Doctors say capital gains tax changes will jeopardize their retirement. Is that true?
The Canadian Medical Association asserts the Liberals' proposed changes to capital gains taxation will put doctors' retirement savings in jeopardy, but some financial experts insist incorporated professionals are not as doomed as they say they are.
Prime Minister Justin Trudeau's government presented a federal budget last week that proposes making two-thirds rather than one-half of capital gains - or profit made on the sale of assets - taxable.
The increase in the so-called inclusion rate would apply to capital gains above $250,000 for individuals, and all capital gains realized by corporations.
Since doctors typically incorporate their medical practices and invest for retirement inside their corporations, the association points out its members will now face a higher inclusion rate on all capital gains they earn, including on retirement investments.
It remains unclear, however, just how much of an impact Canadian physicians are facing.
Jean-Pierre Laporte, CEO of Integris Pension Management Corp., argues physicians can fully shield their retirement savings from capital gains taxation.
Laporte says incorporated professionals like doctors can sell off investments and open a registered pension plan. Contributions to the plan would be tax deductible, which means the individual would not pay any tax on the capital gains they earn.
“If a medical professional corporation is concerned about increasing corporate taxes because of this change to the budget, a solution that's been around for years ... is to have the corporation set up a registered pension plan,” Laporte said.
Physicians would still have to pay income taxes on the money they receive in the form of a pension, as is the case with other Canadians who have a pension.
There are also limits on how much someone can contribute to a pension plan, which means physicians will still end up paying more taxes on personal investments.
“Eventually, they will be impacted by these measures. But nowhere near to the extent that is made out in the news,” Laporte said.
Nicole Ewing, director of tax and estate planning at TD Wealth, says whether opening a pension plan makes sense depends on an individual's circumstances.
“It's not a one-time decision. There are ongoing compliance and administrative requirements. And there are restrictions on how you can get out of that in the future. So, making sure that you go into something like that with eyes wide open is really important to understand,” Ewing said.
As to how much the new capital gains tax rules will affect doctors, Ewing said it's too soon to tell.
“I think that it's premature at this stage to make any conclusions about what the impact would be,” Ewing said.
In a statement, the Canadian Medical Association echoed Ewing's comments, noting that opening a pension plan may make sense for some people.
“While certain individuals may benefit from an (individual pension plan), there are numerous variables to consider,” the CMA said, noting there are limitations to contributions that can be made.
The Liberal government has argued that the proposed changes to capital gains taxation are about fairness and levelling the playing field between those who earn their income via capital gains versus other sources, such as employment.
Physicians who incorporate their practices have historically benefited from lower tax rates that made it easier to save money in the first place.
Experts who help manage their financial affairs say many doctors take full advantage of registered retirement savings plans and tax-free savings accounts, which are not affected by capital gains taxation.
They also note that by incorporating their practices, they benefit from a lower tax rate - in Ontario, that's just 12 per cent on the first $500,000 of taxable income.
Trudeau and Finance Minister Chrystia Freeland have dismissed the doctors' plea to reconsider the capital gains tax changes, arguing the revenue the tax change generates is needed to fund things like housing and health care for all.
“I think Canada's health-care professionals recognize, maybe more than anyone else, how important these investments are,” Freeland said Tuesday.
“They are massive and I think it's entirely appropriate, it's really fair to ask those who are doing the best in our society to pay a little bit more to fund them.”
The government estimates only 0.13 per cent of Canadians in any given year will have to pay more in capital gains taxes as a result of the changes.
The federal government expects the increase to the inclusion rate to generate $19.4 billion in revenue over five years.
This report by The Canadian Press was first published April 25, 2024.
- The Canadian Medical Association funds a fellowship that supports journalism positions at The Canadian Press. CP is wholly responsible for the editorial content created under the initiative.
IN DEPTH
Budget 2024 prioritizes housing while taxing highest earners, deficit projected at $39.8B
In an effort to level the playing field for young people, in the 2024 federal budget, the government is targeting Canada's highest earners with new taxes in order to help offset billions in new spending to enhance the country's housing supply and social supports.
'One of the greatest': Former prime minister Brian Mulroney commemorated at state funeral
Prominent Canadians, political leaders, and family members remembered former prime minister and Progressive Conservative titan Brian Mulroney as an ambitious and compassionate nation-builder at his state funeral on Saturday.
'Democracy requires constant vigilance' Trudeau testifies at inquiry into foreign election interference in Canada
Prime Minister Justin Trudeau testified Wednesday before the national public inquiry into foreign interference in Canada's electoral processes, following a day of testimony from top cabinet ministers about allegations of meddling in the 2019 and 2021 federal elections. Recap all the prime minister had to say.
As Poilievre sides with Smith on trans restrictions, former Conservative candidate says he's 'playing with fire'
Siding with Alberta Premier Danielle Smith on her proposed restrictions on transgender youth, Conservative Leader Pierre Poilievre confirmed Wednesday that he is against trans and non-binary minors using puberty blockers.
Supports for passengers, farmers, artists: 7 bills from MPs and Senators to watch in 2024
When parliamentarians return to Ottawa in a few weeks to kick off the 2024 sitting, there are a few bills from MPs and senators that will be worth keeping an eye on, from a 'gutted' proposal to offer a carbon tax break to farmers, to an initiative aimed at improving Canada's DNA data bank.
