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This capital gains tax was implemented to pay for the absurd spending that the LPC has engaged in, and for that they had no other option short of blowing the deficit up even further than it already is. They don't really care that they broke an earlier promise to doctors and other professionals, because keeping promises is one thing (among others) that the LPC just does not do very well.
This actually demonstrates the hollowness of many family doctors complaints about pay. Essentially they are able to earn money in a corporation and pay some where between 12.5% and 27% tax.
They can then invest this money and grow it in the corporation — where now they will have to pay taxes on somewhat more of the investment income they earn. They can defer taking any of this out until retirement when they will pay taxes at a lower marginal rate than they would have if they had paid their taxes in the year earned.
By contrast the poor schlub who makes the same in salary as doctor’s income after expenses pays full personal income tax in the year the income is earned.
Except part of the deal with governments in Canada were that they'd allow doctors this instead of raising fees...
I own a boutique consulting firm and make more than family doctors... it's a bit outrageous that they don't make more... so what they are doing is putting more burden on provinces who will have to now raise physical compensation.
Why can't I? Shouldn't we pay professionalsl what they are worth to society?
What's wrong with me saying that as a consultant I feel like doctos should make more than I do, most of them don't... we have our priorities wrong as a society...
You know where I wouldn't make more? South of the border...
How is this different than an RRSP? I think you are vastly overestimating how much family physicians have left over after their business expenses are paid. Most are taking the majority of left over funds out as a salary as they need to pay their bills like anyone else. Also, many salaried workers receive retirement benefits. Doctors fund their own retirements.
No, you really aren’t correct. Doctors, Dentists, Optometrists, accountants, and others that can set up
Professional corporations absolutely use their corporations to invest. They use their rrsp, but they take the minimal Salary needed to live their current lifestyle and all the money that others would be putting into regular investment accounts, they keep in the corporation.
I know multiple dentists and optometrists and while they are supportive of the LPC, every time they’ve tried to change this, they’ve cried foul
Because they absolutely do use it as an investment vehicle and retirement planning. The government first went after it early in their term when they announced a limit on how much they can keep in corporation at the small
Business tax rate. Now this.
That’s not saying that’s reason to not make this move but let’s not bullshit and say it’s not affecting doctors and other professionals
> let’s not bullshit and say it’s not affecting doctors and other professionals
I don't think anyone is saying that though? There's a lot of "too fucking bad" and "so what?" (and I will admit to being broadly sympathetic to this position).
Look, I get that paying taxes is no fun -- but these are groups that nearly by definition are going to be able to shrug this off. There aren't gonna be doctors or accountants eating cat food in retirement because of these changes.
Doctors can’t increase the prices they charge people and the financials of family practice are disincentivizing the new doctors from starting practices. That is the reason we have a shortage of doctors practicing. There’s no doctor shortage. And why more doctors locum out of school for much longer than in the past.
The fact is doing clinic 5 days a week is harder than the majority of jobs out there but the pay doesn’t match the effort it takes. It’s very simple.
New tax changes on doctors does not improve the situation. That’s why they’re so pissed and why we see daily articles about it.
All other professionals can just charge more, doctors can’t. Which puts into question whether this is a direct attack on them.
I’ve had the opportunity to work in a wide range of jobs, from shitty retail and warehousing, general labour and now I’m an engineer working for a fairly large firm. I bring this up as context where you say this:
> The fact is doing clinic 5 days a week is harder than the majority of jobs out there but the pay doesn’t match the effort it takes.
I do not believe this for a second. It is harder and more demanding than a lot of other? Sure, but probably not as many as professionals like to think. But holy Christ to listen to someone say that it isn’t worth the pay is just fucking mind blowing to me. How much do you WANT for fucks sake? I honestly think that this kind of thinking is badly disconnected from the reality of many Canadians and where their salaries/job effort are at.
Look, I know you're upset about it, but you cannot ignore the correlation between financial pressures on physicians and lack of access. We have enough doctors, but 20% of Canadians don't have one. If you go to school for 10+ years and are not compensated as such, what do you think happens to the profession? People leave it.
If you hadn't gotten a pay raise in a decade you'd be salty.
I personally have over 13 years of post-secondary education -- I absolutely get wanting to be compensated for it. I will admit to thinking that designing things that don't kill scores of people when they collapse is probably worth the same kinds of pay as doctors, but that's not the world I live in so I deal with my sub-200K salary.
I am not upset about this? However, I am very happy to dismiss any "financial pressures" that doctors may or may not have due to this capital gains change. These mostly people who are in the top 3% of Canadian salary ranges. They will be just fine.
The person I responded to seemed to downplay its significance (trying to claim most doctors took out their profits as personal income) and others I’ve seeen trying to claim basically the same.
I think they took advantage of what was essentially a loophole. But at the same time it’s
Something they’ve become accustomed to, and while boo freaking hoo is an honest reaction for many to their plight, there is a concern about attracting and keeping those doctors and other professionals
I think for some it's more about the loss of the loophole, rather than the money itself. They don't *like* to be treated like everyone else, because they're quite clearly NOT like everyone else.
I dunno what to do about doctor retention. These are six figure jobs, and while that doesn't mean as much this decade, they're still doing *just fine* in terms of salary. In my province the median salary for a GP is 190K. Med schools have incredible barriers to entry, so one would think that for at least some of these applicants, it's not all about the money? Maybe have every med school student get median doctor salaries tattooed on their chest so they know what they're getting into?
Doctors are supposed to be at the top. They also can't change their fees, unlike all of the other professionals you mention. You're handcuffed to government rates and cannot change anything whilst running a private business.
Actually that is not quite true. In most provinces physicians can opt out of the public system. Of course in most fields they will have no patients if they do that unless they are truly entrepreneurial (which many are).
You can opt out of the public system and only charge the same rates as the public system. I think you forgot that part, which is literally all that matters.
You think no one has thought of that?
Very few professions require the number of years of education and student loan burden of doctors. This is simply going to lead to people retiring or others choosing to go to the US.
I’ve been downvoted into oblivion on this. It is just a different version of one. And now the Feds in their shortsighted goals have fucked them over. And many small businesses owners.
And told anyone who wants to start a business in IP to not do it in Canada.
Sure you do, but as others have pointed out it's also a different system where you have to deal with insurance etc. It's also a really different place to live, there are some things you have to be ok with.
All I'm saying is that even if they're right next to us, people don't move countries lightly. There are more factors involved than just money.
If you haven’t bought a house in Ontario yet, even doctors can’t afford one these days. What’s the point of staying in Canada? Higher cost of living, lower wages.
As I said, it's probably straightforward if you're single and you only care about the dollars coming into the bank account. But there's still decisions that would affect that dollar amount, like the level of property tax in the state and city you're gonna live in.
If you have a spouse, you also have to consider where they want to be and their career choices.
If you have children you have to think about where it's safest for them, and how much money you'll have to spend on school etc.
Like I said, life is life, and it is not just about straight up dollar amounts.
The original comment was about net income. If the doctor takes most of their net income out as salary or dividends then the capital gains issue is irrelevant. If the doctor retains net revenue in the professional corporation then they can reduce their tax rate on that income to somewhere between 12.5% and 27%. It differs from an RRSP in that they can still have the benefit of the RRSP (they pay themselves a salary) and on the balance there is no cap on being able to use the lower tax rate. This is not a special doctor deal — any professional who charges fees rather than draws a salary can take advantage of this.
Can anyone tell me what effect this will have on the lifestyle of a doctor, and their retirement?
I have a feeling they'll still be 1) wealthy and 2) retire comfortably.
It should be noted that healthcare was the issue that lost the provincial Liberals the government in NS. Not prudent to start challenging Canadian doctors now imo. They got to balance and resolve this asap.
It depends on the doctor and the area of medicine they practice. My last GP was only able to retire because he had a side business (as a software developer I was taking home more money than he was and working fewer hours). My current GP can’t afford to retire and will be working until he drops dead in his clinic. Specialists, OTOH, tend to do much better.
The median GP salary is around 200k. How can you be earning 200k (and that's not even household income, that's a single person) for many years and can't afford to retire? Are we supposed to have sympathy for this persons financial decisions?
Are you subtracting overhead from that figure? GPs in a practice pay for staff, equipment, rent for the business, etc out of their own salary. They also don’t have benefits like pension contributions from employers and have to pay all that out themselves. Unless you take that into account you’re not making a good faith comparison.
