Medicine Professional Corporations
In Ontario, medical doctors are afforded the option of creating what are known as Professional Corporations – special corporate entities in which a physician registered with the College of Physicians and Surgeons of Ontario (CPSO) is the voting shareholder, but where family members (spouse, parents and/or children) can be non-voting shareholders. Such a corporation presents potentially great tax and/or income savings.
Why Incorporate?
There are a number of reasons you might consider incorporating, but primary among them are the significant tax deferral opportunities. A medicine professional corporation is treated like any other small business, meaning the corporation only pays tax at 15.5% on its first $500,000 of income. Put simply, for every $100,000 you retain in the corporation and don’t use for expenditures, you can defer $31,000, which can then be put towards investing and growing your savings or growing your practice.
Income Splitting
Medicine professional corporations are also unique in that family members (spouse, parents, adult children, and minor children if shares are held in trust) can be shareholders. This allows for additional tax savings for your family by way of income splitting.
The first $40,000 of income paid out of the corporation in dividends is not subject to personal income tax, assuming the recipient does not have other personal income. Thus, by issuing shares to a non-working spouse, the corporation can issue up to $40,000 in dividends to that spouse – tax free.
There are many other benefits to operating a medicine professional corporation including limited creditor proofing and more complex tax planning like bonus deferrals, family salaries, trust options, etc. To discuss these and other opportunities, consult your legal and tax advisors.
Incorporating with Blinick Law
At Blinick Law, we will help you smoothly navigate the process of incorporating your Professional Corporation and obtaining a Certificate of Authorization from the CPSO. The process is as follows:
Resolution of the Directors
Director’s Consent for each director
Consent to Audit Exemption
Certificate of Incorporation
A Statutory Declaration
Application fee
Completed application form
Contact us for a free consultation and to learn more about incorporating your Professional Corporation.
Blinick Law does not provide tax advice. All information on this site is for information purposes alone and cannot be relied upon as legal advice. It is important to consult legal and tax professionals when starting and operating a professional corporation.
Why Incorporate?
There are a number of reasons you might consider incorporating, but primary among them are the significant tax deferral opportunities. A medicine professional corporation is treated like any other small business, meaning the corporation only pays tax at 15.5% on its first $500,000 of income. Put simply, for every $100,000 you retain in the corporation and don’t use for expenditures, you can defer $31,000, which can then be put towards investing and growing your savings or growing your practice.
Income Splitting
Medicine professional corporations are also unique in that family members (spouse, parents, adult children, and minor children if shares are held in trust) can be shareholders. This allows for additional tax savings for your family by way of income splitting.
The first $40,000 of income paid out of the corporation in dividends is not subject to personal income tax, assuming the recipient does not have other personal income. Thus, by issuing shares to a non-working spouse, the corporation can issue up to $40,000 in dividends to that spouse – tax free.
There are many other benefits to operating a medicine professional corporation including limited creditor proofing and more complex tax planning like bonus deferrals, family salaries, trust options, etc. To discuss these and other opportunities, consult your legal and tax advisors.
Incorporating with Blinick Law
At Blinick Law, we will help you smoothly navigate the process of incorporating your Professional Corporation and obtaining a Certificate of Authorization from the CPSO. The process is as follows:
- Meet to discuss the desired corporate and share structure for the corporation (within the bounds of the CPSO and statutory guidelines for Professional Corporations). This includes selecting an appropriate corporate name and determining who are the desired and eligible non-voting shareholders.
- Drafting and filing the Articles of Incorporation
- Complete and file the Initial Report (Form 1)
- Draft the corporate By-laws.
- Draft the various organizing resolutions, including:
Resolution of the Directors
Director’s Consent for each director
Consent to Audit Exemption
- Draft the Application to the CPSO for the Certificate of Authorization and create the submission package which includes:
Certificate of Incorporation
A Statutory Declaration
Application fee
Completed application form
Contact us for a free consultation and to learn more about incorporating your Professional Corporation.
Blinick Law does not provide tax advice. All information on this site is for information purposes alone and cannot be relied upon as legal advice. It is important to consult legal and tax professionals when starting and operating a professional corporation.
