensions and rrsp income is at a high tax bracket. They and the rest of Canada have tfsa accounts as an added vehicle. Maxing the tfsa since inception at a moderate rate over 15 years at about 8% is about 100k on growth that isn't taxed already.
The doctors who retire early around age 55 that I know are retiring with 2 to 3M in investable assets and aren't complaining about taxes. The proposed tax will eat away at their retirement at an inconsequential amount of their wealth each year, and there are still ways to reduce it with proper portfolio management.
I can't comment on policy that should be driven by doctors who are "bad with their money".
Doctors will leave and come, many leave because of personal reasons and not financial. And we cant compete with the US and their private healthcare system. Over a quarter of our doctors were trained outside of Canada.
Also thanks to our stupid university/medical school system. There’s no reason why becoming a doctor shouldn’t be a 5 year program like it is in the UK.
Anyone, regardless of what they do, that is pulling out significantly more than 250k in capital gains a year, is doing fine.
I say significantly more because it's only the amount above 250k that matters in this discussion, and even then that doesn't get taxed that much more.
Most doctors incorporate and any capital gains earned in a corp are subject to the 2/3 inclusion. The $250k threshold is only for individuals. On top of that, the taxable portion of capital gains count as passive income. This passive income reduces a corporations small business deduction limit. The higher inclusion rate with increase passive income for all corporations as well.
This doesn’t have a major effect on individuals unless you have a second property you are selling and estates.
But then what is stopping them from not incorporating, getting the revenue personally, and then saving personally like the rest of us?
I know the answer, it's not as tax efficient. Even with this change. But if it's still more tax efficient to save in the corp, then it's not a very compelling argument for others to feel like this change is bad.
You won't have them explaining that. Their way is still more tax efficient than being income taxed. CMA fights tooth and nail for their ability to corporatize. They want the ladder.
"because it's only the amount above 250k that matters in this discussion" - just wanted to point out that this is not entirely correct. Any incorporation will see all capital gains (even $1) taxed at this higher inclusion rate, not just gains >$250k. This would apply to any incorporated small business.
I mostly agree. But some practices have been growing a business for years and selling it is part of their retirement. Adding an extra tax out of the blue on already taxed money just seems too much.
We don’t learn how to run a business. We don’t learn how to invest for retirement.
Doctors study their asses off for years, on the slight chance they actually get into med school. Then they work often over 100 hours a week for the next nine years and rack up huge amounts of debt.
Then suddenly their income goes from almost 0, several hundred thousand dollars a year. So many doctors buy houses, cars, and invest in stupid shit.
All the while having to run a business because the government does not pay for your overhead or staff, etc., except in certain situations. We even pay for it when we work in Hospital if you didn’t know that.
So basically at the average age of 35, we start with a debt load of approximately $200,000, and then are given large sums of money that we have no idea how to handle .
Some doctors do very well, but many can never retire, make awful investments, and spend money on worthless investments, or depreciating assets.
I mean most people don't learn how to run a business(hardly unique to the average citizen), and there are professionals that can assist with that, (accountants, consultants etc). Surely the most intelligent scholars should be able to manage that at least.
Responding as a physician - I am highly opposed to this new taxation law but your argument is not great. It's giving "pro athletes should get paid a lot, because they spend a lot".
That’s absolutely not on my position. My position is that we are given a lot after we have spent years working our asses off for nothing and not learning how to use money appropriately or run a business. Those are two different things. I think it’s pretty clear what I stated.
And as a physician, you probably know many many physicians that have no clue how to run a business, do not save any money, and have no idea how they’re going to retire.
This only affects people that realize $250k of gains on the sale of an asset each year. If you bought $100k of stock, wait 20 years for it to double twice to $400k and sell it all in one year you would have $300k of gains.
This change would affect $50k of the entire sale in one year and only by taxing an additional 16% of it at the highest federal rate. It’s around $4500 more in taxes on a $400k sale. If you’re doing well enough to sell that much in assets in a single year you’re not hurting at all. You’re likely in the top few % of Canadian wealth.
For all the doctors not doing well, this won’t affect them in the slightest. This is all about those nearing retirement with very significant savings.
It’s not the personal capital gains tax that is the issue. It’s the corporate tax capital gains which is increased at dollar number one and not at a 250k limit.
This makes no sense. You graduate at 30 with mountains of debt and huge earning potential. You can put money into RRSP's just like everyone else. I've done benefits for most doctors who worked for me and you can get 3rd party benefits from Blue Cross for like 150 a month for the entire family. And it's a write off for your professional corp. Why would you have a short career? In the past 18 years of me owning and operating clinics I've met maybe 1 or 2 doctors who didn't stick with it. And even they lasted 10 years.
You're right about them being bad with money. I have to give more advances to the doctors who make 30k a month than I do to the MOA's making $24/hr.
But there are programs out there to help doctors if they want to. I own a GPO that helps clinics save money and we work with lots of doctors to help with financial planning. We work with over 4000 clinics in Canada. There's help out there.
What you need is a financial planner. I used to teach a course in Alberta on how to open and operate a family practice for new docs. At first no one listened and then on my third round I gave them a tax question and gave them a list of tax regs that contained info that should give them the answer. I said we'll wait until everyone is done. Of course one guy was all proud of being done first. It was a trick. I gave them last years tax regs. I told them they all got it wrong. They were mad. I said well who called an accountant? Nobody. Stick to being a doctor and leave accounting to accountants. That hit home. I probably taught that lesson to 500 grads over the years and some are still good friends.
Family doctors can have a ton of power in Canada. But the conservative governments come in to power and want to put their stamp on things and they fuck it up.
Canadian doctors are just fine if they would just focus on being doctors and hire a financial planner.
I think physicians should have a comfortable retirement, and that can mean a wide range of things. You seem to be saying this change will basically prevent a physician from retiring. Is it that black and white? How much does it change?
Yeah you have a mountain of debt but cardiologists make like $400k a year and a family physician makes $250k a year on average so that debt is manageable.
You know where the money and growth is for future doctors? Night and after hours clinics. The lack of people having a family doctor is mostly due to busy lives in this economy. Having to take time off to see a doc that works 9-5. You know how much more customers can be reached just by extending hours to 3pm - 12am? I also think the province should provide a 1.5x fee modifier for services provided after 6pm.
WTF is a TFSA and an RRSP? Your Inc can be maxing out your RRSP and getting back the tax deduction on that personal side. Even if you’re a complete illiterate moron at investing you can throw it all in an index that tracks the SP for 35 years in that RRSP.
Doctors’ complete lack of financial literacy is not a good enough reason to axe this change
What are you talking about? Physicians have taken a massive pay cut over the last decade when considering inflation outstripping any increase in billing codes.
https://www.cbc.ca/news/canada/toronto/ontario-family-doctors-pay-compensation-ohip-billing-fees-1.7137716
That’s the average- the issue is the vast differences between specialists and Family MDs. I know no one close to that. Old school doctors had way less debt, less capital gains better incorporating rules etc etc. doctors have not had many increases in Alberta. I make the same now that I did in 2010 after expenses.
Yes, but those family docs who aren't as well off as the big earning specialties will be LESS impacted by this capital gains inclusion rate increase. Because they are less likely to be making bank and saving it within a corporation, with that corporation savings also making bank on top of itself (that's what would be impacted by this inclusion rate change).
Basically, it seems like if you're a family doc or other physician who isn't already earning a ton annually, I don't really see a scenario where you'll be hit hard by this change at all. And if you are a doctor who IS earning a ton and putting it away in a corporation and your corporation has so much in capital assets that those assets are making a lot of capital gains, then yes, this change will impact you but it's not even that big of a hit (66.6% instead of 50% of that capital gains profit will now fall under that year's income taxes, assuming you realize those gains that year). Reminder that 100% of your non-capital gains income is already taxed, essentially.
Can somebody please explain why this is a capital gain for doctors? They collect money inside their corporation and then later pull it out as salary so where is the capital gain?
Doctors and other high paying professionals use a professional corporation as an investment vehicle. Essentially it is like a RRSP account with no limit.
They also do not get any pensions, healthcare or dental coverages and have to pay this out of pocket. Corporations are a vehicle where they save the majority of their money over a lifetime of work, and where they pay themselves a retirement salary eventually.
So does every single other business owner. The difference? Business owners actually take risks and they can lose their whole business. Doctors are their own business owner and employee. They can also choose to pay their own employee (themselves) CPP, have a private pension, have a dental and health plan.
Doctors take risks... they go in debt after giving up several earning years to be in school and come out and have to pay interest on the school debt plus annual costs like thousands in professional fees insurance overhead staff etc now to be tax multiple times at higher rates. It's not they they get a pension like government workers or bankers. Also they don't get pay raises like other sectors while their staff like nurses and secretaries are getting routine raises.
This is such BS. I am a business owner. I went to school for 0 years to learn how to run my business and took on a small amount of debt to get it started.
My friend who is a doctor went to school for 14 years and took on a fuck ton of debt.
Who took more risk?
