If you’re a physician or dentist earning six figures in Canada, you’re likely facing personal tax rates exceeding 50%. Operating as a sole proprietor or simply taking your income personally means you’re handing a big chunk of your earnings over to taxes every year.
Incorporating your medical or dental practice through a Canadian Controlled Private Corporation (CCPC) isn’t just about having a business structure — it’s about creating a powerful financial vehicle that helps you keep more of your income, grow wealth tax-efficiently, and protect your legacy. But to unlock these benefits, you need expert advice and strategic planning. That’s where Bison CPA LLP’s specialized team steps in.
Factors to Evaluate: Do You Need to Incorporate?
Before incorporating, consider these key factors to determine if it’s right for your situation:
- Income Level: Incorporation becomes more beneficial as your income rises, especially once you exceed personal tax brackets around 40-50%. Professionals earning six figures typically see substantial tax savings.
- Income Stability & Retention: If you don’t need to withdraw all your earnings immediately and can retain income in the corporation to grow tax-deferred, incorporation is usually advantageous.
- Business Expenses & Growth Plans: Having deductible business expenses or plans to expand your practice or investments makes a corporation more valuable for tax planning and asset protection.
- Family Income Splitting Opportunities: If you want to share income with family members legally and optimize your household tax burden, incorporating with trusts is essential to navigate CRA’s TOSI rules.
- Succession and Estate Planning: Planning to pass on your practice or wealth to heirs? Incorporation combined with estate freezes and holding companies can safeguard your legacy and reduce taxes on transfers.
- Professional Liability Risk: Incorporating can protect your personal assets from business liabilities — an important consideration in healthcare professions.
- Administrative Complexity & Costs: Corporations require annual filings, bookkeeping, and compliance costs. Ensure the tax and financial benefits outweigh the added administrative burden.
Discussing these factors with Bison CPA LLP helps clarify if incorporation suits your personal and professional goals.
Why Incorporation Makes a Huge Difference for High Income Earners
By incorporating, the first $500,000 of active business income is taxed at the small business rate — often around 12%–13% — compared to personal rates above 50%. This means you can leave money inside your corporation to grow tax-deferred, withdrawing only what you need personally, and dramatically reduce your overall tax burden.
Your corporation can also act as an investment vehicle, sheltering retained earnings from high personal tax rates and enabling access to advanced investment strategies, such as corporate-owned insurance, private lending, and real estate acquisition.
Tax Deferral: Keep More of Your Income Working for You
High Income Earners typically have fluctuating personal expenses and don’t always need to withdraw all of their earnings each year. Incorporation allows you to defer personal taxes by retaining income inside the corporation. This deferred income grows and compounds faster because it’s taxed at the lower corporate rate, giving you more capital to invest or use for practice expansion.
Income Splitting & Family Trusts: Navigate TOSI Rules with Confidence
Canada’s Tax on Split Income (TOSI) rules have complicated income splitting for professionals who want to share income with family members. However, through carefully structured family trusts, Bison CPA LLP helps you legally allocate dividends or capital gains to adult family members (age 25+) who meet CRA requirements.
This approach lowers your total household tax bill by shifting income to family members in lower tax brackets. Additionally, family trusts enable you to multiply the Lifetime Capital Gains Exemption (LCGE), potentially sheltering $2–3 million or more in tax-free gains when you eventually sell your practice.
Lifetime Capital Gains Exemption (LCGE): Save Millions When You Sell
Planning ahead to ensure your corporation qualifies as a “small business corporation” means your shares can benefit from the LCGE, which currently allows up to $1,016,836 in capital gains tax-free per individual.
With proper trust and share structuring, you can multiply this exemption across family members, significantly reducing tax when selling your medical or dental practice.
Asset Protection and Risk Management Tailored for Healthcare Professionals
Healthcare professionals face unique liability risks. Incorporating provides legal separation between your personal and business assets — safeguarding your personal wealth from professional risks.
We assist High Income Earners in setting up holding companies, corporate-owned insurance plans, and estate freeze strategies, helping protect assets and ensure a smooth succession or sale of your practice.
Advanced Retirement and Succession Planning
Corporations allow for more sophisticated retirement planning tools unavailable to sole proprietors, such as Individual Pension Plans (IPPs) that permit larger tax-deductible contributions than RRSPs.
Corporate-owned whole life insurance can provide tax-sheltered growth and fund your estate or buyouts. Estate freezes allow you to lock in the current value of your practice and transfer future growth to your heirs — a powerful tool for preserving family wealth.
Why Choose Bison CPA LLP?
At Bison CPA LLP, we specialize in working with physicians, dentists, IT contractors, and small business owners who want to do more than just incorporate — they want to build lasting wealth and protect their legacy.
Our expert team helps you:
• Design tax-efficient corporate structures
• Navigate the complexities of TOSI, LCGE, and income splitting
• Protect your assets and manage risks unique to healthcare
• Implement advanced retirement and succession plans
• Maximize tax deferral and investment opportunities inside your corporation
Ready to Make Your Corporation Work for You?
If you’re earning six figures and want to stop overpaying tax every year, it’s time to take control.
Book your free consultation with Bison CPA LLP today. Let’s turn your corporation into your most powerful financial asset.
Disclaimer: This blog is for informational purposes only and does not constitute tax advice. For personalized tax planning and advice tailored to your unique situation, please contact Bison CPA LLP directly.