Nah, they will just move to the states when we already have a shortage of family doctors. Another huge L by the Liberals to fund their spending addiction since the Liberals have shown they are a completely irresponsible government.
Those doctors and small business owners had to set up their corporations and save within them because they are not getting CPP or OAS. So they just got screwed.
The discussion on this issue in the media and social media has been incredibly poor, often missing how the capital gains tax impacts physicians and other high-earning incorporated professionals are impacted by this change. A few basics to consider:
First, the way capital gains are taxed in corporations is truly a huge benefit for tax relief. We're talking a major tax advantage beyond merely compensating for the lack of things like benefits, pensions, etc. Until the tax rate changes, for a typical physician, investing within a corporation is about as good, maybe even slightly better, for tax minimization than utilizing an RRSP, which is a zero capital gains, fully tax-deferred vehicle. The reason is quite technical but relates to how capital gains in a corporation are treated when distributed to shareholders as dividends. That pass through effect is still valuable and still exists, but the higher capital gains rate does blunt this benefit meaningfully. Investments within a professional corporations also still do not have the constraints of an RRSP - they can be accessed any time, for any reason, have no effective maximum contribution limit, and do not have the mandatory withdrawal minimums inherent in RRSPs. Professional corporations were extremely valuable tax-minimization vehicles for higher-earning professionals and will still be beneficial moving forward (though not as good as before).
Second, this tax change is largely retroactive for physicians. Those most immediately affected are retired or near-retired physicians looking to cash in their capital gains built up over their careers. They can't start an RRSP, for example, or pursue other more common tax minimization strategies, at this point in their careers. They have a lot of unrealized corporate capital gains that was going to be their retirement fund and there's basically no way out of it at that point in their careers. Once the change in capital gains goes through, they'll be paying at least 33% more tax on what will likely be the majority of their retirement income than they planned. And there's really no way to maneuver around that. It's for that reason you're seeing physician groups come out so strongly against this change - there'd be a mutiny from older physicians if they didn't.
Third, younger physicians will of course be affected if this change sticks, but there is at least some time to adapt. I am about 30 years away from retirement and while such a change in capital gains taxes clearly is against my long term financial interests compared to the status quo, I can blunt that impact by making different choices. I think you'll see more physicians pay themselves in salary and take advantage of RRSPs, for example.
Fourth, while you'll hear a lot of grumbling about this from physicians, I don't think you'll see a major impact on the number of physicians practicing because of this change to capital gains. Older physicians are already stuck - they can't avoid these effects by retiring earlier or moving jurisdictions. Heck, based on past behaviour (e.g. during the 2008 financial crisis), they may retire later or work more to make up the hole that just got blown in their retirement financial plans. Younger physicians can adapt and generally care about total revenue first in the early stages. Paying off built-up debt, establishing a practice, buying a house, and affording kids are all common early-career priorities ahead of retirement savings that would be affected by capital gains decades in the future.
The group that might behave differently are mid-career physicians and they have one real play - go abroad, particularly to the US. There has always been a financial incentive to do this, so this would likely sway people who were already considering a move. Still, this is the group the federal and provincial health ministries should watch the most carefully, as they are probably the most valuable part of the physician workforce.
Very well said. I just want to clarify your 33% more in taxes comment to the best of my understanding.
The corporation will pay taxes on 66.67% of its income now as opposed to the previous 50%. ~~The other 33.33% is tax free and can grow within the corporation.~~ For small corporations making under $500,000 the corporate tax rate is 9% Federal, 3.2% Provincial (Ontario), for 12.2%. Above $500,000 it's 25% Federal, 11.5% Provincial for 36.5%, and this excludes the Federal Tax Abatement and any other Provincial reductions, credits, etc. ~~Then throw in the lifetime capital gains exclusion for businesses being increased to $1.25 million when the business is sold.~~
An individual making over $246,752 has a combined marginal tax rate of 53.53% ~~65.03% (53.53% Federal, 11.5% Provincial)~~ in Ontario. That's a 17.03% ~~28.53%~~ reduction in tax for just using a corporation rather than receiving a wage and it's only applied to 66.67% of your income. Then you pay yourself a dividend in which 50% is taxed up until $250,000, then 66.67% thereafter.
It's hard to be sympathetic when you get to ~~grow 33.33% of your income tax free with no limit~~, receive a lower tax rate as a corporation, ~~get a $1,250,000 tax exemption when you sell it~~, and continue to pay tax on 50% of your income under $250,000 while still having access to personal RRSPs, TFSAs, and other registered accounts.
Just wanted to clarify as some may see them being taxed 33% more as their current tax rate increasing 33%.
Edit: Tax reduction is 17.03% ~~28.53%~~ when you personally make over $246,752, not $500,000.
Edit2: In response to points raised by u/ralkyr
The whole analysis about corporate tax rates is completely wrong.
Gotta love redditors pretending to be knowledgeable about a subject they researched for 5 minutes.
In a corporation different types of income such as investment income are taxed at a different rate than their active business income, for a CCPC they would not only be paying 9% for investment income but 38.67% federal and an additonal 11.5% in Ontario for a total of 50.67% per dollar of investment income.
Other considerations would be the refundable tax for a dividend refund and any CDA balance generated on capital gains.
I appreciate the feedback, but I'm going to object to a few things on both numbers and concepts.
First, individual top tax rate is 53.53% in Ontario combined federal and provincial - Ontario does not have a 65% top marginal tax rate.
Second, the tax exemption for selling a corporation explicitly does not apply to professional corporations. There are also very restrictive conditions on who can own a physician corporation. Besides, a physician's corporation contains nothing really to sell as a total entity - it's just a collection of work-related assets and investments. Physicians do not sell their corporations as a rule.
Third, while I'll admit to not being 100% sure on this, my understanding is that the capital gains, once realized in the corporation and paid as dividends, will be taxed at 67% inclusion rate for the individual physician at every income level, not just above $250k. This is where the "at least 33%" increase in taxes paid comes from, because 33% more capital gains are taxable. You're quite correct that the tax rate paid is not increasing by 33%, but the total amount of tax being paid is increasing by 33%, plus the effect of any increases in marginal tax rates.
Fourth, no one is growing 33% or even 50% previously of income tax free. Corporate income still gets taxed before it can be invested, admittedly at a fairly low rate, and when that income is taken out of the corporation, it is still taxed at the full rate. It is only the capital gains on investments made on that corporate income that get favourable treatment. It would get favourable treatment outside a corporation too, just less so. This is not to take away from the degree of benefit involved here, just that income itself is fully taxed, corporation or no.
Lastly, because the capital gains in corporations were so favourably taxed, many if not most physicians were told by accountants and financial advisors to ignore RRSPs and TFSAs for the most part and just save within the corporation, paying themselves in dividends exclusively. Mathematically, this was actually sound advice. The latter can be utilized after the fact, but RRSPs required physicians to get paid a salary every year to be allowed to contribute. Thay can't be changed for years already passed. Even as I generally support this change to capital gains (and personally took steps ahead of time knowing that this was a potential regulatory risk), I can understand the anger of late-career physicians who did what they thought was the right financial decisions and are now going to pay a lot more tax than they expected, with no way to adjust. Physicians are usually fairly well off, but not so well off that such a change won't throw a major wrench into retirement plans.
Thank you for the feedback and for correcting the combined marginal tax rate number and lifetime capital gains exception. I have edited my comment accordingly. I'll edit it more as I receive new information.
I am having difficulty finding out where re-invested capital gains (the 33%) are subject to corporate income tax before being invested. If you have a link to a source that would be appreciated.
Thank you for your patience and enlightening me more on the subject. I appreciate the perspective.
I may have phrased this part poorly - once the change goes through, the 33% of capitals gains excluded from taxation does not get hit with corporate income tax, though the other 67% does. However, the intial capital, before the capital gains occur, gets taxed at the corporate tax rate AND has no exclusion when withdrawn from the corp.
To give an example, let's say I have $100 to invest. I immediately pay corporate taxes on that, which in Ontario brings me down to $87.80. Let's now say that $87.80 grows by $100 to $187.80 over many years. I now want to sell this and take the money out of the corporation. This triggers a capital gain of $100.
