Accountant for Doctors & Medical Professionals

What an accountant for doctors actually does

A physician who has incorporated has two tax lives running at once: the corporation earns the practice income and files its own return, and the physician draws money out of it and files personally. Most of the value in this work comes from treating those as one plan rather than two filings done months apart. That means deciding what leaves the corporation each year and in what form, keeping enough inside it to fund the tax instalments that are coming, and making sure the corporate year end and the personal year work together instead of against each other. It also means the unglamorous part: books that are current, payroll that is remitted on time, and a corporation whose annual filings and registrations are actually up to date. Physicians are the group most likely to have an excellent practice and a corporate minute book nobody has touched in three years.

• T2 federal and CO-17 Québec corporate returns, prepared with the personal return in view
• Personal T1 and TP-1 for the physician and spouse
• Remuneration planning — what to draw, when, and in what form
• Corporate bookkeeping, payroll and source deductions
• Tax instalment forecasting so a large balance never arrives as a surprise

Incorporation: when a medical professional corporation pays off

Incorporation is not automatically worthwhile, and the honest test is simple: does the practice earn meaningfully more than the household spends? If everything the practice earns is needed to live on, incorporating mostly adds cost — a second return, financial statements, annual maintenance — without much benefit, because money taken straight out is taxed in your hands either way. The advantage appears when income can be left inside the corporation. Active business income up to the small business limit is taxed at a low corporate rate, and the difference between that and the personal rate stays invested until it is drawn. That deferral is the entire point, and it compounds. There is a real constraint. Once the corporation earns more than $50,000 a year in passive investment income, its access to the small business deduction starts being clawed back, and the benefit shrinks as the investment portfolio grows. A corporation that has been accumulating for a decade needs a different plan from one in its first year.

Paying yourself: salary, dividends, and the RRSP question

There is no universal right answer, and anyone who gives you one without looking at your numbers is guessing. Salary creates RRSP contribution room and CPP/QPP contributions and is deductible to the corporation. Dividends create neither, but avoid payroll contributions and can be simpler to administer. For most incorporated physicians the answer is a mix, set annually rather than fixed once. The considerations that move it are whether you want the RRSP room, whether you are funding an individual pension plan instead, what your spouse's income looks like, and how much needs to stay in the corporation for taxes and reinvestment. One thing that has changed and still catches people: the tax on split income rules sharply limit paying dividends to family members who are not genuinely active in the business. Strategies that worked before 2018 do not work now, and a structure built on the old rules should be reviewed rather than left running.

Accountants for medical practitioners in Québec: what is different here

Québec physicians file twice at every level — a federal T2 and a Québec CO-17 for the corporation, a T1 and a TP-1 personally. The figures overlap heavily but the returns are not interchangeable, and Québec maintains its own credits, deductions and rates. Who may hold shares in a physician's professional corporation is also governed provincially, and Québec's rules are more restrictive than Ontario's. Advice imported from an Ontario colleague or an Ontario-focused blog frequently does not survive contact with the Québec regulation, and family-shareholder structures are the usual place this goes wrong. Billing adds its own timing question. Practice income arriving through RAMQ does not land on the same schedule as the corporation's tax instalments, and a physician whose books are behind will not see the mismatch coming. We keep the two aligned.

Accountants for healthcare professionals beyond physicians

An accountant for healthcare professionals works well beyond medicine. Dentists, pharmacists, optometrists, psychologists, physiotherapists, chiropractors and veterinarians all face some version of the same set of questions, and several of them face harder ones. Dental and veterinary practices carry real equipment and leasehold investment, which makes capital cost allowance planning and financing analysis matter far more than they do for a physician with no premises of their own. Practices that employ staff have payroll, source deductions and often a group benefit plan to administer. Mixed taxable and exempt supplies are the trap. Most healthcare services are exempt from GST/HST, which means the input tax credits on related purchases generally are not recoverable — but a practice that also sells products or provides non-exempt cosmetic services can have both taxable and exempt revenue, and a sales-tax position that has to be worked out rather than assumed.

• Dentists and veterinarians — equipment, leaseholds, capital cost allowance and financing
• Pharmacists — inventory, taxable retail sales alongside exempt professional services
• Psychologists and physiotherapists — solo and group practice structures
• Practices with staff — payroll, source deductions and benefit plan reporting
• GST/QST analysis where a practice has both exempt and taxable revenue

Residents, fellows and physicians new to practice

The first two years of independent practice are where the most avoidable damage happens. A resident on a salary has tax withheld at source; a newly independent physician usually does not, and the first full year's tax bill arrives with instalment requirements attached to it. We would rather set that up correctly than fix it later: work out whether incorporating in year one actually helps or simply adds cost, get instalments right so nothing compounds, and put bookkeeping in place before there is a backlog to reconstruct. Physicians who trained or worked outside Canada have an additional layer — residency status, foreign income reporting and any foreign assets that need to be disclosed. That is a filing question worth answering before the first return rather than after a review letter arrives.