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Accounting for physicians and medical corporations.

Tax and planning for doctors, from first billings to investing inside your corporation.

What we look at

What we look at in a physician's file.

Starting practice

Your first year of billing: tracking fee-for-service payments, setting aside tax instalments, and recording practice expenses from day one.

Incorporating your practice

When a medical corporation makes sense, what it costs to maintain, and how your billings flow into it once the College issues its permit.

Salary, dividends or both

How to pay yourself each year, weighing RRSP room, CPP, your cash needs and the corporation's tax position.

Family members as shareholders

Income splitting with family is limited by the tax on split income (TOSI) rules. We check what still works before anything is paid.

Investing inside the corporation

Passive investment income above $50,000 a year starts to reduce the small business deduction, so where you invest matters.

Billings, locums and clinic costs

Fee-for-service billings, locum income, clinic overhead splits and practice expenses recorded correctly, with your personal and corporate returns prepared together.

What we do for you

Your medical corporation and your personal and family returns are prepared together and reviewed by a CPA.

Corporate year-end and T2 return
Compilation financial statements for your corporation
Personal and family T1 returns
T4 and T5 slips for salary and dividends
Incorporation planning and setup coordination
Bookkeeping, monthly or quarterly
Tax planning before your fiscal year-end

Guide

Incorporating and running a medical practice in BC.

For most physicians the big decisions come in the first few years of practice: how to handle your first year of billing, whether to incorporate, and how to pay yourself once you do.

Your first year of billing

Whether you're paid fee-for-service through MSP, under the Longitudinal Family Physician (LFP) payment model, or through sessional and contract payments, no tax is withheld on most of it. That makes the first year the riskiest.

Set aside roughly a third of your billings for tax until your first return is filed
Keep receipts for practice costs: overhead splits, CMPA fees, licences, dues and continuing education
Expect CRA instalment reminders once you owe more than $3,000 in tax
Medical services are GST exempt, so most physicians don't register for GST

Should you incorporate?

A medical corporation, permitted by the College of Physicians and Surgeons of BC, lets income you don't need to live on be taxed at the small business rate instead of your personal rate. The benefit comes from deferral: the more you can leave in the corporation, the more it's worth.

A rule of thumb, not a rule

If you need nearly all of your income to live on, incorporating adds cost without much benefit. If you can leave a meaningful amount in the corporation each year, it usually pays for itself. We run the numbers on your actual billings before you decide.

Paying yourself once incorporated

Salary creates RRSP room and CPP pensionable earnings. Dividends avoid payroll and CPP. Many physicians use a mix and revisit it each year as their income and goals change.

Family members and TOSI

The tax on split income rules mean dividends paid to a spouse or children from a medical corporation are usually taxed at the top rate. The main exception: once you turn 65, dividends to your spouse are generally excluded. Paying a family member a reasonable salary for real work is still allowed.

Investing inside your corporation

Surplus left in the corporation can be invested, but passive investment income above $50,000 a year starts to reduce the small business deduction, and it's eliminated at $150,000. Choosing investments with this in mind, or using a holding company, can protect the lower rate.

Key dates for physicians

April 30: personal tax payment deadline
June 15: personal filing deadline for self-employed physicians
Quarterly instalments: March, June, September and December 15
Six months after your corporation's year-end: T2 return due

Have a question about your situation?

Book a call

Working with us

In person in Vancouver, or by video from anywhere in BC.

Start with a short call

We learn what you need and give you a quote upfront.

Connect securely

You authorize us with the CRA and share documents through our secure client portal.

We do the work

Your file is prepared and reviewed by a CPA, with questions sent as they come up.

Review together

We walk you through the results by phone, video, at our office or wherever suits you.

Questions

Common questions.

Should I incorporate my medical practice?

It depends mostly on how much of your income you can leave in the corporation. Incorporation helps most when you don't need all of your earnings to live on. We run the numbers on your actual billings before you decide.

I'm finishing residency. When should I talk to an accountant?

Before your first full year of billing, so instalments and the incorporation decision are set early.

Can my spouse receive dividends from my medical corporation?

Possibly, but the TOSI rules tax many family dividends at the top personal rate. There are exceptions, for example once the physician is 65 or older. We review your situation before any dividend is declared.

Do I need to meet you in person?

No. Most clients meet by phone or video, and we're happy to come to you if you'd rather meet in person.

Do physicians have to charge GST?

Generally no. Medical services are GST exempt, so most physicians don't register or charge GST.

Can I deduct my CMPA fees?

Yes. CMPA fees, licensing, association dues and continuing education are generally deductible practice costs.

Do I need to make tax instalments?

Usually, once you owe more than $3,000 at filing in the current year and either of the two prior years.

How are fees set?

Fees depend on the size and complexity of your file. We give you a quote upfront after a short first call.

Talk to a CPA about your file.

Book a call