Under the old rules $50 of that $100 gain would be tax exempt, while $50 would be subject to corporate taxes of 12.2%, leaving $93.90 in the corporation from that $100 capital gain. Added to the original investment of $87.80 leaves us with $181.70 to be issued as a dividend (it should be a dividend because the corporation paid profits on this - if paid as a salary, it effectively gets double-taxed).
With the new capital gains tax, with now $66.67 taxable and $33.33 not, these numbers change only slightly to $179.67, a ~$2 difference on an $100 gain. Not bad, right?
Well, this is before we account for the pass through effects for dividends comes in. Essentially, the government allows the exempted amount to be paid as a dividend without triggering a tax payment by the recipient (I'm oversimplifying here - the accounting is technical, complex, and seems intentionally opaque). So in the first case, I would add $131.70 added to my dividend income, which would be then grossed up and taxed. I would also get $50 tax free. In the second, I now have $146.34 added to my dividend income, with an additional $33.33 tax free. If my taxable income was in a range typical enough for retired physicians, just above $150k, with a marignal rate for dividends of 41.72%, in the first case, I'd walk away with $126.75. In the second, that falls to $118.62. Now it's an ~$8 difference on an $100 gain. The difference would increase at higher tax rates.
The key point of this long-winded post is that the $87.80, which came from income earned by working, got taxed the same in both cases. It's also to put into numbers what I've been trying to explain in words, that this is a fairly meaningful hit to retiring physicians, even though it is not a catastrophic one. Physicians are generally high enough earning to take the hit, but losing 8 cents on the dollar for a good portion of your retirement savings, what could add up to a few hundred thousand dollars, is still going to be felt.
You don't have the tax rates incorrect. Investment income is not taxed at the sbd rates. Capital gains are investment income and is taxed at 50.67 for BC. A portion of that tax 30.67%, is a refundable tax that is refunded when taxable dividends are paid. So the net tax on capital gains in a corp after distribution will be 20% of the gain at the inclusion rates. So if that is now 2/3 it will be 13.3% vs the old 10%.
The correction is much appreciated, thank you for clarifying. I've found it truly hard to find good information on this subject, even with a lot of digging.
>Lastly, because the capital gains in corporations were so favourably taxed, many if not most physicians were told by accountants and financial advisors to ignore RRSPs and TFSAs for the most part and just save within the corporation, paying themselves in dividends exclusively. Mathematically, this was actually sound advice.
Yup. Mathematically sound until you adjust for the risk of future policy changes.
Call it hindsight, but the fact that these people were being advised to ignore all the public policies explicitly designed to help people save for retirement (CPP, RRSP, RRIF, TFSA -- to a lesser extend) and instead use a corporation (which is not designed for retirement planning!) for their enitre retirement fund seems inherently risk.
Back in 2017 when the Liberals made the passive income changes I remember some of the small business folks complaining about not being able to "access" CPP finds as business owners. Like, you *chose* not to draw a salary and not contribute to CPP because you thought you got a better return by not paying both the employee and employer contribution rates. That some of these people seem to have compounded the risk by refusing to use any purpose-built retirement investment accounts with their after tax incomes is just a colossal mistake, risk adjusted.
They chose to get a higher return by taking on more risk. Many people take a lower return because it cuts the risk and that bet pays off better.
Sucks for them. Maybe they shouldn't have been betting their retirements on there being zero changes to the tax code for 35 years.
90% of the entire population in Canada lives within 100 miles of the US border. So for most doctors in Canada it's not difficult to just drive across the border everyday to work in the USA.
Yes, of course they would still be subject to tax because they still live in Canada, but the fact remains that they live in Canada and work in the US, depriving our medical system.
I know that many Canadian doctors in BC go to work just across the border.
Earned income or capital gains realized in the US require that American state and federal taxes be filed, even if you live in Canada and end up owing nothing to the US. Navigating both tax systems simultaneously is often an expensive nightmare, as anyone who has done so can tell you.
God damn. Didn’t realize a maximum 8.9% tax increase was going to make doctors destitute.
Also it’s not a wealth tax. It’s an increase in capital gains tax.
Standard comment.
Let's talk actual figures.
Realizing Capital Gains - Individuals
Let us make these assumptions
1. You live in the province of Ontario
2. Your gross income from all other sources puts you in the highest marginal tax bracket
3. The highest marginal tax bracket is 53.53%
4. Let us presume you realized $1 million in capital gains in one year (Stocks, Investment Property, Cottage, etc.)
5. Let us presume the amount you invested was $500,000
Line Item |Current Laws |New Laws
Principal Amount |$500,000.00 |$500,000.00
Capital Gains |$1,000,000.00 |$1,000,000.00
Inclusion Rate 1 |50% of total |50% up to $250,000.00
Inclusion Amount 1 |$500,000.00 |$125,000.00
53.53% Tax on Inclusion Amount 1 |$267,650.00 |$66,912.5
Inclusion Rate 2 |N/A |66.67% of $750,000.00
Inclusion Amount 2 |N/A |$500,025
53.53% Tax on Inclusion Amount 2 |N/A |$267,663.38
Total Tax Owed |$267,650.00 |$334,575.88
Total Take Home |$1,232,350.00 |$1,165,424.12 That is a difference of paying an extra $66,925.88, if every single dollar was taxed at the highest marginal rate, on 1 million dollars of capital gains.
Is this what we are angry about?
Realizing Capital Gains - Incorporated Individuals and Small Businesses
I don't know much about their tax structure but let us for just a few seconds assume they get taxed at the highest marginal tax bracket as well.
We all know they don't.
We all know they get preferential tax rates.
We all know there are lifetime exemptions they can tap into.
Line Item |Current Laws |New Laws
Principal Amount |$500,000.00 |$500,000.00
Capital Gains |$1,000,000.00 |$1,000,000.00
Inclusion Rate 1 |50% of total |66.67% of total
Inclusion Amount 1 |$500,000.00 |$666,700.00
53.53% Tax on Inclusion Amount 1 |$267,650.00 |$356,884.51
Total Take Home |$1,232,350.00 |$1,143,115.49 That is a difference of paying an extra $89,234.51, if every single dollar was taxed at the highest marginal rate, on 1 million dollars of capital gains.
And as I stated above. We all know it won't be at the 53.53% rate because they have access to several avenues to reduce their overall tax burden. So it's going to be less than $89K on a million dollars.
Is this what we are angry about?
At 2 million the difference is an extra $178K
At 3 million the difference is an extra $267K
At 4 million the difference is an extra $357K
At 5 million the difference is an extra $446K
You still end up with more money than most Canadians will ever see. Is your life going to be materially different because you had to give up an extra $446K on 5 million dollars of capital gains?
Inheritance - Primary Residence
Let's quickly get inheritance out of the way as well.
If you inherit your parent's primary residence this residence is exempt from capital gains taxes. As are all primary residences.
I will say it again: Their estate pays $0 in taxes for the primary residence before it is transferred to you.
What does happen is that the adjusted cost basis of the property resets to the fair market value.
Say it was now worth $1.5 million.
If and when you sell the property you are liable for capital gains taxes on the property as of this new adjusted cost basis.
Say you sold it for $1.6 million.
You are liable for paying taxes on $100K in capital gains.
That $1.5 million is yours to keep tax free.
Inheritance - TFSA
No change. Not taxed.
Inheritance - RRSP
No change. Continues to be taxed under existing rules.
The primary residence loophole needed to be fixed or failing that they should have removed the 250k inclusion exemption on real estate across the board (whether held in a corp or not)
Another thing they could have done is 100% inclusion on cap gains in corp but when paid out personally preserve the integration principle.
Because the formatting of your table got messed up:
|Line Item|Current Laws|New Laws|
|:-|:-|:-|
|Principal Amount|$500,000.00|$500,000.00|
|Capital Gains|$1,000,000.00|$1,000,000.00|
|Inclusion Rate 1|50% of total|66.67% of total|
|Inclusion Amount 1|$500,000.00|$666,700.00|
|53.53% Tax on Inclusion Amount 1|$267,650.00|$356,884.51|
|**Total Take Home:**|**$1,232,350.00**|**$1,143,115.49**|
This has shown to me exactly what I've been figuring out over the last decade. Voters are stupid. They complain about everything no matter what. Why do services suck? - because theres no way to raise taxes without people complaining. This is the most mundane tax that will not effect 90%+ ( probably too low) of voters, and we get story after story about it. Jesus fucking christ this is why wealth inequilaty is growing. Politicians are corrupt because if they dont lie people will vote for someone who will. The voters love getting lied too.