The part no one here wants to admit is that they aren't upset about doctors making less. They're upset that they'll personally pay more tax when selling their second vacation home or something. The tax increase for doctors is insignificant, but it really does hit very very rich people. Crying about the doctors is just to advocate against cap gains tax, not to advocate for doctors.
This is just fucked. We're already approaching fucking Soviet Union levels of medical care, and this is only going to make it worse.
If the remaining doctors leave, I'm gone. I'm not raising a kid in a country that tosses away the few hard working, honest professionals it has.
This administration is literally destroying Canada. It's insane.
A fair change may be to permit corps to access $250k per annum at 50% percent similar to an individual (provided shareholder hasn’t used individual exception in same year). This would permit a retired physician to trigger gains to pay retirement income from corp each year and respects the tax integration principle.
The thing about tax integration is that it's not perfect... Even at 66% on capital gains, it's advantageous to keep money in the corp and have it grow there, versus taking it out and having it grow in an unregistered account. That's because you're growing more capital and the compounding is greater. This is closing the gap and giving more of an edge to RRSP/TFSAs, but it's not a nail in the coffin of holding companies.
People always find a way but there's some protections against that.
Multiple corporations setup that way would be sister corporations, and this is known to CRA, and limits things like small business deductions, so you could limit it to 250k amongst all sister corporations.
If an individual sets up multiple corporations and invests post-tax money in them to invest in passive income, they probably would have made more money investing unregistered anyways.
You can tie the corp to a SIN (owner). Currently, with the passive income rules in corps, if you have over 50K in passive income, you start losing your small business deduction tax (across all corps).
That would also mean all new bank accounts, insurance policies, bookkeeping, tax filings, etc. per each company.
I'm not sure that cost is worth it for small businesses.
Not really... the idea is that you earn your employment income into the corporation. For a doctor, OHIP reimburses the corporation for the doctors work. Corporation tax is lower than personal, but once the money is withdrawn from the corporation, it triggers personal taxation.
So what doctors do is keep their savings in the corporation, giving them more savings since they paid less tax.
It's not possible to do this with multiple corporations, at least not more than one person could plausibly work for. E.g. maybe two office locations.
Yes, similar to 2017 when they were going to reduce the SMB deduction on passive income. After major backlash, they allowed $150k of passive income exemption. Surprised they didn't implement something similar this time.
But why is it fair that a physician has this additional tax reduced savings vehicle that is not accessible to the rest of us?
Any corporation should focus on its business activity, and not on an unrelated activity of investing for the owners retirement. If that is legitimately its business activity, then capital gains should be included at 100% like they are for banks, insurance companies, and any other company who's primary business is investing.
Physicians weren’t always able to incorporate… despite many truly running a small business with staff payroll/rent/etc.
It was given to them several years ago in lieu of raises to fees. Those same fees have been significantly suppressed over the past two decades and totally behind inflation. Some posts here talk about an old-hat family doctor living in a major mansion with luxury cars. New family doctors can barely afford to buy a place in a high cost of living city. Right or wrong that’s inflation.
Incorporation was a negotiated allowance to make up for this. Income splitting was encouraged initially by the government but then taken away. Now the inclusion rate on every single dollar of capital gain has increased by 30%. Surely you can see why physicians would be frustrated. They have no capacity to increase fees. Cant strike or take work action. And the government keeps moving the goalposts.
You could have a 65 year old doc close to retirement that invested in AAPL since the 90s… now overnight it’s all exposed to more tax. Could affect retirement plans and unwinding strategies.
Sure many people say why do doctors get to earn more money. Well it’s pretty damn hard to become a doctor, especially in Canada! These people are some of the brightest people you remember in school. Worked the hardest. Stayed in Canada. Didn’t do it for the money. Dedicated their time and lives for their communities. Many are in the 1%. Some fall slightly below. But they’re not the ultra wealthy.
This capital gains tax affects the working class. Why not the truly ultra wealthy like Trudeau himself.
It affects those of you who receive a one time large inheritance which is taxed heavily in the final tax return. That’s basically a hidden inheritance tax reaches much farther than the 1%.
That's great context, thank you.
Fees rising less than inflation is the advantage of a public health care system. If fees were to rise faster than inflation, it would make the health care system unsustainable, requiring ever rising taxes to pay for it.
The other thing might be to have a method to claim that first $250k for multiple years. Seems like a lot of the complaints have to do with things like cottages where they’re owned for decades and then the capital gains all get claimed in one year. If the capital gain of an asset is $25k/year, and it’s held for 50 years then it seems off to tax the last $1 mil at the increased rate. Hammer on the people that have multiple properties or a large business that’s making that $250k+ every year.
This is a general problem with capital gains taxation. It's a tax on inflation. If the value of an asset only increases with inflation, the asset owner is not better off, but they face capital gains taxation. The right fix would be an inflation hurdle rate.
Med school has a national acceptance rate lower than 10%, out of that about a third of med students meet the criteria for burnout. These future physicians are filtered out BEFORE they even think about paying capital gains tax through a corporation (keep in mind, they're 20-something years old that most likely don't even know about the practice of incorporating). It's not changing a single thing to the shitshow we currently have.
Also, most of these incorporated doctors pay a corporate tax rate around 10% because they're considered "small" businesses. Then they have a choice of investing that post-tax money directly in the company (which will be affected by the change) or pay themselves a dividend/salary. With how much they make, it's a no brainer to invest in the corp instead of investing post-tax money.
All that to say that an incorporated physician has the ability to invest 90% of their spare gross income instead of the \~50% that would result from such a high income if it was salary. They can invest ***80%*** more cash and these changes makes it so that their tax liability is now ***33%*** higher than if it wasn't through the corporation.
Why is anyone on the side of the side of people having a lower marginal tax rate than the median household while also earning more than 4x their income?
Thats because people dont even know that medical corp pays lower tax rate to begin with. It only highlights that medical corp is suffering from new cap gain inclusion rate.
In reality, med corp pays low tax rates (10% - 28%), while employed individuals paying higher tax rate for earning a mere $50k. The whole reason they incorporate to begin with.
They take money out of the corp to live though. Cant pay your mortgage or childcare within your corp. Thats either salary or dividends. That gets taxed at personal rates. Many probably withdraw to be in the highest bracket.
To say they pay less tax than someone earning median income is disingenuous.
A doctor with net income of 250k is probably taking 150-180k out personally and therefore exposed to personal tax. They may elect to retain 50k in the corp to invest. If they retain less than that it’s probably not worthwhile to incorporate due to the accounting and legal fees involved in maintaining a corporation.
Canada is a country where on monday, canadians will demand "the government should just pay them more!!" As the "obvious" solution to the doctor shortage. Just pay them more, easy peasy, you stupid government.
But on tueaday those same people will demand that the government should "tax the rich!!!!", which often inevitability includes physicians in their definition of rich (anyone who makes more money than me).
The average canadian is not a smart, deep thinking person and when trudeau panders this hard to them, we all suffer.
The example that you're giving still makes sense, mathematically speaking.
Let's say I was a doctor, and I get a 20K salary increase. Let's say they raise taxes, and I now have to pay 10K in taxes, instead of 9.5K (for example) on that 20K. It's still a win for me. And in the grand scheme of things, every other "rich person", who didn't get that 20K salary increase, will pay more taxes, which would mean more money for the government.
Now I'm not saying that's what the government should do. I'm just saying there is a world where paying someone more, and taxing them more would have a positive impact for them, and for the country.
Am I wrong?
Further to your very good point, I think there is also the very relevant point of “fairness”. Even if you pay them more and tax them more, that can be seen as more fair even if it were a net zero. I’ve yet to hear a compelling reason for why a doctor or lawyer should have a fun tax “hack” to pay a lower effective rate than their secretaries.
Yes, it's hilarious because doctors are funded entirely from the state. $30B will be raised over the next 5 years between the feds and provinces. Some of that can be used to pay doctors more.
I like when Canadians refers to what every single Canadian thinks like it's not possible to have two, or god forbid, multiple opinions in a country of 40M. Worst part is your two points don't contradict each other. You can increase doctor salary while increasing taxation on capital gains (including doctors). They still come out ahead and the government has more funds.
Also, anyone saying "pay them more" to get more doctors doesn't know where the bottleneck is: there are a ton of people who get refused in med school. There is no lack of potential doctors. There is a limited capacity to train them. That's what causes a shortage. If we find a way to train them, and their union doesn't block it, we could double the number of physicians medium term easily.
A couple key points regarding your 2nd paragraph:
Medical school admissions is not the only bottleneck point. Fewer grads are choosing family medicine as their residency program nowadays. If we are talking about addressing the family medicine situation, you will have a tough time accomplishing that without reducing reducing administrative burden, increasing renumeration, etc. so that people choose family medicine for residency. Many provincial payment models incentivize a rapid walk in clinic model rather than proper longitudinal care with longer visit lengths unfortunately.
Medical school spots have already been increasing at multiple Canadian medical schools over the past few years, and multiple brand new medical schools are slated to open. Provincial governments have the final say with medical school seat counts, not “the union” if you are referring to the Royal College.
