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How much do pathologists pay in taxes?


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The Sunshine List pegs pathologist salaries at around $300K. On income tax calculators online, that converts to $125K in taxes alone (~40%).

 

Do pathologists (or anyone with that high of a salary) actually pay 40% tax or do they pay less with accounting tricks?

 

Mind you that this is salary from the hospital (as opposed to being paid straight from OHIP into a business account, as most other doctors do).

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I'm sure there are people that don't do anything special with their income and get taxed to whatever maximum % their tax bracket allows for. The most common method I know about to get around taxes is incorporating, which basically just delays your taxes. How much tax you'd proportionally end up paying when you use the money could be quite variable.

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In Alberta the majority of pathologists are contractors rather than employees of Alberta Health Services, and are thus free to incorporate. The professional corporation pays the corporate tax rate (~14%) rather than the personal rate (~39%). There are probably similar options for incorporation and the major tax savings in other provinces, but I don't know any specifically.

 

you do pay corporate taxes as well to be fair - the main advantages of incorporation is tax deferral, income splitting, and writing off businesses expenses. The government is working to remove the difference between dividend income rate + corporate rate vs income tax as it is traditional to salary. You are not saving 25% tax (39-14) by going the business route but there are still significant advantages.

 

As a rule most of tax law is surprisingly fair while taxes of course remain annoying :)

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The Sunshine List pegs pathologist salaries at around $300K. On income tax calculators online, that converts to $125K in taxes alone (~40%).

 

Do pathologists (or anyone with that high of a salary) actually pay 40% tax or do they pay less with accounting tricks?

 

Mind you that this is salary from the hospital (as opposed to being paid straight from OHIP into a business account, as most other doctors do).

 

On the income mentioned on the sunshine list then yeah they are paying that amount of base tax, but can of course claim tax credits/deductions and use an RRSP to income splitting purposes and retirement savings. The TFSA will be a powerful vehicle for them as well.

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I understand how incorporating works (my dad in IT incorporates).

 

But the fact that pathologists are on the sunshine list, meaning that they receive salary as employees, is very surprising. Note that there are no other doctors on the sunshine list except pathologists (and executives like Head of Medicine/Surgery etc.)

 

Are pathologists not allowed to incorporate like other doctors or what?

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I understand how incorporating works (my dad in IT incorporates).

 

But the fact that pathologists are on the sunshine list, meaning that they receive salary as employees, is very surprising. Note that there are no other doctors on the sunshine list except pathologists (and executives like Head of Medicine/Surgery etc.)

 

Are pathologists not allowed to incorporate like other doctors or what?

 

They can! Many do. It is just that traditionally it seemed they where just employees of the hospital. From an administrative point of view that certainly makes things easier for them :)

 

Western just had a bunch of pathologists jump over to incorporation.

 

For some reason many of the rads at sick kids are also on salary. Not sure why that is either.

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My parents have recently incorporated their practices. So they pay less tax by listing my siblings and I as shareholders in their corporation - this is one common way of saving on taxes.

 

Too bad you cannot do that until you were 18 with medical corporations :) You used to be able to.

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Another question... If pathologists are all employees, that means they probably aren't billing fee for service. Is this true?

 

In Ontario, that's generally true for pathologists working at an academic centre. Some of them will work part-time (e.g., a half day a week) at a private community lab. I believe any slides they read there are FFS.

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No Alberta pathologists are FFS. Those that are employees are paid x dollars with benefits, and those that are contractors are paid x dollars for y number of days worked within the contract period (where x the current agreed-upon figure for the Alberta Section of Laboratory Physicians).

 

They don't use the L4E system?

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I think that's also where being on contract might help. You can only be expected to do the work you can fit into your 200 working days in a year.

 

*boggle* So "sorry, I'm on break" is actually a valid response for these physicians. Path is looking more and more appealing!

 

(Except for the fact that everything is just a blur of pink and purple and my brain isn't big enough to hold all the knowledge required to be a good pathologist).

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That's odd. This makes pathologists easy to exploit.

 

That's how it usually works:

 

In Quebec 1 FTE (full time equivalent based on the L4E or level for equivalent system) = 300k. If at the end of the year, a pathologist worked more because there was more volume (which is usually the case since there's a shortage of pathologists here), then those who worked for eg 1.2 FTE will get paid accordingly, up to 1.5 FTE. Now, if you go beyond 1.5 FTE, you officially don't get paid for the extra work (you still earn 450k a year which isn't bad). Very few pathologists go beyond 1.5 FTE but those who do have a special agreement so that they still get paid. Also keep in mind that pathology is usually a 8-9 to 5 job, with extremely light call, and less paperwork than internal. Are pathologists easy to exploit? Potentially, the situation is quite bad in the US with clinicians billing for pathologists' work and then paying them a percentage. But currently, the L4E system works in our favor.