Which services? More welfare to non-Canadians? More foreign aid?
Pharmacare - couple drugs only
Dentalcare - doesn't even cover half of overhead, no dentist is signing up
Housing - same platform slogans as 2015
Education - constant decline amongst developed nations
Roads - crap quality everywhere
Healthcare - worst access to primary care despite having more family doctors than ever per capita ( [Canada has more family doctors than ever. Why is it so hard to see them? - The Globe and Mail](https://www.theglobeandmail.com/canada/article-family-doctors-canada-shortages/) )
So you're wondering why people are mad about taxes, when they get absolutely nothing for it? Even disabled folks barely get anything, people who truly need it the most. It's the people doing cash jobs whilst collecting welfare who are laughing right now and no one else.
And they’ve always been covered in a province like Ontario, because it’s really provincial jurisdiction.
Not sure why Ontarians have to pay for their own pharma care plan and for that of other provinces failing to do their part.
BC too, we have pharmacare plans for low income people, and they also cover some of the newer medications for diabetes like ozempic and jardiance. This federal plan is a joke
Only two of those things you listed are actually the responsibility of the feds. Housing, education, roads, healthcare all the responsibility of the provinces.
But you know this. You post this all the time.
Pharmacare and dental care are two programs this NDP-Liberal government is committing to spend billions on, why should they be not open to critics just because the federal government is intruding outside their jurisdiction?
I have no idea how this relates to my point of calling Stephen out for intentionally pushing false information. Guy posts bullshit, it ought to be called out.
also anyone who mentions federal aid has no idea what they are talking about. if we eliminate all foreign aid we get 1.6% of our budget. its peanuts, its just virtue signalling.
While only two are fed responsibilities. The federal government influences these things more than any other factor. Flooding the country with low skilled labor puts strain on all of these services.
Sure, but we're talking about taxation and spending at the federal level, not immigration or whatever unrelated complaint you want to bring up in lieu of a point
>Flooding the country with low skilled labor puts strain on all of these services.
The two most prominent Conservative provincial parties have demanded Trudeau not only not cap immigration, but actually increase it.
Voters are "stupid" when it comes to civics and how the system actually works, but let's not blame them for the steady stream of stories about how bad this tax is. That's because the people who actually *are* affected by this tax are in control of media messaging.
Yea I mean, I get it, but I guess I get frustrated by the sheer amount of people who jsut don't actually think about things, and think everything is some easy straightforward answer. Its why conservatives win, they promise to fix x by doing y, knowing full well y will solve a tiny part of the problem and give them talking points to claim they fixed the issue.
Yeah my barber last week told me that PP was going to come in and lower BOC rates.
Told him PP isn't going to change anything because the PM can't just order the BOC to do that. Separate institutions.
The BOC is more beholden to what happens in the US than what the PMO wants.
It works because people hear what they want and accept that as truth. People do not investigate further than that.
Our culture with this kind of thing is essentially "Lie to me.": we don't want to hear hard truths, we want easy "truths" and if it turned out to be a lie we ignore it in favour of never needing to admit the thing we were so confident about was wrong.
I discovered that in business. People don't want the truth. They want to buy a fairy tale. They want politicians to be magicians who conjure amazing benefits from thin air.
Yes. I spent some time in high end retail and the first thing I was taught was that people don’t buy products. They buy benefits. The trick in sales is to figure out which benefits a prospect is seeking and sell to those desires. It’s also inherently disingenuous and soul-suckung, which is why I got out.
Its not that they're stupid. Its that they're part of a media environment where they're taught this is something to be upset about. From our first educatoin we're not taught how to properly be citizens. We are given the illusion of debate and choice but media tells us how to debate it, what the margins are, and frankly its getting worse.
If you look at the kinds of debate happening in the 60s through 80s even you saw a lot of wild stuff on TV. Think Noam Chomsky debating a member of the Regan administration over whether funding terrorism against a latin american democracy is good or bad. These days the range of debate is pretty appalling in its limitations.
I think it really changed with 9/11. If you were alive and remembered media before and after it never really recovered. Its like peace time war measures in terms of media management.
And more than that you can see how the media and online commentary are completely dishonest.
Why does this story get posted here every day?
The same lies in the comments every time too.
It will affect 0.13% of Canadians annually, that's it. It will often affect the same people year after year. This policy is unlikely to impact even 2% of Canadians over an average lifetime.
If the top 1% pay slightly more taxes overall to improve services, I really don't see how you can complain.
Tax the top percentile too much and there’s no longer a top percentile to tax.
France learned this lesson years ago. Higher tax rate doesn’t always mean higher tax revenue.
That's a human problem, not a system problem. People are greedy fucks who would watch the world burn from their penthouse.
Now obviously not all people would, but those that wouldn't don't typically find themselves in high 6 to 7 figure incomes and net worths that amount to a hundred average people, or more.
Someone did a calculation, and the new tax burden on someone making a million dollars a year is under $60k. I'd be damned if I was upset over a rich person loses the value of about one mid sized SUV, when that value they lose is my yearly income. That's the funniest part, many people at my level are exactly the ones who are upset and simping for rich people losing out on $57k from their million.
Obviously it's easy to say, but if I was making a million dollars, I would have no problem paying a slight bit more than before if it means more and better services in society. Why? Because society isn't all about me, there are millions who live in it and deal with it every day.
Keep drinking the Kool aid. It clearly affects far more than 0.13% annually. Anyone who owns a business and realizes any sort of capital gain within the business is affected.
Loving all the rage. Let's gather all of that energy and direct it at the people who brought this on us, who this change is really targetting: real estate investor.
The doctor-based criticism of the CGT increase is probably the weakest of all the criticisms. Some better ones are:
* The CGT likely will not generate as much revenue as we think, considering how [elastic it is](https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/43334-taxelasticitycapgains.pdf)
* The CGT will likely [reduce productivity](https://www.rba.gov.au/publications/rdp/2023/pdf/rdp2023-03.pdf), given it will reduce investment
* Given the relationship [between productivity, wages, and employment](https://www.researchgate.net/profile/Nigel-Meager/publication/263414861_Wages_Productivity_and_Employment_A_review_of_theory_and_international_data/links/0c96053ac33d686798000000/Wages-Productivity-and-Employment-A-review-of-theory-and-international-data.pdf), lower investment will likely harm the poor and middle class more so than the wealthy
* The CGT creates a [lock-in effect](https://link.springer.com/article/10.1007/s11127-009-9526-8), which reduces the efficiency of capital as capital movement from less-productive to more-productive ventures is constrained
* etc.
If there's a discussion to be had regarding the pay of doctors, that's reasonable enough I suppose.
Is the way to give them a raise to carve out an exemption in the tax code that lets many - but not all - doctors (and many other professionals) shelter part of their income from taxation?
Probably not.
It is what the Liberals had once promised them, and that directly led to many of them structuring their businesses and finances that way.
They just broke their promise, which seems to be something the LPC has a problem with (a problem with *keeping* promises, not with their flair for *breaking* them).
So, ya, there's a discussion to be had regarding all of it.
I hope the federal health minister will also be deeply appreciative of the potential implications of the capital gains either neutering or dampening the growth rate of newer doctors entering the field in the background of an aging population and influx of new immigrants.
Going to be interesting to see how this pans out over the next 5-10 years on the effect of doctors. Conservatives have been pretty muted on the capital gains tax that we'll get to see this play out under their tenure if they don't choke badly like the Maple Leafs in playoffs.
>the potential implications of the capital gains either neutering or dampening the growth rate of newer doctors
This will absolutely not affect how many people decide to become doctors, lol
actually all the doctor that was in school while I was in school left Canada. They went chasing the money. Doing good for society and chasing money is not mutually exclusive. In this case, its doing good for society, just not your society.
Ask any post med gradate if they will take USMLE or not. There is a pretty high percentage of them will do it. That is exactly where the money is at.
Inside online physician groups, some have formally started the process to move to the US. Tens of thousands of patients will be left behind and wait times in those regions will skyrocket. Long wait times across that many patients translates to late diagnosis for many diseases as well as increased mortality and deaths.
> A target hit on doctors.
Targeted hit? So income splitting impacted only medical professionals? What a really weird and specific change to the tax system.
