Tax changes for physicians with incorporated practices
On November 15, 2018, the government presented its 2018 Ontario Economic Outlook and Fiscal Review (fall economic statement).
Of note, Ontario has chosen not to proceed with the previous government's tax measure - which paralleled the federal measure - to limit the small business deduction for corporations pertaining to passive income.
How does this impact physicians with incorporated practices?
Being incorporated means that a designated portion of your practice income is usually taxed at the small business tax rate. Typically, physicians with incorporated practices retain income in their corporate accounts which generates passive income such as interest, dividends and capital gains.
With Ontario now not proceeding with the previous tax proposal on passive income, physicians with incorporated practices could realize savings. Consult with your bookkeeper or accountant to learn more about these tax changes.