We need more doctors, more health care, more solutions.
Physicians who run their own clinics, including many family doctors, bear the cost of office space, employees and supplies to serve their patients. To make their clinics more efficient – and save for life events such as sick days, parental leaves and retirement — many have set up professional corporations.
Proposed changes to the capital gains inclusion rate introduced in the 2024 federal budget will put undue financial strain on many of these physicians — and put access to health care, already at an all-time low, at risk.
Working together, the CMA believes this oversight can be fixed to ensure support for the physicians critical to our health system.
The basics
Which doctors are affected by changes to the capital gains tax?
Don’t doctors make a lot of money?
How much more will incorporated doctors have to pay?
Dive deeper
Why do doctors incorporate?
Many provinces encouraged physicians to incorporate their medical practices to operate community-based practices more effectively. Physicians invest their own money to pay rent, hire staff, secure equipment and buy all the medical supplies and technology they need to provide the best care for patients. A professional corporation is also a means to save for retirement and pay for life events such as illness, parental leaves and vacations, because doctors do not receive employer-based benefits.
How will proposed tax measures impact access to care?
Increasing the capital gains inclusion rate will significantly impact community-based medical practice, including family doctors, at a time when more than six million Canadians lack a primary care provider. Burnout has already prompted some family doctors to decrease their hours, leave independent practice or consider different areas of focus. Additional financial strain will exacerbate this trend, and discourage future doctors from pursuing community-based disciplines. We are already seeing a decreasing number of Canadian medical graduates opting for family medicine.
How will proposed tax measures affect the health system?
Increasing the capital gains inclusion rate will not only make it more difficult for Canadians to find a family doctor, it risks undermining recent investments in the health system. Primary care is the front door for a wide range of preventative and medical treatments, as well as referrals to specialists. Gaps in primary care are also putting undue pressure on emergency departments. Making it more challenging to operate a community-based practice will affect providers across the continuum of care.
How are incorporated medical practices different from other businesses?
It's a misconception that doctors can run their corporations the same way other businesses do. Unlike other businesses, they can’t simply increase fees to make up for rising overhead costs or tax increases. In addition, because of the current physician shortage, particularly in family medicine, it is near impossible for a physician to find a buyer for the shares of a medical professional corporation, negating their ability to use the lifetime capital gains exemption.
What Canadians think
To understand how patients and the general public view capital gains increases, the CMA commissioned a national survey with Abacus Data.
Our recommendations on capital gains changes
More than 6.5 million Canadians have no regular family doctor. Countless others are suffering from long waits for medical tests and procedures. The proposed increase to the capital gains inclusion rate puts improvements in health care following historic federal funding at risk.
The CMA, with the support of most provincial and territorial medical associations, has recommended:
- A full repeal or exemption for medical professional corporations from to the increase to the capital gains inclusion rate
- Or, at minimum, the introduction of tax measures allowing individuals to share the $250,000 capital gains threshold at which the higher inclusion rate would apply with the medical professional corporations they control, and indexing this threshold to annual inflation.
Our advocacy on the increase to the capital gains inclusion rate
- The capital gains tax proposal will hurt health care in Canada. Here’s how the CMA is advocating for change
- Federal government’s tax move puts access to health care at risk: CMA
- COMMENTARY: Tough Times for Family Medicine and Patients
- Canadian medical organizations call on federal government to exempt physicians from increase to capital gains inclusion rate
- CMA remains extremely concerned about the impact of capital gains tax proposal on access to care
- Commentary: Federal tax changes will hurt access to health care
How we’ve supported physicians in the past
The CMA has been a longtime tax advocate for physicians and other medical professionals.
In the 1950s, we lobbied governments to find a way for physicians and other self-employed Canadians to contribute to their retirements – leading to the creation of the registered retirement savings plan (RRSP) in 1957.
In 2017, we led a campaign to highlight to government how proposed changes to Canada’s small business taxation framework would negatively impact physicians’ practices and patient care, resulting in policy amendments and less restrictive taxation measures for incorporated businesses.
During the COVID-19 pandemic, we took a similar approach, lobbying governments to amend federal and provincial fiscal stabilization measures to ensure different physician practice models could qualify for financial assistance.