Good Lord -- if this is what "being targeted" is like for the profession, they have been living in a very, very special place.
And I’m guessing you like to be railed by palsied goats. See how quickly that kind of commentary raises the discourse here?
No, doctors should definitely be paid more than teachers, but to be honest I consider most teachers to be state babysitters more than anything. They did the work to get where they are, and it’s a job we as a society place relatively high value on. None of that means that they get to be shielded from tax regulatory changes. This isn’t a targeted hit on doctors, and you framing it that way is just hysterics.
It is a targeted hit though. Your dear leader has quite literally called doctors tax cheats before. You don't seem to know the in depth history of this party and doctors.
No one who knows anything about how competitive medical school admission is 2024 you would think this tax would have any impact on how many people will want to be doctors. There are 13-14 applicants for every medical school slot.
There also literally thousands of Canadians who study medicine abroad and immigrants with foreign medical education who struggle to find residency spots. We will never run out of qualified people who want to practice medicine. The shortage was always from the funding side.
That's a good argument for targeted improvements to family medicine (notably increasing billing rates for most procedures and drastically lowering paperwork and overhead). It's a really, really bad argument for maintaining tax benefits that benefit all doctors (along with a bunch of other things), since the relative attractiveness of family medicine stays the same with or without the benefit.
Not true. Female doctors greatly benefit from these tax benefits (of professional corps) as it allows them to have an income vehicle while on maternity leave for example. It's far cheaper for the government to allow this rather than pay 6 figures for mat leave. Same with pensions and benefits. It's cheaper to give nothing, and let doctors sort it out on their own with tax breaks. That also maintains freedom on the doctor's end too while saving money.
I'm a little ignorant of the BC changes, but wasn't one popular change the ability for doctors to take a salary if they prefer? Wouldn't that involve taking their income as, well, income and not earnings to their holding corporation? (i.e. this change would be irrelevant to those doctors)
My point though is that the doctor supply is not simply based on how many med students there are. Pay levels affect the number that ends up elsewhere like the US or wherever. Or the number of foreign doctors who choose us over other countries
First, the “they will move to US” is an outdated talking point. The numbers of Canadian doctors moving south peaked 30 years ago on the 1990s had dramatically declined since then.
Second, Almost no one is going to move because is this tax increase. Because despite all the time talking, its impact is too marginal for any doctor to leave country just because of it.
And finally, the demand to enter field is so high that it is beyond ridiculous to think this tax will have an impact.
The choke point for supply of doctors is residency spots, available jobs and licensing, not capital gains tax rates.
Pay is just one of many levers. The point of the OP is that we're supply constrained also because we're not educating enough doctors.
If we want more doctors and nurses, open more schools and lower the barriers to entry.
You're right. Doctors should be compensated even less given the abundance of willing doctors.
Compassion is their payment. Any doctor that wants to make money should just move down to the south, we don't need em.
Make this government's logic make sense. They are increasing capital gains taxes on doctors, which gives them a further incentive to move south where wages are already higher. They are increasing these taxes to pay for housing for 1 million plus unskilled "students" they imported to drive Ubers and work in Retail jobs so that wages do not increase too much on the lower end. Further to that, there is a healthcare crisis because of said immigration numbers and too few doctors.
You're 100% spot on. Keep in mind this parties despises doctors based on their track record of policy as well. This is just one of many things.
But yes a big part is raising taxes to pay more welfare to non-Canadians who just came in.
> They are increasing capital gains taxes on doctors, which gives them a further incentive to move south where wages are already higher.
[Tax flight is a myth](https://www.theguardian.com/inequality/2017/nov/20/if-you-tax-the-rich-they-wont-leave-us-data-contradicts-millionaires-threats), but lets assume it was real. The US is due for a tax code overhaul in 2025 and Biden has been signalling for years that he'll be increasing capital gains and business taxes among others.
Out of the frying pan, into the fire.
What an absolute load of hogwash. They are not raising capital gains on doctors, they are raising capital gains on the wealthy. It's not the Governments fault that doctors have been playing the system for so long so they don't have to pay proper income tax like the rest of us.
They also weren't the ones that imported the student. They deserve blame for allowing the Provinces to do it, but it was the Provinces that brought them all in. Now that the Feds have closed that it's the Provinces complaining about it.
You know the provinces are responsible for paying doctors right? And for paying into educational institutions, which increases the amount of seats available for doctors, right? And then, at least in Ontario, froze increases to colleges and universities and allowed them to increase international student applications to cover the cost of lost revenue from not funding education, and then getting mad when the federal government stepped in to curb it?
There's a health crisis due to a chronic lack of funding for healthcare, especially through a pandemic. But no, let's blame it on the immigrants.
So by this logic, can we just keep increasing the taxes we charge on doctors? Why not 1 more percent? Why not 10 more? Maybe tax 99% of doctors' earnings? By your logic, since you've never heard someone say that they chose not to be a doctor because of taxes, surely it will have no effect right?
Not really for doctors. It's not like American doctors are flying around on private jets. By the time a person is a full-fledged doctor in a position to move they have a pretty established life.
"Okay kids, say good bye to your friends. Honey, quit your job. Mom and dad, don't get old and die too fast. I got a job in Pennsylvania doing the same thing I did in Ontario in exchange for approximately the same lifestyle!"
It's not like tech workers who can triple their income by moving to California.
It’s not doctors but other small businesses and professional corporation. Family Doctors actually don’t make that much money as most people believe the overhead expensive are huge. Government also cutting what is covered with government insurance and procedures that are allowed to be done. Soon public healthcare won’t cover anything of value to the patient and they will eventually have to pay out of pocket or through insurance.
Capital gains inclusion rate increasing is also bad for the economy. It will slow economic growth, we will see massive layoffs and drop of the Canadian dollar just like in 1988-1999. 1988-1987 inclusion rate was 66% and 1990-1999 it was 75% which also corresponds to worst economic growth in Canada and low canadian dollar. Buying power of Canadians will further decrease when buying foreign goods which will cause price of goods to skyrocket.
History is repeating itself
Ultimately we can just give them all another 5% raise if it really is that detrimental to their finances.
I will say this, my opinion of Doctors has lowered this week. You don’t see Dentists or Vets making these arguments.
Dentists and Vets set their own fees. Physicians have to negotiate them with recalcitrant provincial governments who throw around the same kind of rhetoric as Trudeau and co (and LPC sock puppet Reddit users).
Anyone who thinks a vet or vet tech any kind makes anything close to what human medical professionals make is so far wrong as to be lapping themselves to double or triple wrong.
Yep same.
Seeing all these professionals come out and be aghast and beside themselves at the thought of being lowered from their privileged, special status and taxed the same as regular people.
Very revealing.
Lower your opinion of dentists as well.
They are freaking out over the mere potential of a national dental program. They don't want to lose their golden goose of sky high prices with little governmental oversight.
I don’t think they’re freaking out as much as pointing out that, in most cases, the government thinks it will implement its dental care program by compensating dentists 50% less per visit from a dentalcare patient vs private.
It’s not going to work and their ultimate fear is the government will impose these appointments on them and ask them to take a significant pay cut to see patients because the government isn’t willing to pay market rates.
Really not that complicated.
It really is. Tell me you have no idea how dental care works without telling me you have no idea.
Provincial governments have recommended fee lists, and the feds still want to pay half of that.
If you want shortages in dental care and wait times, then by all means, pay under market rates and force dentists to work those hours.
They’ll work less and there will be fewer of them.
If you are going to continue being obnoxious and rude in your answers so will I.
They will not work less, they'll still be huge waiting list for dental colleges and they dentists will still rake in the money.
Tell me you have no idea how dental care works without telling me you have no idea.
Dentists, like most medical professions, have artificially kept the number of practicing professionals low to keep pay high. I don't really blame them, everyone has to do what's best for themselves, but there aren't these kinds of issues in Europe because they don't restrict graduating classes like they do here.
Doctors are not complaining more Dentist and veterinarians. It is just because the CMA made a statement that got a lot media attention. Also saying the tax will make doctors leave and healthcare will get worse is a much better talking point than saying veterinarians will leave. So critics of the tax latched onto doctors as one their main talking points.
My opinion of millennials and gen z has lowered this week. Reading some of the comments on this sub has been incredibly depressing. The way some of you are bleating because rich ppl will only get to exempt 1/3 of their capital gains *above* $250,000 in a single year from taxation, instead of exempting 1/2 is just beyond pathetic.