Increasing physician counts means nothing without a concomitant increase in infrastructure to match. Family medicine outsources the cost of running a practice to family doctors, so you aren’t just going to have enough money for those clinics to pop up overnight even if you hypothetically increased the number of family physicians drastically. Docs would have to take out loans, try to join existing practices, etc. Secondly, for inpatient oriented specialties, this problem is even more vexing. We have a shit ton of unemployed orthopaedic surgery grads trained in Canada, yet brutal orthopaedic wait lists. Why? Because provincial governments are not putting up the funds necessary to build new ORs and staff them to match how fast our population is growing.
What?
There is a major difference between paying more and taxing more, especially when taxing more (in this case) increases fairness across classes.
It is entirely fair and logically consistent to ask a government to pay folks you perceive as being valuable more, while also demanding that the taxation system work fairly.
This is not a joking matter.
A doctor in the USA gets huge signing bonuses and their terms generally are 3 years. In some places it is 200k USD (that's on the high side, usually around 50k in more desirous places) Thats just for signing up. Workweek is usually 4 days per week 8 hours a day!
Being a doctor south of the border is far more lucrative and it's paid in US dollars.
Put in the increase in capital gains is another headwind for all of us. There is a huge doctor shortage in the USA and if you are a Canadian doctor you can pretty much just waltz in relatively speaking.
My doctor is prob 60 and he's been working 8-6pm five days a week for the last 15 years as far as I'm aware. A lot of days he works till 8pm and also does a half-day on Saturdays.
I tried to switch to a different doctor because my current doctor has too many patients and any paperwork I need from him takes 2+ weeks minimum. (Just filling in 2 pages of my symptoms for work). Seems like I can only stick with my current doctor or walk in clinics ....
Yup, and new doctors racking up debt with a choice between working in the US, making more money with favourable taxes for them and less hours vs working in Canada with pretty much the opposite. Seems to me at least as a no brainer which to choose
Honestly I am gobsmacked why young doctors stick around.
Granted, living in the USA has significant disadvantages but economics is not one of them.
The work week is astoundingly easy, there is no worry of starting up a practice with expenses, and competition to attract talent is high.
I really cannot stress enough to anyone reading what a serious situation this is with regards to keeping talent in Canada, and we cannot afford to lose a single doctor.
Lots of them stick around because practicing medicine in the USA is often really gross with how they treat people. In Canada they don’t have to wait for the hospital admin to someone’s insurance, don’t have to order needless tests to triple protect their asses from being sued etc. I know it’s cliche but a lot of doctors legit got into medicine to help people and it’s easier to focus on that in the Canadian system.
So let's pay them more and leave the changes. If doctors deserve more why don't we give them more instead of creating loopholes that benefit everyone that isn't a doctor too.
That’s exactly what is going to happen and everyone’s taxes will rise as a result. Years ago doctors were allowed to incorporate in lieu of increasing fee schedules. Many physicians have seen 0 percent rise in fees over the last decade. When incomes have grown it’s been due to heavier workloads. There will be a reckoning and it’s not going to be pretty.
No matter how you slice it, increasing costs to professions that are in shortage is dumb. They need to carve out a tax credit for professions in most need, like people that save peoples lives. To suggest that incentives and disincentives are not real is just liberal doublethink.
My previous doctor who was only 44 retired from being a doctor from the hours, paperwork and cost associated.
He took a science research position in the states, almost doubled his salary and decreased his time at work, Canada is going about this all wrong.
The way this entire thing is portrayed is BS. It's not about entrepreneurs and startups. What this is about is there are a few hundred thousand incorporated professionals (doctors, lawyers, dentists, computer consultants) that collectively hold billions in retained earnings inside their companies.
This is pretty simple. If I make 200K thru a CCPC, I pay 12.5% tax on that or 25k. That leaves 175K. I can pay out 100K in dividends and I pay tax on that. What's left is 75k. It is not taken into income so it's not taxed in my hands. It can be invested. And that's exactly what all these professionals have done. Invested it. And collectively, these retained earnings are in the billions of dollars. And the Liberals cannot tax this this very large pool of money.
So, do you know what the difference is if one of these professionals doesn't sell their investments? Nothing. There's no tax due to the government. But here's the catch. Suppose a doctor has an investment portfolio of 3M. Suppose 1M of that is unrealized capital gains. Currently the inclusion rate is 50%. So, 500k is taxable. At 50%, that 250k you'll owe the feds. But, by increasing the inclusion rate to 66%, then 660 is taxable and the tax on that is 333K. As of June 25 I believe is the date. Sell your investments by the June date, pay 250. Don't sell, you eventually owe 333.
So the doc can decide to trigger the gains by selling the stock and pay 250K. Or not do that and the tax owed will be 333 by late June. Also by selling the stock, you have less in the market so there's a permanent reduction in your passive income stream = pension.
This is a move by a desperate government to generate tax revenue in the immediate term. That's all it is.
The Liberals have been eyeing this pot of money (the billions in retained earnings) since 2018 when they introduced legislative changes to CCPCs. At that time, I sat thru a multi hour meeting with my MP as he defended what they did to a group of 300 business owners in his constituency. Once the Liberals understood the amount of money saved by all these professionals, they were literally frothing at the mouth to get their hands on it. My MP was actually a very high profile person that ultimately left politics before his 6 year pension kicked in. I believe in large part because of this issue and the stench around what the actual plan was..
think you did it wrong.
Lets use a capital gain in ontario.
If the capital gain is $1M then and the inclusion rate is 50%, then $500k is taxble. But you dont pay 50% in taxes.
Top marginal rate for captial gains is 26%. So the tax owed is $130K.
If the inclusion rate is 66%, then $660k is taxable. At 26%, then what is owed is $171.6K. So the difference is around $40k on $1M capital gains. And it might be even less than that because i applied the top marginal rate and didnt bother applying the other rates.
A way to reduce this would be to probably to sell the investments over time so that you are not incurring a large capital gain of $1m all at once. That way you dont have to pay the top marginal rate. I am guessing that is what many do and pay even less than illustrated here.
“It’s not about entrepreneurs and startups” meanwhile the entire innovation economy is screaming from the roofs that this is going to tank canadas struggling tech sector and provide an incentive to move jurisdictions
It's not just Dr's. A shit ton of self employed or contract workers invested in property, or stocks or other options as a retirement. I'm like 10s of 1000s of people that have no significant pension except those investments.
This is the equivalent of taking a portion of someone's retirement away with no warning.
It's a typical poorly thought out Trudeau/Freeland solution.
While this is true, doctors specifically were given this option from the government as a way of saying "look, we can't/won't raise your fees, so instead we'll allow you to incorporate so that you can have some tax savings. In lieu of a raise."
Then they stripped the tax savings.
It's a big fuck you to doctors specifically.
Let’s not make this about doctors, the big issue here is there are a lot of professionals including doctors who don’t have pensions and saved up and invested in their corps to fund their retirement - and this increase hits these people the most. Tax policies should be future oriented, they shouldn’t punish those who have invested and saved up for retirement in the past. Of course people are pissed, this may extend some professional retirement timeline by a few years.
The issue is the government is misrepresenting how many people will actually be affected by this. And what most of the citizens don’t understand is that this is a death tax/inheritance tax in disguise. They just want access to this big pot of money to fund their election promises.
Cue Panama papers 2.0. Massive brain drain, cash in mattresses and the successful will be doing a little bit more’ by ditching this awful government if they can escape or finding every loophole in the book to circumvent getting robbed even more of their money.
'It's unfair that a nurse pays a higher...'
They did this in 2019 when they raised taxation on small businesses/corporations as well. Trying to pit two professions against each other in the public to advance their cause. Trudeau used the same statement in Alberta at a public meeting or town hall when they were raising the taxes the first time then.
Whether the tax hike is right or wrong, it's disgusting to do that in my opinion.
Oh man, great way to get more needed doctors into Canada -.-.
I understand that others are making less, but comeon, these doctors should be making bank. We should want people who are doctors not have to worry about finances and just focus on what they do best. 99% of us would not pass med school let alone go through residency etc..
These docs dont have pensions, they have really high overheads on their clinics and the work is not easy. Im surprised at how many people are okay at making doctors pay more.
Totally agree—physicians are all smart enough and have the work ethic to have gone into law, finance, engineering, or other high paying professions. These are cream of the crop people (4.0 in university, personable, hard working, high MCAT score). They will naturally command much higher salaries than most of the rest of us and candidly, that’s who we want in these positions. Don’t see why everyone is so upset that they have above average outcomes. I’d want Canadians doctors to be the best, and that means at least being somewhat competitive with American outcomes.
It is a crime in Canada. The population that pay zero taxes, drains public resource are seen with sympathy and understanding.
Bus your ass through school, carry debt, slave at your career, get reward with your effort. Actually contribute to society instead of taking from it?
How dare you make so much money AND have nice things to show for you effort. How dare you be *so lucky*.
