For Health Professionals
Tax for Doctors, Dentists & Health Professionals in Ottawa
Physicians and dentists in Ontario can practise through a professional corporation, a medicine professional corporation (MPC) for doctors or a dentistry professional corporation (DPC) for dentists. For high earners, that corporation is one of the most powerful tax tools available: income left in it is taxed at the low small business rate instead of your top personal rate, deferring tax that stays invested for you.
Nour & Daniels Tax works with doctors, dentists, and other regulated health professionals across Ottawa, from residents filing their first return to specialists and practice owners planning their retirement. We match the tax strategy to your stage, not a template.
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Why Incorporate
What a professional corporation does for you
A professional corporation does not lower the tax you pay when you take money out to live on. Its power is deferral and control: it lets you keep the income you do not need this year inside the corporation, taxed at a much lower rate, so more capital stays invested and working until you withdraw it. The higher your income and the more you can leave in, the larger the benefit.
Tax deferral
Income kept in the corporation is taxed at the low small business rate, deferring a large amount of tax until you draw the funds personally.
Income smoothing
Pay yourself a steady amount and leave the rest in the corporation, evening out your personal tax across high and low years.
Investing inside the corporation
The deferred tax stays invested, giving you more after-tax capital to grow for retirement than investing personally would.
Retirement planning room
Incorporated professionals can access tools like an Individual Pension Plan (IPP), which can allow larger retirement contributions than an RRSP, especially later in your career.
Compensation flexibility
Choose a salary and dividend mix that fits your needs, your RRSP room, and your CPP, planned with us each year.
Eventual sale or wind-down
With planning, the sale of a qualifying practice corporation may access the lifetime capital gains exemption. The structure you build now affects the exit later.
The Ontario Rules
Who can own your professional corporation
Ontario sets specific share-ownership rules for medical and dental professional corporations, and they shape what income-splitting planning is even possible. These rules apply to medicine professional corporations under the CPSO and dentistry professional corporations under the RCDSO.
| Share rule | What it means |
|---|---|
| Voting shares | Must be held by you, the physician or dentist who is a member of your College. You control the corporation. |
| Non-voting shares for family | Your spouse (including common-law), children, and parents may hold non-voting shares. The CPSO also accepts step-children and step-parents. Parents-in-law are not accepted. |
| Minor children | Shares for minor children must be held in trust for each child until they turn 18, then transferred to them. |
| Income splitting | Family share ownership allows limited income splitting, but the tax on split income (TOSI) rules tax dividends to family who are not active in the practice at the top rate. We plan within those rules. |
Your health-law lawyer prepares the incorporation and College approvals. We make sure the share structure and compensation work for tax before anything is finalized.
Your Situation
Different professionals, different tax problems
There is no single "doctor tax plan." A resident and a retiring surgeon face completely different decisions. Here is how we approach the situations we see most across Ottawa's medical and dental community.
Not yet time to incorporate
With training income and student debt, incorporation rarely pays yet. The wins are elsewhere: claiming moving and exam costs where eligible, student loan interest, and building RRSP room. We set the foundation so you incorporate at the right moment, not too early.
Deferral becomes worth it
Once billings are steady and exceed what you spend, an MPC starts to pay off. We model the deferral, set your salary-dividend mix, and put the surplus to work inside the corporation instead of sending it to the CRA each year.
Advanced planning territory
Surgeons and other high earners can leave large amounts in the corporation. Here we layer in investment planning inside the corporation and tools like an Individual Pension Plan, and we watch the passive-investment rules that can affect the small business rate.
A business, not just a profession
Owning a practice means equipment depreciated through capital cost allowance, staff payroll, a practice purchase or buy-in often financed with goodwill, and a mix of HST-exempt and taxable (cosmetic) services. We handle the practice's books and the personal planning together.
Variable income, contractor questions
Associates and locums often bill through a corporation with income that swings month to month. We smooth it, plan instalments, and check the structure so it is a genuine professional practice, not caught by rules meant for incorporated employees.
Two income types, one plan
Many physicians have T4 hospital or academic income alongside private or clinic billings. We make both halves work together, so the self-employed side is optimized without tripping over the salaried side.
The exit you planned for
Selling or winding down brings capital gains, possible access to the lifetime capital gains exemption, and decisions about the investments inside your corporation. The earlier we plan the exit, the better the result.