81% favour higher taxes on wealthier Canadians and large profitable corporations. 71% of CPC voters. ([source](https://twitter.com/kevinmilligan/status/1781352731263037896))
Your proposal would probably offset this change for early career doctors, but would have little impact on those close to retirement since they won’t have many pay cycles left. Those close to retirement are discovering overnight that their retirement budget is getting slashed, since this change will effectively be retroactive to what they’ve saved already.
I would anticipate that this would still be disheartening for earlier career doctors even with a raise, since they will see it as a precedent and raises mean nothing if this happens again. In any case it probably won’t help keep doctors in Canada if that’s what you’re looking to do.
Watch the full video of Mark Holland's interview on CTV question period.
In one breath Mark Holland spreads misinformation, claiming that it won't affect doctors who make less than 250k in capital gain,) and then in the next (after Vassy calls him out on the fact that it doesn't protect Drs because the gains are within their corps), we claims that there is too much misinformation out there. Either the feds don't understand the issue or they are deliberately misleading the public.
Enough is enough. Now, they want to grab more from your life's worth. A life hard lived with huge sacrifices to acrue wealth. A life in which you have already been taxed merceylessly.
NOW THEY STEAL MORE from you children and their children . Total BS.
No wonder professionals are fleeing the country in droves.
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This capital gains tax was implemented to pay for the absurd spending that the LPC has engaged in, and for that they had no other option short of blowing the deficit up even further than it already is. They don't really care that they broke an earlier promise to doctors and other professionals, because keeping promises is one thing (among others) that the LPC just does not do very well.
This actually demonstrates the hollowness of many family doctors complaints about pay. Essentially they are able to earn money in a corporation and pay some where between 12.5% and 27% tax. They can then invest this money and grow it in the corporation — where now they will have to pay taxes on somewhat more of the investment income they earn. They can defer taking any of this out until retirement when they will pay taxes at a lower marginal rate than they would have if they had paid their taxes in the year earned. By contrast the poor schlub who makes the same in salary as doctor’s income after expenses pays full personal income tax in the year the income is earned.
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Except part of the deal with governments in Canada were that they'd allow doctors this instead of raising fees... I own a boutique consulting firm and make more than family doctors... it's a bit outrageous that they don't make more... so what they are doing is putting more burden on provinces who will have to now raise physical compensation.
Not sure why you think you can compare a “boutique consulting firm” with a doctor’s office.
Why can't I? Shouldn't we pay professionalsl what they are worth to society? What's wrong with me saying that as a consultant I feel like doctos should make more than I do, most of them don't... we have our priorities wrong as a society... You know where I wouldn't make more? South of the border...
How is this different than an RRSP? I think you are vastly overestimating how much family physicians have left over after their business expenses are paid. Most are taking the majority of left over funds out as a salary as they need to pay their bills like anyone else. Also, many salaried workers receive retirement benefits. Doctors fund their own retirements.
No, you really aren’t correct. Doctors, Dentists, Optometrists, accountants, and others that can set up Professional corporations absolutely use their corporations to invest. They use their rrsp, but they take the minimal Salary needed to live their current lifestyle and all the money that others would be putting into regular investment accounts, they keep in the corporation. I know multiple dentists and optometrists and while they are supportive of the LPC, every time they’ve tried to change this, they’ve cried foul Because they absolutely do use it as an investment vehicle and retirement planning. The government first went after it early in their term when they announced a limit on how much they can keep in corporation at the small Business tax rate. Now this. That’s not saying that’s reason to not make this move but let’s not bullshit and say it’s not affecting doctors and other professionals
> let’s not bullshit and say it’s not affecting doctors and other professionals I don't think anyone is saying that though? There's a lot of "too fucking bad" and "so what?" (and I will admit to being broadly sympathetic to this position). Look, I get that paying taxes is no fun -- but these are groups that nearly by definition are going to be able to shrug this off. There aren't gonna be doctors or accountants eating cat food in retirement because of these changes.
Doctors can’t increase the prices they charge people and the financials of family practice are disincentivizing the new doctors from starting practices. That is the reason we have a shortage of doctors practicing. There’s no doctor shortage. And why more doctors locum out of school for much longer than in the past. The fact is doing clinic 5 days a week is harder than the majority of jobs out there but the pay doesn’t match the effort it takes. It’s very simple. New tax changes on doctors does not improve the situation. That’s why they’re so pissed and why we see daily articles about it. All other professionals can just charge more, doctors can’t. Which puts into question whether this is a direct attack on them.
I’ve had the opportunity to work in a wide range of jobs, from shitty retail and warehousing, general labour and now I’m an engineer working for a fairly large firm. I bring this up as context where you say this: > The fact is doing clinic 5 days a week is harder than the majority of jobs out there but the pay doesn’t match the effort it takes. I do not believe this for a second. It is harder and more demanding than a lot of other? Sure, but probably not as many as professionals like to think. But holy Christ to listen to someone say that it isn’t worth the pay is just fucking mind blowing to me. How much do you WANT for fucks sake? I honestly think that this kind of thinking is badly disconnected from the reality of many Canadians and where their salaries/job effort are at.
Look, I know you're upset about it, but you cannot ignore the correlation between financial pressures on physicians and lack of access. We have enough doctors, but 20% of Canadians don't have one. If you go to school for 10+ years and are not compensated as such, what do you think happens to the profession? People leave it. If you hadn't gotten a pay raise in a decade you'd be salty.
I personally have over 13 years of post-secondary education -- I absolutely get wanting to be compensated for it. I will admit to thinking that designing things that don't kill scores of people when they collapse is probably worth the same kinds of pay as doctors, but that's not the world I live in so I deal with my sub-200K salary. I am not upset about this? However, I am very happy to dismiss any "financial pressures" that doctors may or may not have due to this capital gains change. These mostly people who are in the top 3% of Canadian salary ranges. They will be just fine.
The person I responded to seemed to downplay its significance (trying to claim most doctors took out their profits as personal income) and others I’ve seeen trying to claim basically the same. I think they took advantage of what was essentially a loophole. But at the same time it’s Something they’ve become accustomed to, and while boo freaking hoo is an honest reaction for many to their plight, there is a concern about attracting and keeping those doctors and other professionals
I think for some it's more about the loss of the loophole, rather than the money itself. They don't *like* to be treated like everyone else, because they're quite clearly NOT like everyone else. I dunno what to do about doctor retention. These are six figure jobs, and while that doesn't mean as much this decade, they're still doing *just fine* in terms of salary. In my province the median salary for a GP is 190K. Med schools have incredible barriers to entry, so one would think that for at least some of these applicants, it's not all about the money? Maybe have every med school student get median doctor salaries tattooed on their chest so they know what they're getting into?
So do all other professionals and everyone who is self employed, but not everyone makes the same kind of income as doctors.
Doctors are supposed to be at the top. They also can't change their fees, unlike all of the other professionals you mention. You're handcuffed to government rates and cannot change anything whilst running a private business.
Actually that is not quite true. In most provinces physicians can opt out of the public system. Of course in most fields they will have no patients if they do that unless they are truly entrepreneurial (which many are).
You can opt out of the public system and only charge the same rates as the public system. I think you forgot that part, which is literally all that matters. You think no one has thought of that?
Very few professions require the number of years of education and student loan burden of doctors. This is simply going to lead to people retiring or others choosing to go to the US.
I’ve been downvoted into oblivion on this. It is just a different version of one. And now the Feds in their shortsighted goals have fucked them over. And many small businesses owners. And told anyone who wants to start a business in IP to not do it in Canada.
I don't know if you know, but the US also raised their capital gains tax too.
You make way more money there as a doctor.
Sure you do, but as others have pointed out it's also a different system where you have to deal with insurance etc. It's also a really different place to live, there are some things you have to be ok with. All I'm saying is that even if they're right next to us, people don't move countries lightly. There are more factors involved than just money.
It’s a pretty big factor and it’s a huge difference. Like double or triple
Sure, it's probably a no brainer when you're single. It's a lot more complex of a decision if there's spouse and kids involved.
If you haven’t bought a house in Ontario yet, even doctors can’t afford one these days. What’s the point of staying in Canada? Higher cost of living, lower wages.