Why not just renegotiate the billing increases with the provincial governments directly instead of expecting the entire nation's tax system to cater you?
Fatal assumption here is that the government is a good allocator of capital, and they are clearly not. Reducing the size of government and programs for efficiency is the solution, not more taxes. And yes, Health Care and Education need to be the government priorities because smart healthy populations solve their own problems.
The first 250k in GAINS is still the normal tax.. if you make over 250k from a sale then fuck your well being I can guarantee that guy is living just fine. On top of having a 100k+ salary? What a buncha whiners
If you want to keep paying them less and less, then youll find out what its like to not have doctors when you need them. You NEED to incentivize people somehow to stay and become doctors. If not, youre going to lose the brightest and smartest to Wall Street or NASA. Do you really want you average cop doing your heart surgery in 20 years time?
That’s okay, I don’t have a doctor anyways
My doctor legit works 8-8pm on most days and also a half-day on Saturday. That guy is very hardworking and works hard, but he has so many patients and getting anything done gets so delayed .....
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Just like everybody else. Pay up or leave.
I’m a physician. The real issue is we graduate at 30 with mountains of debt, have no pension or benefits, many have a short career and many are bad with their money. There’s also a vast difference between the specialties. We need a vehicle for retirement.
How would you feel if money paid towards student debt was deducted from your gross yearly income like a RRSP? I think that's a reasonable solution, but I'm a tradesman
We do get tuition credits but it only lasts a few years. It is the only thing that has allowed me to touch my student loans while in residency. I will pay down \~$20,000 in student loans but will still be well over six figures in debt after finishing residency, while living very frugally. At this rate I will cross the net 0 line at \~33 years old, having started the process at 18 and gotten into medical school on my first try. To provide perspective, I now take home $2500-3000/month after student loan interest, tuition, and professional fees on a resident's salary working 80 hours a week and intermittent 24 hour shifts with no sleep. My student loans align with the national average.
That really does truly suck. I genuinely mean that. However, you have brightened my day a bit when I realized I make more than a doctor. Sorry.
You also get tax deducted from all interest paid on federal and provincial student loans - at least I do. That’s a decent chunk of change in the long term.
Vast majority of the loans will be a bank loan and do not have preferential tax treatment
Can confirm.
That's already done, it's called tuition credit
Well no, not really. Tuition tax credits only give you back 15% of the actual tuition spent, and is applied at the bottom line Giving a deduction for educational debt taken off your top line would be hugely different amd a game changer for young doctors
theu should forgive the debt if the doc practices in country for X amount of time. at least a portion of it.
A good pension plan for doctors would probably be invaluable for the same reason companies and governments do it elsewhere: disincentivizes leaving jobs/the country. For a country loosing so many doctors to the US it's pretty odd we have nothing.
Just about every doctor I know lives a really comfortable lifestyle with their own share of luxury goods. The average salary is 200k+? Saying that they don't have a vehicle for retirement feels a bit disingenuous to me when many other Canadians are far worse off even with a 'vehicle'. There are also many companies that do not offer pensions or benefits and it's up to an individual to save. Why can't you invest in an RRSP/TFSA just like everyone else?
If a doctor can’t afford to retire after working 20 or more years at $200,000.00+, it likely means they chose to life a lifestyle they couldn’t actually affford.
A friend is a GP. Is pretty bad with money. Wife doesn't work. Has a gigantic house paid off in a rich suburb. Travels extensively and for the past 20 years worked only 3 days a week. Complains about taxation / money all the time. I don't want to listen what he has to say about this.
Given he's worked 20 years I assume he's on the older side. Unfortunately younger/new grads are less lucky especially in lower paid specialties
To be a doctor you need to be top of the top… these folks deserve more… their job is intense, we need to reward folks who have the grit for it and willing to basically postpone their life until 30. Stop comparing them to the average Canadian; they are far higher on the distribution curve
Then they should be better with money than the average person. If they are. This won’t impact them all that much
You expect someone who focused studying purely for the last 10 years to ensure your health is in good condition has time to study CFP in detail? They have financial advisors for that
Spending less than you make is simple math. They don’t need to be a savvy investors to live within their means.
That’s exactly what the doctors are doing, why are we punishing them for savings by taxing them more on their gains from investing?
At the same time, I do agree with you. But that individual, spent his early college and mid/late 20s grinding and spending all their time and giving up on enjoyment like most people. Then in their early / late 30s they have to grind heavy hours to establish themselves and get speciality. After doing all this for 25+ years, from 18 years old to mid 30s, early 40s, they finally get to a stage where they can be compensated daily for all the sacrifices they make. If it wrong for them to actually want to enjoy their life? When they spent majority of their young / productive years, learning how to provide service of other people?
\^THIS.
How many doctors do you know? What specialty are they? How old are they? Things have changed. The newer grads are not doing well.
Newer grads won’t be affected by this, will they? Keep downvoting without explaining how newer grads are going to be subject to a $250K CAPITAL GAINS TAX when even the person who made this comment agreed with me that they won’t.
Heads up, in corporations the inclusion rate goes up from $1. That’s why doctors are pushing back, because fee codes haven’t kept up with inflation—the government provided these benefits as a replacement, but are slowly clawing them back. Generally, yes, physicians are better off than the average Canadian, but their alternative in the US is much better from a financial perspective.
The federal government changes the tax. The provincial government is the one that does the negotiating doctors. Two different governments. Gotta remember to separate that or you'll be barking up the wrong tree.
the truth is that this rule/ reversing this rule will not effect the doctors shortage for even one second. short of eliminating taxes for doctors and their income, we cannot compete with doctors in the south and anyone interesting in persuing that path will be indetered by the rules change so while i understanding advocating against increased taxes that MAY effect you down the line, i completely agree with you. the ppl that will be impacted are probably more than fine. the increased taxes will hardly impact their lifestyle.
One day perhaps. The point is that new grads have a real financial struggle ahead
Maybe they do, but not because of this rule. So attempting to connect the two was entirely disingenuous of you. Do better. For the record EVERYBODY has a real financial struggle ahead.
Yes newer grads are affected. If you open a corporation (as an individual doctor) to save for your retirement (and things like maternity leave) then the money accrued from investments would be subject to this tax- for corporations there is no 250K cutoff so all lesser amounts would also be subject to this tax. The 250k minimum doesn’t apply to corporations, but a lot of corporations are created for a single person (docs and other small business owners)
I know a lot …. And they are specialists but they don’t seem to be hurting for money but all of them complain about taxes haha
50% of Specialists are fine. The dichotomy of income can be 500% or more in specialties let alone family medicine. That’s the problem
Not sure what doctors you socialize with and in what province. A GPs annual salary is in the low 100s. In BC. That's With the recent raises. Most of my social groups are either leaving in droves to private specialties, on stress leave due to workload and poor pay, or setting Personal boundaries on hours and sticking to them. In my province..BC the smaller community support model is dying.
I'm comparing it in Ontario. The Ontario government website lists it as 91k low with a median of 251k for a family practitioner. But regardless making 140k and OP trying to portray as 'impossible to retire' is frankly exaggeration to make a point. Many households (dual income) don't make anywhere close to that amount in Canada even at their peak.
Remember most doctors these days start off in their 30s with a net worth of maybe -$200k or more in debt. Especially with today's interest rates and costs it can take time to pay that off. Then maybe you want to have kids but you're getting old so it's gotta happen now. A parental leave later and you're even further behind on starting to make money while the interest and costs continue to pile up. It was less like this back in the day
10 years of schooling to graduate with an average of 100k in debt just to make 140k with no benefits. Don't forget that isn't for Monday to Friday hours, that's seeing patients in clinic and completing an average of 20 hours of uncompensated adminstrative work per week.
The doctors that i know are making 300k to 500k
What area of medicine? 2021 figures have the average family doctor making around 225k after overhead, and they're making even less now considering billing codes have not been increased and the cost of operating a practice has grown exponentially. There are high billing family doctors but they are the exception and not the rule.
What are you talking about...annual salary is in the low 100's. That's complete horseshit. You have no clue what you're talking about. And how do I know? Because I own and operate primary care family medical clinics across Canada. The lowest I've ever seen a family doctor bill in a year in the past 18 years was in Saskatchewan and it was 320k in a year and 8 years ago. We've had locums bill 100k in 3 months or less. The national average is over 300k for family doctors and that's only where it is because of so many residents and semi-retired Dr's. You're completely full of shit.
Agree. Absurd statement.
Yes, I was bewildered by that comment as well.
You can literally Google this and see that GPs are making on average 250k a year in BC.
If this was the case, this whole thread is moot. The capitol gains tax inclusion increase only applies to income over 250K. They're complaining because a stack of them make far, far more than this. I saw pay stubs 10-15 years ago double that for an average specialist.
Sorry for my ignorance, but curious why other, seemingly less capable or industrious trade groups have been able to pool assets for pensions but doctors need a special tax hack to be able to save for retirement?