Opinion
opinion Don Martin: Gusher of Liberal spending won't put out the fire in this dumpster
A Hail Mary rehash of the greatest hits from the Trudeau government’s three-week travelling pony-show, the 2024 federal budget takes aim at reversing the party’s popularity plunge in the under-40 set, writes political columnist Don Martin. But will it work before the next election?
opinion Don Martin: The doctor Trudeau dumped has a prescription for better health care
Political columnist Don Martin sat down with former federal health minister Jane Philpott, who's on a crusade to help fix Canada's broken health care system, and who declined to take any shots at the prime minister who dumped her from caucus.
opinion Don Martin: Trudeau's seeking shelter from the housing storm he helped create
While Justin Trudeau's recent housing announcements are generally drawing praise from experts, political columnist Don Martin argues there shouldn’t be any standing ovations for a prime minister who helped caused the problem in the first place.
opinion Don Martin: Poilievre has the field to himself as he races across the country to big crowds
It came to pass on Thursday evening that the confidentially predictable failure of the Official Opposition non-confidence motion went down with 204 Liberal, BQ and NDP nays to 116 Conservative yeas. But forcing Canada into a federal election campaign was never the point.
opinion Don Martin: How a beer break may have doomed the carbon tax hike
When the Liberal government chopped a planned beer excise tax hike to two per cent from 4.5 per cent and froze future increases until after the next election, says political columnist Don Martin, it almost guaranteed a similar carbon tax move in the offing.
CTVNews.ca Top Stories
Teen was doing homework at family's Mississauga, Ont. restaurant when gunman opened fire: testimony
The 13-year-old sister of a young man killed in the attack on her family’s Mississauga restaurant in 2021 took the stand in a Brampton courthouse on Monday to describe the terrifying moments of coming under fire.
'Repetitive partisan conduct': Conservatives to force vote on ousting Speaker Greg Fergus
The federal Conservatives have advanced a motion that will force MPs to vote on whether to oust Greg Fergus as House of Commons Speaker, after MPs' deputy adjudicator ruled Monday that the Liberal member's allegedly errant partisan event invite required urgent attention.
Trial for B.C. man accused of killing, dismembering wife begins
The trial for a Langley man accused of killing his wife began Monday, with the prosecutor laying out a disturbing series of facts agreed upon by both Crown and defence.
Stars roar back to win Game 3 over Oilers
Jason Robertson's hat-trick goal midway through the third period broke a deadlock and proved to be the eventual winner as the Dallas Stars beat the host Edmonton Oilers 5-3 in Game 3 of the Western Conference Final to take a 2-1 series lead.
What a CBSA strike could look like, according to an expert
Slowed or interrupted travel, the passing of goods and significantly restricted borders should be expected if Canadian border workers take upcoming strike action.
WATCH Alta. man rescues wild foal trapped on steep cliffside
A man's daring rescue of a newborn wild foal that was trapped after falling down a steep embankment was caught on video over the weekend.
Severe thunderstorms, tornado watch in some areas of Canada. Here's where
Depending on where you live, you can expect to get a mixed bag of weather this week, as local forecasts predict heavy rain, strong wind, severe thunderstorms and even snowfall across some areas of Canada.
B.C. senior prepares to move due to devastating effects of fraud
A Courtenay, B.C., senior is downsizing and packing to move as she comes to accept she can no longer afford to stay in her home, after falling victim to a scam that robbed her of her life savings worth more than $100,000.
Israel close to approving Gaza reunification program before Rafah invasion: Miller
Immigration Minister Marc Miller says Israel seemed to be on the verge of approving a program to get Palestinian relatives of Canadians out of the Gaza Strip before the country's invasion of the town of Rafah.
Local Spotlight
'Forgot how fun this was': Winnipeg man competing in World Pinball Championship
A Winnipeg pinball wizard is heading to the granddaddy of them all – the IFPA World Pinball Championship.
Ottawa U20 ultimate Frisbee players to represent Canada at world championships this summer
It’s the chance of a lifetime for a group of Ottawa athletes who are getting ready to represent Team Canada at the World Junior Ultimate championships in the United Kingdom.
140-year-old downtown Winnipeg church on brink of collapse
Parishioners at Holy Trinity Anglican Church are praying for a monetary miracle, as their historic place of worship could collapse at any moment.
'Inspires a sense of adventure': Sask. man conquers Mount Everest
A Saskatchewan man made it to the summit of Mount Everest earlier this month.
New gold mine in northern Ontario could become biggest in Canada
IAMGOLD’s Cote Gold open pit mine, located off Highway 144 between Timmins and Sudbury, had its official ribbon-cutting ceremony this week as production ramps up.
Pomp, circumstance, and Crocs: Barrie, Ont. couple's unforgettable day at Buckingham Palace
When one is extended an invitation to the Royal Garden Party in London, England, there's undoubtedly no shortage of pomp and circumstance. Barrie, Ont. natives Megan Kirk Chang and her husband Brandon experienced just that as they entered the prestigious event hosted at Buckingham Palace on Tuesday.
Tim Meadows pledges not to shave until the Oilers win the cup, who are the team's other famous fans?
An unlikely celebrity emerged from social media to cheer on the Edmonton Oilers as they face the Dallas Stars tonight in Game 1 of the Western Conference Finals.
'Near and dear to all filmmakers': Return of Regina's discount theatre bodes well for fans, movie makers alike
The proprietors of Regina's sole discount theatre are aware they're carrying on a significant legacy.
'Best experience ever': B.C. baker on making it to the finals of Netflix's 'Is it Cake?'
When Jujhar Mann said he wanted to be a pastry chef on a grade school career project, he didn't imagine that pursuing his dream would land him on a popular Netflix baking competition.