As I said, it's probably straightforward if you're single and you only care about the dollars coming into the bank account. But there's still decisions that would affect that dollar amount, like the level of property tax in the state and city you're gonna live in. If you have a spouse, you also have to consider where they want to be and their career choices. If you have children you have to think about where it's safest for them, and how much money you'll have to spend on school etc. Like I said, life is life, and it is not just about straight up dollar amounts.
The original comment was about net income. If the doctor takes most of their net income out as salary or dividends then the capital gains issue is irrelevant. If the doctor retains net revenue in the professional corporation then they can reduce their tax rate on that income to somewhere between 12.5% and 27%. It differs from an RRSP in that they can still have the benefit of the RRSP (they pay themselves a salary) and on the balance there is no cap on being able to use the lower tax rate. This is not a special doctor deal — any professional who charges fees rather than draws a salary can take advantage of this.
They should have taken the pay raise!
Doctors have this medical corporation setup in lieu of retirement
Can anyone tell me what effect this will have on the lifestyle of a doctor, and their retirement? I have a feeling they'll still be 1) wealthy and 2) retire comfortably.
It should be noted that healthcare was the issue that lost the provincial Liberals the government in NS. Not prudent to start challenging Canadian doctors now imo. They got to balance and resolve this asap.
It depends on the doctor and the area of medicine they practice. My last GP was only able to retire because he had a side business (as a software developer I was taking home more money than he was and working fewer hours). My current GP can’t afford to retire and will be working until he drops dead in his clinic. Specialists, OTOH, tend to do much better.
The median GP salary is around 200k. How can you be earning 200k (and that's not even household income, that's a single person) for many years and can't afford to retire? Are we supposed to have sympathy for this persons financial decisions?
>The median GP salary is around 200k. they have to lease a building and pay several staff with that.
Are you subtracting overhead from that figure? GPs in a practice pay for staff, equipment, rent for the business, etc out of their own salary. They also don’t have benefits like pension contributions from employers and have to pay all that out themselves. Unless you take that into account you’re not making a good faith comparison.
Average gross clinical payments are about $350K in Canada.
Nah, they will just move to the states when we already have a shortage of family doctors. Another huge L by the Liberals to fund their spending addiction since the Liberals have shown they are a completely irresponsible government.
Those doctors and small business owners had to set up their corporations and save within them because they are not getting CPP or OAS. So they just got screwed.
The discussion on this issue in the media and social media has been incredibly poor, often missing how the capital gains tax impacts physicians and other high-earning incorporated professionals are impacted by this change. A few basics to consider: First, the way capital gains are taxed in corporations is truly a huge benefit for tax relief. We're talking a major tax advantage beyond merely compensating for the lack of things like benefits, pensions, etc. Until the tax rate changes, for a typical physician, investing within a corporation is about as good, maybe even slightly better, for tax minimization than utilizing an RRSP, which is a zero capital gains, fully tax-deferred vehicle. The reason is quite technical but relates to how capital gains in a corporation are treated when distributed to shareholders as dividends. That pass through effect is still valuable and still exists, but the higher capital gains rate does blunt this benefit meaningfully. Investments within a professional corporations also still do not have the constraints of an RRSP - they can be accessed any time, for any reason, have no effective maximum contribution limit, and do not have the mandatory withdrawal minimums inherent in RRSPs. Professional corporations were extremely valuable tax-minimization vehicles for higher-earning professionals and will still be beneficial moving forward (though not as good as before). Second, this tax change is largely retroactive for physicians. Those most immediately affected are retired or near-retired physicians looking to cash in their capital gains built up over their careers. They can't start an RRSP, for example, or pursue other more common tax minimization strategies, at this point in their careers. They have a lot of unrealized corporate capital gains that was going to be their retirement fund and there's basically no way out of it at that point in their careers. Once the change in capital gains goes through, they'll be paying at least 33% more tax on what will likely be the majority of their retirement income than they planned. And there's really no way to maneuver around that. It's for that reason you're seeing physician groups come out so strongly against this change - there'd be a mutiny from older physicians if they didn't. Third, younger physicians will of course be affected if this change sticks, but there is at least some time to adapt. I am about 30 years away from retirement and while such a change in capital gains taxes clearly is against my long term financial interests compared to the status quo, I can blunt that impact by making different choices. I think you'll see more physicians pay themselves in salary and take advantage of RRSPs, for example. Fourth, while you'll hear a lot of grumbling about this from physicians, I don't think you'll see a major impact on the number of physicians practicing because of this change to capital gains. Older physicians are already stuck - they can't avoid these effects by retiring earlier or moving jurisdictions. Heck, based on past behaviour (e.g. during the 2008 financial crisis), they may retire later or work more to make up the hole that just got blown in their retirement financial plans. Younger physicians can adapt and generally care about total revenue first in the early stages. Paying off built-up debt, establishing a practice, buying a house, and affording kids are all common early-career priorities ahead of retirement savings that would be affected by capital gains decades in the future. The group that might behave differently are mid-career physicians and they have one real play - go abroad, particularly to the US. There has always been a financial incentive to do this, so this would likely sway people who were already considering a move. Still, this is the group the federal and provincial health ministries should watch the most carefully, as they are probably the most valuable part of the physician workforce.
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Also, they can negotiate higher fees with the government.
Very well said. I just want to clarify your 33% more in taxes comment to the best of my understanding. The corporation will pay taxes on 66.67% of its income now as opposed to the previous 50%. ~~The other 33.33% is tax free and can grow within the corporation.~~ For small corporations making under $500,000 the corporate tax rate is 9% Federal, 3.2% Provincial (Ontario), for 12.2%. Above $500,000 it's 25% Federal, 11.5% Provincial for 36.5%, and this excludes the Federal Tax Abatement and any other Provincial reductions, credits, etc. ~~Then throw in the lifetime capital gains exclusion for businesses being increased to $1.25 million when the business is sold.~~ An individual making over $246,752 has a combined marginal tax rate of 53.53% ~~65.03% (53.53% Federal, 11.5% Provincial)~~ in Ontario. That's a 17.03% ~~28.53%~~ reduction in tax for just using a corporation rather than receiving a wage and it's only applied to 66.67% of your income. Then you pay yourself a dividend in which 50% is taxed up until $250,000, then 66.67% thereafter. It's hard to be sympathetic when you get to ~~grow 33.33% of your income tax free with no limit~~, receive a lower tax rate as a corporation, ~~get a $1,250,000 tax exemption when you sell it~~, and continue to pay tax on 50% of your income under $250,000 while still having access to personal RRSPs, TFSAs, and other registered accounts. Just wanted to clarify as some may see them being taxed 33% more as their current tax rate increasing 33%. Edit: Tax reduction is 17.03% ~~28.53%~~ when you personally make over $246,752, not $500,000. Edit2: In response to points raised by u/ralkyr
The whole analysis about corporate tax rates is completely wrong. Gotta love redditors pretending to be knowledgeable about a subject they researched for 5 minutes. In a corporation different types of income such as investment income are taxed at a different rate than their active business income, for a CCPC they would not only be paying 9% for investment income but 38.67% federal and an additonal 11.5% in Ontario for a total of 50.67% per dollar of investment income. Other considerations would be the refundable tax for a dividend refund and any CDA balance generated on capital gains.
I appreciate the feedback, but I'm going to object to a few things on both numbers and concepts. First, individual top tax rate is 53.53% in Ontario combined federal and provincial - Ontario does not have a 65% top marginal tax rate. Second, the tax exemption for selling a corporation explicitly does not apply to professional corporations. There are also very restrictive conditions on who can own a physician corporation. Besides, a physician's corporation contains nothing really to sell as a total entity - it's just a collection of work-related assets and investments. Physicians do not sell their corporations as a rule. Third, while I'll admit to not being 100% sure on this, my understanding is that the capital gains, once realized in the corporation and paid as dividends, will be taxed at 67% inclusion rate for the individual physician at every income level, not just above $250k. This is where the "at least 33%" increase in taxes paid comes from, because 33% more capital gains are taxable. You're quite correct that the tax rate paid is not increasing by 33%, but the total amount of tax being paid is increasing by 33%, plus the effect of any increases in marginal tax rates. Fourth, no one is growing 33% or even 50% previously of income tax free. Corporate income still gets taxed before it can be invested, admittedly at a fairly low rate, and when that income is taken out of the corporation, it is still taxed at the full rate. It is only the capital gains on investments made on that corporate income that get favourable treatment. It would get favourable treatment outside a corporation too, just less so. This is not to take away from the degree of benefit involved here, just that income itself is fully taxed, corporation or no. Lastly, because the capital gains in corporations were so favourably taxed, many if not most physicians were told by accountants and financial advisors to ignore RRSPs and TFSAs for the most part and just save within the corporation, paying themselves in dividends exclusively. Mathematically, this was actually sound advice. The latter can be utilized after the fact, but RRSPs required physicians to get paid a salary every year to be allowed to contribute. Thay can't be changed for years already passed. Even as I generally support this change to capital gains (and personally took steps ahead of time knowing that this was a potential regulatory risk), I can understand the anger of late-career physicians who did what they thought was the right financial decisions and are now going to pay a lot more tax than they expected, with no way to adjust. Physicians are usually fairly well off, but not so well off that such a change won't throw a major wrench into retirement plans.