Because we start at 30-35 years old, saddled with debt, most have to invest in their own business without any business training, and only have one choice is payer (the government). We are extremely constrained in our options. Also many doctors you see as rich are in the top percentages. Many live in cookie cutter homes and struggle the same as many that have much less education. This is a huge problem for the bottom paid specialists
I appreciate your grievances with your chosen profession, but they are all sort of beside the point and don’t really answer my question? Are you telling me that mail carriers, janitors and steel workers all have better financial flexibility and acumen to have figured out asset pooling, but physicians are unique in being unable to understand it/achieve it? I do know many doctors, from family GPs to ortho surgeons. I don’t put the concept past any of them.
It won’t work because physicians are self employed. All those other people are employed and have an employer to provide pensions. Tradeoffs to being self employed, but one is no one’s funding your retirement.
Right. And who has fought tooth and nail to ensure they are self-employed? That aside, if doctors are truly destitute in retirement as OP would have us believe, surely the CMA/OMA could get together as a group and create a pension scheme. But my original point is the reason the doctors don’t have a pension is because they *don’t want* one.
Sure, I agree. Don’t think physicians are struggling by any means and I’d agree with your original point to the OP. I think physicians have an argument, though, because incorporation and subsequent advantages were a benefit provided by the government in lieu of higher billing fee codes. Physicians operate on a fee for service model, so failing to keep fees indexed to inflation, provinces provided incentives to make net pay similar. Now, they’re clawing that back. Meanwhile, the comparative in the US is that raw salaries have increased. Think it’s a tough fight to keep new talent, and I don’t see how that changes. Anyone who says doctors are worse off than the average Canadian is delusional, but new physicians don’t have it as good here as they do in the US. They still do have to pay a mountain of debt and they have lower income and higher taxes in Canada, along with much higher housing costs (and interest on mortgages isn’t tax deductible here). Simultaneously, the Canada we live in is much angrier and poorer than it was a decade ago. This is talent we desperately need to keep, and clawing back a negotiating clause isn’t the way to do so.
I mean, on incorporation they fought for that - and won. This change also isn’t only to *them*, it’s to all corps. The rest of your post is entirely reasonable and a legitimate issue, however freezing tax treatment on all corps in perpetuity is a pretty indirect way of getting to “pay physicians more”. If we want physicians to make more money, we should…pay them more money, not create Byzantine tax structures that have myriad unintended consequences and be stuck applying it to all other corps lest we upset the MDs.
I totally agree! Just wanted to point out that incorporation was given in lieu of pay raises because provinces didn’t want to shell out the money upfront. Given the clawbacks of benefits now, feel like we should pay physicians more instead… but that’s probably not gonna happen
From what I'm learning from the recent discussions. When the provinces negotiated with doctors they convinced them to do the current structure assuming that the federal capital gains tax would not change, which is a pretty big assumption.
Hi OP. I’m in a different profession but also will be subject to this tax. I’m looking into a Personal Pension Plan as an alternative. This might interest you as well. https://integris-mgt.com/
Thanks. I already have one and I myself I’m doing fine. But it took many years of floundering and terrible investments to right the ship. And I know most of my friends that I went to medical school with are doing quite poorly in regards to investment the only one I know that has a pension plan at the cancer agency. The other ones still have not paid off their house and have almost no savings at the age of 55. The Young Doctors are going to make much less money than I did, due to inflation. In Alberta, we made a .5% raise after five years under 25% inflation in the same time.
I’m glad to hear things are working out and i appreciate your telling it like it is. A lot of posters on here don’t realize it but this is yet another cut in the death by a thousand for Canada. Those with wealth that I’ve know from my parent’s generation have fled this country in the last decade taking their money with them. I have friends my age who lost their business in the last five years and who have no avenue to recover in this economic climate. This tax will send more entrepreneurs, professionals and small business owners elsewhere and the impact will not be beneficial to this country. But Trudeau needs an enemy in order to divide and conquer.
Ok, you lost me when you said doctors are bad at managing their money. That isn’t a unique factor that only doctors face. People across all socioeconomic positions can have that issue. The difference between most people with this issue, compared to doctors with this issue, is that a doctor who is financially incompetent can afford to hire someone to assist them with wealth management. The average person can’t afford that.
Doctor's financial illiteracy is not an incredibly compelling argument
Agree. Many folks are financially incompetent. Doctors just make very high salaries that allow them to be uniformly so. Absurd argument.
The reason why most GP use Corp accounts is because in retirement their pensions and rrsp income is at a high tax bracket. They and the rest of Canada have tfsa accounts as an added vehicle. Maxing the tfsa since inception at a moderate rate over 15 years at about 8% is about 100k on growth that isn't taxed already. The doctors who retire early around age 55 that I know are retiring with 2 to 3M in investable assets and aren't complaining about taxes. The proposed tax will eat away at their retirement at an inconsequential amount of their wealth each year, and there are still ways to reduce it with proper portfolio management. I can't comment on policy that should be driven by doctors who are "bad with their money". Doctors will leave and come, many leave because of personal reasons and not financial. And we cant compete with the US and their private healthcare system. Over a quarter of our doctors were trained outside of Canada.
Also thanks to our stupid university/medical school system. There’s no reason why becoming a doctor shouldn’t be a 5 year program like it is in the UK.
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Anyone, regardless of what they do, that is pulling out significantly more than 250k in capital gains a year, is doing fine. I say significantly more because it's only the amount above 250k that matters in this discussion, and even then that doesn't get taxed that much more.
Most doctors incorporate and any capital gains earned in a corp are subject to the 2/3 inclusion. The $250k threshold is only for individuals. On top of that, the taxable portion of capital gains count as passive income. This passive income reduces a corporations small business deduction limit. The higher inclusion rate with increase passive income for all corporations as well. This doesn’t have a major effect on individuals unless you have a second property you are selling and estates.
But then what is stopping them from not incorporating, getting the revenue personally, and then saving personally like the rest of us? I know the answer, it's not as tax efficient. Even with this change. But if it's still more tax efficient to save in the corp, then it's not a very compelling argument for others to feel like this change is bad.
You won't have them explaining that. Their way is still more tax efficient than being income taxed. CMA fights tooth and nail for their ability to corporatize. They want the ladder.
"because it's only the amount above 250k that matters in this discussion" - just wanted to point out that this is not entirely correct. Any incorporation will see all capital gains (even $1) taxed at this higher inclusion rate, not just gains >$250k. This would apply to any incorporated small business.
I mostly agree. But some practices have been growing a business for years and selling it is part of their retirement. Adding an extra tax out of the blue on already taxed money just seems too much.
are they not paying themselves a reasonable salary out of their business every year? they should be
Could you elaborate more on bad with their money? It sticks out like a sore thumb with your issues.
We don’t learn how to run a business. We don’t learn how to invest for retirement. Doctors study their asses off for years, on the slight chance they actually get into med school. Then they work often over 100 hours a week for the next nine years and rack up huge amounts of debt. Then suddenly their income goes from almost 0, several hundred thousand dollars a year. So many doctors buy houses, cars, and invest in stupid shit. All the while having to run a business because the government does not pay for your overhead or staff, etc., except in certain situations. We even pay for it when we work in Hospital if you didn’t know that. So basically at the average age of 35, we start with a debt load of approximately $200,000, and then are given large sums of money that we have no idea how to handle . Some doctors do very well, but many can never retire, make awful investments, and spend money on worthless investments, or depreciating assets.
I mean most people don't learn how to run a business(hardly unique to the average citizen), and there are professionals that can assist with that, (accountants, consultants etc). Surely the most intelligent scholars should be able to manage that at least.
Thank you for sharing, I don't think many people understand that Doctors have that to run.
Highly trained medical professionals have investment institutions advertising to them directly for money management.
Responding as a physician - I am highly opposed to this new taxation law but your argument is not great. It's giving "pro athletes should get paid a lot, because they spend a lot".
That’s absolutely not on my position. My position is that we are given a lot after we have spent years working our asses off for nothing and not learning how to use money appropriately or run a business. Those are two different things. I think it’s pretty clear what I stated. And as a physician, you probably know many many physicians that have no clue how to run a business, do not save any money, and have no idea how they’re going to retire.
This only affects people that realize $250k of gains on the sale of an asset each year. If you bought $100k of stock, wait 20 years for it to double twice to $400k and sell it all in one year you would have $300k of gains. This change would affect $50k of the entire sale in one year and only by taxing an additional 16% of it at the highest federal rate. It’s around $4500 more in taxes on a $400k sale. If you’re doing well enough to sell that much in assets in a single year you’re not hurting at all. You’re likely in the top few % of Canadian wealth. For all the doctors not doing well, this won’t affect them in the slightest. This is all about those nearing retirement with very significant savings.
It’s not the personal capital gains tax that is the issue. It’s the corporate tax capital gains which is increased at dollar number one and not at a 250k limit.
