Taxes

[hahmad]

Hi everyone,

 

I was just wondering what paying taxes is like for doctors. I'm aware of the marginal tax rates. If you're on salary, I'm assuming that you'll pay those marginal tax rates with the exception of what you put away in an RRSP.

 

What about fee for service or if you have your own practice? Is there anyway to incorporate, keep cash in the business and defer taxes? Perhaps invest?

 

Just trying to get a better idea of how doctor's pay taxes and if it's just straight up dependent on the marginal tax rates or if there are tax planning strategies out there.

 

Thanks for your thoughts!

[NLengr]

Taxes for physicians tends to be much closer to business taxes because most docs tend to incorporate into a professional medical corp.

 

It's an incredibly complex topic.

[ubcredfox]

It's basically one of two ways:

1. You run as a small business proprietorship in which case you pay personal tax rates on your profit minus all small business expenses (which are numerous, and their calculation/criteria can be complex) or

2. You run as a physician corporation where instead you pay corporate taxes on all profit minus all small business expenses. The major benefits to incorporation are the possibility of a) personal income tax deferral income sharing between lower income individuals i.e. spouse, dependents over 18 c) income investment through the corporation

 

The basics can be gleaned from reading the CRA website tax bulletins and picking up a couple of books about basic corporate tax law as it applies in Canada. A focus on small businesses is best. Get a good accountant, but try to have an idea of what they are talking about.