Your College, your structure
Optometrists, chiropractors, physiotherapists, psychologists, and pharmacists each have their own College rules and their own mix of exempt and taxable services. We work across regulated health professions, not just medicine and dentistry.
HST works differently for health care
Most medical and dental services are exempt from HST, and that exemption changes how the whole picture works.
- Exempt services: Most services a physician provides, and most basic dental services, are exempt from HST. You generally do not charge HST on them, and you generally cannot recover the HST you pay on related expenses.
- Taxable exceptions: Some services, such as purely cosmetic procedures, can be taxable. A practice with both kinds of work has to track them separately, and that is easy to get wrong.
- Why it matters: Because you usually cannot claim input tax credits on exempt work, the HST you pay on equipment and supplies becomes a real cost. We factor that into purchase and practice decisions.
For services that are taxable, the usual $30,000 registration rules apply. We sort out which of your work is which.
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A specialist earns $450,000 in a year but draws $180,000 to live on. Paid entirely personally, the top portion of that income is taxed at the highest personal rates. Through her medicine professional corporation, she takes the $180,000 she needs and leaves roughly $270,000 in the corporation, taxed at the low small business rate. The tax deferred on that surplus stays invested for her retirement. Over a career, that deferral, compounded, can be worth a great deal, which is exactly why the structure is worth getting right.
Claim What Counts
Deductions and costs we make sure you capture
Licensing and dues
CPSO or RCDSO fees, College dues, and association memberships.
Malpractice and insurance
CMPA or professional liability coverage and other practice insurance.
Continuing education
CME, courses, conferences, and the travel tied to keeping current.
Equipment and technology
Dental chairs, imaging, instruments, and clinic technology, depreciated through CCA.
Staff and payroll
Hygienists, assistants, and administrative staff, with payroll handled correctly.
Practice premises
Rent, leasehold improvements, and the costs of running your clinic or office.
How It Works
How we work with doctors and dentists
Stage and goals review
We start with where you are, resident, associate, owner, or winding down, and what you want, then build the plan around that, not a template.
Incorporation decision and setup
If incorporating makes sense, we model it, design the share structure for tax, and coordinate with your health-law lawyer on the College approvals.
Corporate filing and bookkeeping
We keep your practice books clean, handle HST where it applies, and file your T2 accurately.
Compensation and retirement planning
We plan your salary-dividend mix, investing inside the corporation, and tools like an IPP as your career matures.
The long game
We keep the plan current through every stage, right up to the eventual sale or wind-down of your practice.
Help Centre
Doctor and dentist tax questions
Should I incorporate as a doctor or dentist?
It depends on your income and how much of it you can leave invested. Incorporation defers tax on income you do not need personally, so it pays off most when your billings comfortably exceed your spending. For residents and lower earners it often is not worth the cost yet. We model your numbers and tell you when the timing is right.
Who can own shares in my professional corporation?
In Ontario, you as the physician or dentist hold the voting shares. Your spouse (including common-law), children, and parents may hold non-voting shares, and the CPSO also accepts step-children and step-parents, but not parents-in-law. Shares for minor children are held in trust until they turn 18. (Source: CPSO.)
Can I split income with my family through my corporation?
To a limited degree. Family members can hold non-voting shares, but the tax on split income (TOSI) rules tax dividends to family who are not genuinely active in the practice at the top personal rate. There are still situations where it helps, and we plan within the rules rather than promising splits the CRA would reverse.
Do I charge HST on my medical or dental services?
Usually not. Most physician services and most basic dental services are exempt from HST, which means you generally do not charge it and generally cannot recover HST on related expenses. Some services, like purely cosmetic procedures, can be taxable. We sort out which of your work falls where and handle any registration that applies.
What is an Individual Pension Plan, and should I have one?
An Individual Pension Plan (IPP) is a registered pension plan a corporation can set up for its owner. For incorporated professionals, especially later in your career, it can allow larger tax-deductible retirement contributions than an RRSP. Whether it fits depends on your age, income, and goals, which we assess as part of your planning.
I am buying into a dental practice. Can you help with the tax side?
Yes. A practice purchase or buy-in involves financing, goodwill, equipment, and how the deal is structured, all of which affect your tax for years. We work through the numbers with you and your advisors before you sign, then handle the corporation and books afterward.
Tax strategy built for your career stage
Whether you are deciding whether to incorporate, buying into a practice, or planning your exit, tell us where you are and we will build the plan around it.
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