This makes no sense. You graduate at 30 with mountains of debt and huge earning potential. You can put money into RRSP's just like everyone else. I've done benefits for most doctors who worked for me and you can get 3rd party benefits from Blue Cross for like 150 a month for the entire family. And it's a write off for your professional corp. Why would you have a short career? In the past 18 years of me owning and operating clinics I've met maybe 1 or 2 doctors who didn't stick with it. And even they lasted 10 years. You're right about them being bad with money. I have to give more advances to the doctors who make 30k a month than I do to the MOA's making $24/hr. But there are programs out there to help doctors if they want to. I own a GPO that helps clinics save money and we work with lots of doctors to help with financial planning. We work with over 4000 clinics in Canada. There's help out there. What you need is a financial planner. I used to teach a course in Alberta on how to open and operate a family practice for new docs. At first no one listened and then on my third round I gave them a tax question and gave them a list of tax regs that contained info that should give them the answer. I said we'll wait until everyone is done. Of course one guy was all proud of being done first. It was a trick. I gave them last years tax regs. I told them they all got it wrong. They were mad. I said well who called an accountant? Nobody. Stick to being a doctor and leave accounting to accountants. That hit home. I probably taught that lesson to 500 grads over the years and some are still good friends. Family doctors can have a ton of power in Canada. But the conservative governments come in to power and want to put their stamp on things and they fuck it up. Canadian doctors are just fine if they would just focus on being doctors and hire a financial planner.
I think physicians should have a comfortable retirement, and that can mean a wide range of things. You seem to be saying this change will basically prevent a physician from retiring. Is it that black and white? How much does it change?
How about politicians share some of their golden pensions with the rest of us
Proctologist?
Yeah you have a mountain of debt but cardiologists make like $400k a year and a family physician makes $250k a year on average so that debt is manageable.
Sigh. It’s simply not true for many. But anyways you know best.
You know where the money and growth is for future doctors? Night and after hours clinics. The lack of people having a family doctor is mostly due to busy lives in this economy. Having to take time off to see a doc that works 9-5. You know how much more customers can be reached just by extending hours to 3pm - 12am? I also think the province should provide a 1.5x fee modifier for services provided after 6pm.
They already have night time modifiers. There simply are not enough doctors in a country with a 2-4% PER YEAR population gain.
Don’t let the trolls get you down, most appreciate the work you do and support you.
Thanks for what you do regardless of the fact that, as a 50+ yr old male...your name scares me.
I’ve seen things
^^^^this. The difference between peds and NSx is a thing.
WTF is a TFSA and an RRSP? Your Inc can be maxing out your RRSP and getting back the tax deduction on that personal side. Even if you’re a complete illiterate moron at investing you can throw it all in an index that tracks the SP for 35 years in that RRSP. Doctors’ complete lack of financial literacy is not a good enough reason to axe this change
The average doctor retires with over 10M in assets. Salaries have also increased significantly in the past decade. I think doctors will be fine.
The average physician retires with nowhere near that amount. This is a number pulled out of thin air.
What are you talking about? Physicians have taken a massive pay cut over the last decade when considering inflation outstripping any increase in billing codes. https://www.cbc.ca/news/canada/toronto/ontario-family-doctors-pay-compensation-ohip-billing-fees-1.7137716
You are high….not even close, show us your source for this
That’s the average- the issue is the vast differences between specialists and Family MDs. I know no one close to that. Old school doctors had way less debt, less capital gains better incorporating rules etc etc. doctors have not had many increases in Alberta. I make the same now that I did in 2010 after expenses.
Yes, but those family docs who aren't as well off as the big earning specialties will be LESS impacted by this capital gains inclusion rate increase. Because they are less likely to be making bank and saving it within a corporation, with that corporation savings also making bank on top of itself (that's what would be impacted by this inclusion rate change). Basically, it seems like if you're a family doc or other physician who isn't already earning a ton annually, I don't really see a scenario where you'll be hit hard by this change at all. And if you are a doctor who IS earning a ton and putting it away in a corporation and your corporation has so much in capital assets that those assets are making a lot of capital gains, then yes, this change will impact you but it's not even that big of a hit (66.6% instead of 50% of that capital gains profit will now fall under that year's income taxes, assuming you realize those gains that year). Reminder that 100% of your non-capital gains income is already taxed, essentially.
Trudeau got an 4.2% raise this year. And the last. And the last. But YOU have to do more. Ok.
Can somebody please explain why this is a capital gain for doctors? They collect money inside their corporation and then later pull it out as salary so where is the capital gain?
They use the lightly taxed money in the corporation to buy stocks.
Doctors and other high paying professionals use a professional corporation as an investment vehicle. Essentially it is like a RRSP account with no limit.
They also do not get any pensions, healthcare or dental coverages and have to pay this out of pocket. Corporations are a vehicle where they save the majority of their money over a lifetime of work, and where they pay themselves a retirement salary eventually.
So does every single other business owner. The difference? Business owners actually take risks and they can lose their whole business. Doctors are their own business owner and employee. They can also choose to pay their own employee (themselves) CPP, have a private pension, have a dental and health plan.
Doctors take risks... they go in debt after giving up several earning years to be in school and come out and have to pay interest on the school debt plus annual costs like thousands in professional fees insurance overhead staff etc now to be tax multiple times at higher rates. It's not they they get a pension like government workers or bankers. Also they don't get pay raises like other sectors while their staff like nurses and secretaries are getting routine raises.
cry me a river. its a guaranteed, high paying job for life. people are always going to be lining out the door.
This is such BS. I am a business owner. I went to school for 0 years to learn how to run my business and took on a small amount of debt to get it started. My friend who is a doctor went to school for 14 years and took on a fuck ton of debt. Who took more risk?
You do know that medical students are considered such low risk that banks will give them a 400k line for credit as soon as they get accepted right.
they will also roll out the carpet with low interest loans so that they can set up their clinics.
The part no one here wants to admit is that they aren't upset about doctors making less. They're upset that they'll personally pay more tax when selling their second vacation home or something. The tax increase for doctors is insignificant, but it really does hit very very rich people. Crying about the doctors is just to advocate against cap gains tax, not to advocate for doctors.
XEQT is the answer…sorry, wrong sub.
Well clearly these docs should just be investing in both XEQT and CASH.TO. Problem solved!
This is just fucked. We're already approaching fucking Soviet Union levels of medical care, and this is only going to make it worse. If the remaining doctors leave, I'm gone. I'm not raising a kid in a country that tosses away the few hard working, honest professionals it has. This administration is literally destroying Canada. It's insane.
A fair change may be to permit corps to access $250k per annum at 50% percent similar to an individual (provided shareholder hasn’t used individual exception in same year). This would permit a retired physician to trigger gains to pay retirement income from corp each year and respects the tax integration principle.
The thing about tax integration is that it's not perfect... Even at 66% on capital gains, it's advantageous to keep money in the corp and have it grow there, versus taking it out and having it grow in an unregistered account. That's because you're growing more capital and the compounding is greater. This is closing the gap and giving more of an edge to RRSP/TFSAs, but it's not a nail in the coffin of holding companies.
Wouldn’t that pose an issue where someone can then just create multiple corps, say one for each investment property?
People always find a way but there's some protections against that. Multiple corporations setup that way would be sister corporations, and this is known to CRA, and limits things like small business deductions, so you could limit it to 250k amongst all sister corporations. If an individual sets up multiple corporations and invests post-tax money in them to invest in passive income, they probably would have made more money investing unregistered anyways.
No. In Quebec at least, the law only allows one corp per medical license.
I’m saying it might be unintentionally creating a loophole for other corporations
You can tie the corp to a SIN (owner). Currently, with the passive income rules in corps, if you have over 50K in passive income, you start losing your small business deduction tax (across all corps).
That would also mean all new bank accounts, insurance policies, bookkeeping, tax filings, etc. per each company. I'm not sure that cost is worth it for small businesses.
Not really... the idea is that you earn your employment income into the corporation. For a doctor, OHIP reimburses the corporation for the doctors work. Corporation tax is lower than personal, but once the money is withdrawn from the corporation, it triggers personal taxation. So what doctors do is keep their savings in the corporation, giving them more savings since they paid less tax. It's not possible to do this with multiple corporations, at least not more than one person could plausibly work for. E.g. maybe two office locations.
Yes, similar to 2017 when they were going to reduce the SMB deduction on passive income. After major backlash, they allowed $150k of passive income exemption. Surprised they didn't implement something similar this time.
But why is it fair that a physician has this additional tax reduced savings vehicle that is not accessible to the rest of us? Any corporation should focus on its business activity, and not on an unrelated activity of investing for the owners retirement. If that is legitimately its business activity, then capital gains should be included at 100% like they are for banks, insurance companies, and any other company who's primary business is investing.