 

Maybe that's not how it works in Alberta, but we're not the 1st province to use this system so it's not unique to Quebec.

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*boggle* So "sorry, I'm on break" is actually a valid response for these physicians. Path is looking more and more appealing!

 

(Except for the fact that everything is just a blur of pink and purple and my brain isn't big enough to hold all the knowledge required to be a good pathologist).

 

Yes it is :) I like the idea that the point person on a critical eval that likely won't or cannot easily be repeated is in a relatively stress free environment.

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I like the idea that the point person on a critical eval that likely won't or cannot easily be repeated is in a relatively stress free environment.

 

Having had my share of "it's 4AM, there are 30 patients to see and some drunken -hole just puked on me" moments, I can't disagree. :)

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Just to make things clearer:

 

FTE (or full time equivalent) is not a measure of time or hours worked, it's a measure of volume. That's why the term equivalent is used. How do you determine this volume? With L4Es

 

For eg: let's say a prostate biopsy is 0.1 L4E, a neoplastic colon is 0.5 L4E, a specimen with more than X immunos is 1 L4E etc. Each type of specimen or case has an L4E grading (this is where the name level for equivalent comes from) that depends on the specimen and its complexity.

 

You need between 5000-10 000 L4E to be considered ''full time equivalent'' (1FTE), someone who works in an academic setting might only need 9000L4E, and neuropathologists only need 5000L4E. As I said, if at the end of the year someone who was supposed to do 1 FTE (10 000 L4E) went through 15 000 L4E because he's fast or because he put in the hours, he will get paid accordingly. The same logic works if someone worked less.

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thebouque: Thanks for the explanation on Quebec. I'm not overly familiar with the L4E system (apparently it hasn't been well-established for HP), but the way you use it, it sounds like a better way to ensure fair compensation. We had a talk on pathologist pay a few months ago; I will check my notes on it to make sure there's nothing I'm missing. I don't want to wrongly generalize the HP setup to AP here.

 

Thanks, and I don't want to wrongly generalize the setup in Quebec to the whole country either (also HP doesn't exist as a stand alone specialty in Qc). However, we copied the system from other provinces so I'm quite sure that it's being used elsewhere, maybe slightly differently.

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Checked on it, and I was right; AP does not use the L4E system here to determine pay. It might be coming, but nothing in the very near-future. We still use the term FTE here to refer to someone with 200 worked days, but I guess it's a bit of a misnomer.

 

Indeed, full time equivalent takes a very different meaning in this situation.

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Anesthetists are typically paid for their time (with added fees for various procedures and higher risk patients... everyone is an ASA III at least on call!) and many emerg docs are too.

 

Indeed (and wasn't meaning to poo-poo path earlier -- the part of me that would love to stop and think for a while is just a little bit jealous). Emerg docs routinely describe their jobs as being a "full line" a "half line" etc. Lots of variability though...lots of docs who are scheduled to work until 08h00 will be out the door in a cloud of dust at 08h01, while others will be there until 09h30 or later cleaning up loose ends to avoid a handover.

 

 

Would prefer not to be thought of as a less-than-professional. None of which has anything to do with pathology. Back to the original discussion...

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Yeah that's what I'm talking about. Doesn't seem like pathologists do much of that. Why would one go into pathology without the autonomy to be remunerated for the work you actually do?

 

That being said, I looked up the Ontario Schedule of Benefits and found that there are billing numbers for "laboratory medicine", which I suppose includes what pathologists do. Is there any reason why they don't bill these FFS?

 

Perhaps you can clarify what your issue seems to be with them being classified as salaried employees as I am not seeing the problem here? They make pretty good coin so what's the big deal if they aren't billing as an independent and FFS?

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I was under the impression that physicians as a whole were paid for their expertise, not their time like a rank-and-file employee. By being employees however, aren't pathologists kind of less-than-professionals that that point?(not that this is right, since they are a medical field). I guess I mean to say that doesn't such a scheme really limit autonomy?

 

In many provinces including Qc pathologists are not employees and are eligible to incorporation. Also the L4E system isn't far from an FFS scheme, and you get paid depending on the volume you get, not the hours worked, did you read my other post?

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