If you are working in Canada as a Doctor, it is necessary to be aware with the ever-changing tax policies and regulations. Majority of doctor perform both via an integrated corporation or as sole proprietors.
In this article, we’ll assist you recognition nowadays on modifications affecting Canadian physicians and how you can file your tax returns for coming year by taking advantage of these changes. It is required to make sure you have an effective plan to counter ever changing tax landscape.
We introduced you a few excellent tips for Canadian doctors for creating a fool proof tax plan.
Categories of doctors working in Canada:
- Sole proprietor
- An incorporated MD
It is crucial to realize each type to decide in which category you fall and what sort of income tax return you need to file.
Sole Proprietor
Sole proprietor mean you are the owner of your own business (Self-Employed). As a sole proprietor you need to file a personal income tax return because your business and personal incomes are the same.
Incorporated MD
In incorporated MD you have set up a corporation. You need to file a corporate income tax return for your business, if you are an incorporated MD because it is a separate legal entity.
Form to file tax return:
T1 personal income tax return is required to file by both categories of doctors.
T1 personal income tax return contains:
- Employment income
- Business or professional income
- Rental income
- Investment income
- Any other source of income
T2 Corporation Income Tax Return is required to file if you are an incorporated MD because it is a separate legal entity.
Expenses that can be abstracted from taxes by doctors:
Few expenses that cab be abstracted from your tax returns are as follows:
- Professional fees
- Malpractice insurance
- Continuing medical education
- Lab expenses
- Office rent
How doctors can reduce taxable income:
Whether you are a sole proprietor or are incorporated, there are number of ways to reduce your taxable income. Few of them are as follows:
Sole Proprietor:
- charitable donations
- Abstracting optional expenses
- Claiming capital cost allowances on equipment
Incorporated (MD):
- Contributing to Individual Pension Plan
- Income splitting
- Claiming capital cost grant on equipment
- Abstracting optional expenses
Better know the recent changes to income splitting:
Previously doctors benefited from ripping financial gain with members of the family through the utilization of their incorporated entities. After recent changes in Tax rules and regulations it becomes difficult to file an income tax return but still few splitting possibilities may available. It is recommended to consult “Finnection” Professional Accountants to provide you with the best advice and guidance for your tax planning.
For consultancy and advisory of Taxes for Doctors in Canada, contact finnection via email at info@finnection.ca or call us at (647) 795-5462
Disclaimer: Above information is subject to change and represent the views of the author. It is shared for educational purposes only. Readers are advised to use their own judgement and seek specific professional advice before making any decision. Finnection Inc. is not liable for any actions taken by reader based on the information shared in this article. You may consult with us before using this information for any purpose.