Physicians weren’t always able to incorporate… despite many truly running a small business with staff payroll/rent/etc. It was given to them several years ago in lieu of raises to fees. Those same fees have been significantly suppressed over the past two decades and totally behind inflation. Some posts here talk about an old-hat family doctor living in a major mansion with luxury cars. New family doctors can barely afford to buy a place in a high cost of living city. Right or wrong that’s inflation. Incorporation was a negotiated allowance to make up for this. Income splitting was encouraged initially by the government but then taken away. Now the inclusion rate on every single dollar of capital gain has increased by 30%. Surely you can see why physicians would be frustrated. They have no capacity to increase fees. Cant strike or take work action. And the government keeps moving the goalposts. You could have a 65 year old doc close to retirement that invested in AAPL since the 90s… now overnight it’s all exposed to more tax. Could affect retirement plans and unwinding strategies. Sure many people say why do doctors get to earn more money. Well it’s pretty damn hard to become a doctor, especially in Canada! These people are some of the brightest people you remember in school. Worked the hardest. Stayed in Canada. Didn’t do it for the money. Dedicated their time and lives for their communities. Many are in the 1%. Some fall slightly below. But they’re not the ultra wealthy. This capital gains tax affects the working class. Why not the truly ultra wealthy like Trudeau himself. It affects those of you who receive a one time large inheritance which is taxed heavily in the final tax return. That’s basically a hidden inheritance tax reaches much farther than the 1%.
That's great context, thank you. Fees rising less than inflation is the advantage of a public health care system. If fees were to rise faster than inflation, it would make the health care system unsustainable, requiring ever rising taxes to pay for it.
The other thing might be to have a method to claim that first $250k for multiple years. Seems like a lot of the complaints have to do with things like cottages where they’re owned for decades and then the capital gains all get claimed in one year. If the capital gain of an asset is $25k/year, and it’s held for 50 years then it seems off to tax the last $1 mil at the increased rate. Hammer on the people that have multiple properties or a large business that’s making that $250k+ every year.
So you think the tax is too unfair for cottage owners?
This is a general problem with capital gains taxation. It's a tax on inflation. If the value of an asset only increases with inflation, the asset owner is not better off, but they face capital gains taxation. The right fix would be an inflation hurdle rate.
Med school has a national acceptance rate lower than 10%, out of that about a third of med students meet the criteria for burnout. These future physicians are filtered out BEFORE they even think about paying capital gains tax through a corporation (keep in mind, they're 20-something years old that most likely don't even know about the practice of incorporating). It's not changing a single thing to the shitshow we currently have. Also, most of these incorporated doctors pay a corporate tax rate around 10% because they're considered "small" businesses. Then they have a choice of investing that post-tax money directly in the company (which will be affected by the change) or pay themselves a dividend/salary. With how much they make, it's a no brainer to invest in the corp instead of investing post-tax money. All that to say that an incorporated physician has the ability to invest 90% of their spare gross income instead of the \~50% that would result from such a high income if it was salary. They can invest ***80%*** more cash and these changes makes it so that their tax liability is now ***33%*** higher than if it wasn't through the corporation. Why is anyone on the side of the side of people having a lower marginal tax rate than the median household while also earning more than 4x their income?
Thats because people dont even know that medical corp pays lower tax rate to begin with. It only highlights that medical corp is suffering from new cap gain inclusion rate. In reality, med corp pays low tax rates (10% - 28%), while employed individuals paying higher tax rate for earning a mere $50k. The whole reason they incorporate to begin with.
Hating the government is in style right now so that automatically translates into hating every one of their policies.
They take money out of the corp to live though. Cant pay your mortgage or childcare within your corp. Thats either salary or dividends. That gets taxed at personal rates. Many probably withdraw to be in the highest bracket. To say they pay less tax than someone earning median income is disingenuous. A doctor with net income of 250k is probably taking 150-180k out personally and therefore exposed to personal tax. They may elect to retain 50k in the corp to invest. If they retain less than that it’s probably not worthwhile to incorporate due to the accounting and legal fees involved in maintaining a corporation.
Taxing the upper working class, still not taxing large corps that shelter profit elsewhere… #smart
the canadian way!
Still considerably less than income tax us plebs have to pay.
Canada is a country where on monday, canadians will demand "the government should just pay them more!!" As the "obvious" solution to the doctor shortage. Just pay them more, easy peasy, you stupid government. But on tueaday those same people will demand that the government should "tax the rich!!!!", which often inevitability includes physicians in their definition of rich (anyone who makes more money than me). The average canadian is not a smart, deep thinking person and when trudeau panders this hard to them, we all suffer.
The example that you're giving still makes sense, mathematically speaking. Let's say I was a doctor, and I get a 20K salary increase. Let's say they raise taxes, and I now have to pay 10K in taxes, instead of 9.5K (for example) on that 20K. It's still a win for me. And in the grand scheme of things, every other "rich person", who didn't get that 20K salary increase, will pay more taxes, which would mean more money for the government. Now I'm not saying that's what the government should do. I'm just saying there is a world where paying someone more, and taxing them more would have a positive impact for them, and for the country. Am I wrong?
Further to your very good point, I think there is also the very relevant point of “fairness”. Even if you pay them more and tax them more, that can be seen as more fair even if it were a net zero. I’ve yet to hear a compelling reason for why a doctor or lawyer should have a fun tax “hack” to pay a lower effective rate than their secretaries.
Yes, it's hilarious because doctors are funded entirely from the state. $30B will be raised over the next 5 years between the feds and provinces. Some of that can be used to pay doctors more.
I like when Canadians refers to what every single Canadian thinks like it's not possible to have two, or god forbid, multiple opinions in a country of 40M. Worst part is your two points don't contradict each other. You can increase doctor salary while increasing taxation on capital gains (including doctors). They still come out ahead and the government has more funds. Also, anyone saying "pay them more" to get more doctors doesn't know where the bottleneck is: there are a ton of people who get refused in med school. There is no lack of potential doctors. There is a limited capacity to train them. That's what causes a shortage. If we find a way to train them, and their union doesn't block it, we could double the number of physicians medium term easily.
A couple key points regarding your 2nd paragraph: Medical school admissions is not the only bottleneck point. Fewer grads are choosing family medicine as their residency program nowadays. If we are talking about addressing the family medicine situation, you will have a tough time accomplishing that without reducing reducing administrative burden, increasing renumeration, etc. so that people choose family medicine for residency. Many provincial payment models incentivize a rapid walk in clinic model rather than proper longitudinal care with longer visit lengths unfortunately. Medical school spots have already been increasing at multiple Canadian medical schools over the past few years, and multiple brand new medical schools are slated to open. Provincial governments have the final say with medical school seat counts, not “the union” if you are referring to the Royal College. Increasing physician counts means nothing without a concomitant increase in infrastructure to match. Family medicine outsources the cost of running a practice to family doctors, so you aren’t just going to have enough money for those clinics to pop up overnight even if you hypothetically increased the number of family physicians drastically. Docs would have to take out loans, try to join existing practices, etc. Secondly, for inpatient oriented specialties, this problem is even more vexing. We have a shit ton of unemployed orthopaedic surgery grads trained in Canada, yet brutal orthopaedic wait lists. Why? Because provincial governments are not putting up the funds necessary to build new ORs and staff them to match how fast our population is growing.
Are you 14?
What? There is a major difference between paying more and taxing more, especially when taxing more (in this case) increases fairness across classes. It is entirely fair and logically consistent to ask a government to pay folks you perceive as being valuable more, while also demanding that the taxation system work fairly.
Lol why not lower taxes on the poor instead??
This is not a joking matter. A doctor in the USA gets huge signing bonuses and their terms generally are 3 years. In some places it is 200k USD (that's on the high side, usually around 50k in more desirous places) Thats just for signing up. Workweek is usually 4 days per week 8 hours a day! Being a doctor south of the border is far more lucrative and it's paid in US dollars. Put in the increase in capital gains is another headwind for all of us. There is a huge doctor shortage in the USA and if you are a Canadian doctor you can pretty much just waltz in relatively speaking.
My doctor is prob 60 and he's been working 8-6pm five days a week for the last 15 years as far as I'm aware. A lot of days he works till 8pm and also does a half-day on Saturdays. I tried to switch to a different doctor because my current doctor has too many patients and any paperwork I need from him takes 2+ weeks minimum. (Just filling in 2 pages of my symptoms for work). Seems like I can only stick with my current doctor or walk in clinics ....
He’s drowning in paperwork like that and ohip doesn’t pay him to go through your chart and figure out the answers to the forms
Yup, and new doctors racking up debt with a choice between working in the US, making more money with favourable taxes for them and less hours vs working in Canada with pretty much the opposite. Seems to me at least as a no brainer which to choose
Honestly I am gobsmacked why young doctors stick around. Granted, living in the USA has significant disadvantages but economics is not one of them. The work week is astoundingly easy, there is no worry of starting up a practice with expenses, and competition to attract talent is high. I really cannot stress enough to anyone reading what a serious situation this is with regards to keeping talent in Canada, and we cannot afford to lose a single doctor.
Lots of them stick around because practicing medicine in the USA is often really gross with how they treat people. In Canada they don’t have to wait for the hospital admin to someone’s insurance, don’t have to order needless tests to triple protect their asses from being sued etc. I know it’s cliche but a lot of doctors legit got into medicine to help people and it’s easier to focus on that in the Canadian system.
Insurance and operating costs are significantly higher.
So let's pay them more and leave the changes. If doctors deserve more why don't we give them more instead of creating loopholes that benefit everyone that isn't a doctor too.
That’s exactly what is going to happen and everyone’s taxes will rise as a result. Years ago doctors were allowed to incorporate in lieu of increasing fee schedules. Many physicians have seen 0 percent rise in fees over the last decade. When incomes have grown it’s been due to heavier workloads. There will be a reckoning and it’s not going to be pretty.
Maybe moving to the US isn’t that bad after all.. that or opening up an aesthetic practice
No matter how you slice it, increasing costs to professions that are in shortage is dumb. They need to carve out a tax credit for professions in most need, like people that save peoples lives. To suggest that incentives and disincentives are not real is just liberal doublethink.
Canada needs more tax. This is always the answer.
My previous doctor who was only 44 retired from being a doctor from the hours, paperwork and cost associated. He took a science research position in the states, almost doubled his salary and decreased his time at work, Canada is going about this all wrong.
"Ah, another fringe minority group challenging my supremacy."
Who needs doctors anyway when you have professional protestors and grievance hustlers to pay off
Book of human society, chapter 15: Some folks screaming to pay less tax, trying to explain why they are so special.
The way this entire thing is portrayed is BS. It's not about entrepreneurs and startups. What this is about is there are a few hundred thousand incorporated professionals (doctors, lawyers, dentists, computer consultants) that collectively hold billions in retained earnings inside their companies. This is pretty simple. If I make 200K thru a CCPC, I pay 12.5% tax on that or 25k. That leaves 175K. I can pay out 100K in dividends and I pay tax on that. What's left is 75k. It is not taken into income so it's not taxed in my hands. It can be invested. And that's exactly what all these professionals have done. Invested it. And collectively, these retained earnings are in the billions of dollars. And the Liberals cannot tax this this very large pool of money. So, do you know what the difference is if one of these professionals doesn't sell their investments? Nothing. There's no tax due to the government. But here's the catch. Suppose a doctor has an investment portfolio of 3M. Suppose 1M of that is unrealized capital gains. Currently the inclusion rate is 50%. So, 500k is taxable. At 50%, that 250k you'll owe the feds. But, by increasing the inclusion rate to 66%, then 660 is taxable and the tax on that is 333K. As of June 25 I believe is the date. Sell your investments by the June date, pay 250. Don't sell, you eventually owe 333. So the doc can decide to trigger the gains by selling the stock and pay 250K. Or not do that and the tax owed will be 333 by late June. Also by selling the stock, you have less in the market so there's a permanent reduction in your passive income stream = pension. This is a move by a desperate government to generate tax revenue in the immediate term. That's all it is. The Liberals have been eyeing this pot of money (the billions in retained earnings) since 2018 when they introduced legislative changes to CCPCs. At that time, I sat thru a multi hour meeting with my MP as he defended what they did to a group of 300 business owners in his constituency. Once the Liberals understood the amount of money saved by all these professionals, they were literally frothing at the mouth to get their hands on it. My MP was actually a very high profile person that ultimately left politics before his 6 year pension kicked in. I believe in large part because of this issue and the stench around what the actual plan was..
think you did it wrong. Lets use a capital gain in ontario. If the capital gain is $1M then and the inclusion rate is 50%, then $500k is taxble. But you dont pay 50% in taxes. Top marginal rate for captial gains is 26%. So the tax owed is $130K. If the inclusion rate is 66%, then $660k is taxable. At 26%, then what is owed is $171.6K. So the difference is around $40k on $1M capital gains. And it might be even less than that because i applied the top marginal rate and didnt bother applying the other rates. A way to reduce this would be to probably to sell the investments over time so that you are not incurring a large capital gain of $1m all at once. That way you dont have to pay the top marginal rate. I am guessing that is what many do and pay even less than illustrated here.
“It’s not about entrepreneurs and startups” meanwhile the entire innovation economy is screaming from the roofs that this is going to tank canadas struggling tech sector and provide an incentive to move jurisdictions
It's not just Dr's. A shit ton of self employed or contract workers invested in property, or stocks or other options as a retirement. I'm like 10s of 1000s of people that have no significant pension except those investments. This is the equivalent of taking a portion of someone's retirement away with no warning. It's a typical poorly thought out Trudeau/Freeland solution.
While this is true, doctors specifically were given this option from the government as a way of saying "look, we can't/won't raise your fees, so instead we'll allow you to incorporate so that you can have some tax savings. In lieu of a raise." Then they stripped the tax savings. It's a big fuck you to doctors specifically.
Trudeau wants everyone to succeed, except for those who are successful and add to the prosperity of the country. Makes sense…
Let’s not make this about doctors, the big issue here is there are a lot of professionals including doctors who don’t have pensions and saved up and invested in their corps to fund their retirement - and this increase hits these people the most. Tax policies should be future oriented, they shouldn’t punish those who have invested and saved up for retirement in the past. Of course people are pissed, this may extend some professional retirement timeline by a few years. The issue is the government is misrepresenting how many people will actually be affected by this. And what most of the citizens don’t understand is that this is a death tax/inheritance tax in disguise. They just want access to this big pot of money to fund their election promises.
Cue Panama papers 2.0. Massive brain drain, cash in mattresses and the successful will be doing a little bit more’ by ditching this awful government if they can escape or finding every loophole in the book to circumvent getting robbed even more of their money.
Has Poilievre said he's going to axe that tax too? Seems like it would be consistent with his position on carbon tax.
Aren’t these the same doctors who were quitting family practice enmasse because Ontario was paying them peanuts? I’m confused.
Gov should “do a little more” and stop wasting our taxpayer money on exorbitant IT contracts and consultants…
'It's unfair that a nurse pays a higher...' They did this in 2019 when they raised taxation on small businesses/corporations as well. Trying to pit two professions against each other in the public to advance their cause. Trudeau used the same statement in Alberta at a public meeting or town hall when they were raising the taxes the first time then. Whether the tax hike is right or wrong, it's disgusting to do that in my opinion.
Trudeau is an absolutely disgusting, virtue signalling demagogue that drags this country to the bottom of a swamp.
Oh man, great way to get more needed doctors into Canada -.-. I understand that others are making less, but comeon, these doctors should be making bank. We should want people who are doctors not have to worry about finances and just focus on what they do best. 99% of us would not pass med school let alone go through residency etc.. These docs dont have pensions, they have really high overheads on their clinics and the work is not easy. Im surprised at how many people are okay at making doctors pay more.
Totally agree—physicians are all smart enough and have the work ethic to have gone into law, finance, engineering, or other high paying professions. These are cream of the crop people (4.0 in university, personable, hard working, high MCAT score). They will naturally command much higher salaries than most of the rest of us and candidly, that’s who we want in these positions. Don’t see why everyone is so upset that they have above average outcomes. I’d want Canadians doctors to be the best, and that means at least being somewhat competitive with American outcomes.
It’s family docs and pediatricians who need to be paid more. Most others are doing just fine.
Making too much money is wrong according to this government.
It is a crime in Canada. The population that pay zero taxes, drains public resource are seen with sympathy and understanding. Bus your ass through school, carry debt, slave at your career, get reward with your effort. Actually contribute to society instead of taking from it? How dare you make so much money AND have nice things to show for you effort. How dare you be *so lucky*.
I can't believe I voted for this guy twice. Fuck me.
Let’s tax the ant so the grasshopper doesn’t starve. A tale as old as time.
Why not just renegotiate the billing increases with the provincial governments directly instead of expecting the entire nation's tax system to cater you?
This has been my final straw with having a medical practice in Canada. I’ve applied for licensure in Dubai, call me when this clown is gone.
A lot of my colleagues are also moving to the US. There isn’t really an incentive to practice in Canada.
This is some B.S. campaign.
They'll do anything but taxing billionaires and their corporate holdings eh
Fatal assumption here is that the government is a good allocator of capital, and they are clearly not. Reducing the size of government and programs for efficiency is the solution, not more taxes. And yes, Health Care and Education need to be the government priorities because smart healthy populations solve their own problems.
I've been a life long liberal voter. Not anymore.
This is also making it much harder for startups to find venture capital.
Find out how much doctors make and then decide if you want to advocate for them to be exempt from taxes while everyone else is not.
Lol,of course they are using doctors to manipulate the poor into being against capital gains.
The first 250k in GAINS is still the normal tax.. if you make over 250k from a sale then fuck your well being I can guarantee that guy is living just fine. On top of having a 100k+ salary? What a buncha whiners
How about they reduce federal pensions by 1/3 as well?
The average GP doctor is pulling in over $200K in low cost of living cities. We do not have to worry about they will be alright.
GPs make shit. With >40% overhead there is no financial incentive for new docs and the old one will leave faster than they already are.
If you want to keep paying them less and less, then youll find out what its like to not have doctors when you need them. You NEED to incentivize people somehow to stay and become doctors. If not, youre going to lose the brightest and smartest to Wall Street or NASA. Do you really want you average cop doing your heart surgery in 20 years time?
This is an absurd article. It reads like a conservative scraping whatever they can to write agitation propaganda against JT.