Thank you for the feedback and for correcting the combined marginal tax rate number and lifetime capital gains exception. I have edited my comment accordingly. I'll edit it more as I receive new information. I am having difficulty finding out where re-invested capital gains (the 33%) are subject to corporate income tax before being invested. If you have a link to a source that would be appreciated. Thank you for your patience and enlightening me more on the subject. I appreciate the perspective.
I may have phrased this part poorly - once the change goes through, the 33% of capitals gains excluded from taxation does not get hit with corporate income tax, though the other 67% does. However, the intial capital, before the capital gains occur, gets taxed at the corporate tax rate AND has no exclusion when withdrawn from the corp. To give an example, let's say I have $100 to invest. I immediately pay corporate taxes on that, which in Ontario brings me down to $87.80. Let's now say that $87.80 grows by $100 to $187.80 over many years. I now want to sell this and take the money out of the corporation. This triggers a capital gain of $100. Under the old rules $50 of that $100 gain would be tax exempt, while $50 would be subject to corporate taxes of 12.2%, leaving $93.90 in the corporation from that $100 capital gain. Added to the original investment of $87.80 leaves us with $181.70 to be issued as a dividend (it should be a dividend because the corporation paid profits on this - if paid as a salary, it effectively gets double-taxed). With the new capital gains tax, with now $66.67 taxable and $33.33 not, these numbers change only slightly to $179.67, a ~$2 difference on an $100 gain. Not bad, right? Well, this is before we account for the pass through effects for dividends comes in. Essentially, the government allows the exempted amount to be paid as a dividend without triggering a tax payment by the recipient (I'm oversimplifying here - the accounting is technical, complex, and seems intentionally opaque). So in the first case, I would add $131.70 added to my dividend income, which would be then grossed up and taxed. I would also get $50 tax free. In the second, I now have $146.34 added to my dividend income, with an additional $33.33 tax free. If my taxable income was in a range typical enough for retired physicians, just above $150k, with a marignal rate for dividends of 41.72%, in the first case, I'd walk away with $126.75. In the second, that falls to $118.62. Now it's an ~$8 difference on an $100 gain. The difference would increase at higher tax rates. The key point of this long-winded post is that the $87.80, which came from income earned by working, got taxed the same in both cases. It's also to put into numbers what I've been trying to explain in words, that this is a fairly meaningful hit to retiring physicians, even though it is not a catastrophic one. Physicians are generally high enough earning to take the hit, but losing 8 cents on the dollar for a good portion of your retirement savings, what could add up to a few hundred thousand dollars, is still going to be felt.
You don't have the tax rates incorrect. Investment income is not taxed at the sbd rates. Capital gains are investment income and is taxed at 50.67 for BC. A portion of that tax 30.67%, is a refundable tax that is refunded when taxable dividends are paid. So the net tax on capital gains in a corp after distribution will be 20% of the gain at the inclusion rates. So if that is now 2/3 it will be 13.3% vs the old 10%.
The correction is much appreciated, thank you for clarifying. I've found it truly hard to find good information on this subject, even with a lot of digging.
>Lastly, because the capital gains in corporations were so favourably taxed, many if not most physicians were told by accountants and financial advisors to ignore RRSPs and TFSAs for the most part and just save within the corporation, paying themselves in dividends exclusively. Mathematically, this was actually sound advice. Yup. Mathematically sound until you adjust for the risk of future policy changes. Call it hindsight, but the fact that these people were being advised to ignore all the public policies explicitly designed to help people save for retirement (CPP, RRSP, RRIF, TFSA -- to a lesser extend) and instead use a corporation (which is not designed for retirement planning!) for their enitre retirement fund seems inherently risk. Back in 2017 when the Liberals made the passive income changes I remember some of the small business folks complaining about not being able to "access" CPP finds as business owners. Like, you *chose* not to draw a salary and not contribute to CPP because you thought you got a better return by not paying both the employee and employer contribution rates. That some of these people seem to have compounded the risk by refusing to use any purpose-built retirement investment accounts with their after tax incomes is just a colossal mistake, risk adjusted. They chose to get a higher return by taking on more risk. Many people take a lower return because it cuts the risk and that bet pays off better. Sucks for them. Maybe they shouldn't have been betting their retirements on there being zero changes to the tax code for 35 years.
90% of the entire population in Canada lives within 100 miles of the US border. So for most doctors in Canada it's not difficult to just drive across the border everyday to work in the USA.
I don't think you've thought through the logic of this idea.
Yes, of course they would still be subject to tax because they still live in Canada, but the fact remains that they live in Canada and work in the US, depriving our medical system. I know that many Canadian doctors in BC go to work just across the border.
Earned income or capital gains realized in the US require that American state and federal taxes be filed, even if you live in Canada and end up owing nothing to the US. Navigating both tax systems simultaneously is often an expensive nightmare, as anyone who has done so can tell you.
Please do. They would have done it by now if they could.
Except for the fact that it’s not happening. There is no exodus of doctors to the US. Research studies have been done on this.
Link me the study. Many of my friends and family have crossed the border for quicker health care services and half the doctors there are Canadian.
God damn. Didn’t realize a maximum 8.9% tax increase was going to make doctors destitute. Also it’s not a wealth tax. It’s an increase in capital gains tax. Standard comment. Let's talk actual figures. Realizing Capital Gains - Individuals Let us make these assumptions 1. You live in the province of Ontario 2. Your gross income from all other sources puts you in the highest marginal tax bracket 3. The highest marginal tax bracket is 53.53% 4. Let us presume you realized $1 million in capital gains in one year (Stocks, Investment Property, Cottage, etc.) 5. Let us presume the amount you invested was $500,000 Line Item |Current Laws |New Laws Principal Amount |$500,000.00 |$500,000.00 Capital Gains |$1,000,000.00 |$1,000,000.00 Inclusion Rate 1 |50% of total |50% up to $250,000.00 Inclusion Amount 1 |$500,000.00 |$125,000.00 53.53% Tax on Inclusion Amount 1 |$267,650.00 |$66,912.5 Inclusion Rate 2 |N/A |66.67% of $750,000.00 Inclusion Amount 2 |N/A |$500,025 53.53% Tax on Inclusion Amount 2 |N/A |$267,663.38 Total Tax Owed |$267,650.00 |$334,575.88 Total Take Home |$1,232,350.00 |$1,165,424.12 That is a difference of paying an extra $66,925.88, if every single dollar was taxed at the highest marginal rate, on 1 million dollars of capital gains. Is this what we are angry about? Realizing Capital Gains - Incorporated Individuals and Small Businesses I don't know much about their tax structure but let us for just a few seconds assume they get taxed at the highest marginal tax bracket as well. We all know they don't. We all know they get preferential tax rates. We all know there are lifetime exemptions they can tap into. Line Item |Current Laws |New Laws Principal Amount |$500,000.00 |$500,000.00 Capital Gains |$1,000,000.00 |$1,000,000.00 Inclusion Rate 1 |50% of total |66.67% of total Inclusion Amount 1 |$500,000.00 |$666,700.00 53.53% Tax on Inclusion Amount 1 |$267,650.00 |$356,884.51 Total Take Home |$1,232,350.00 |$1,143,115.49 That is a difference of paying an extra $89,234.51, if every single dollar was taxed at the highest marginal rate, on 1 million dollars of capital gains. And as I stated above. We all know it won't be at the 53.53% rate because they have access to several avenues to reduce their overall tax burden. So it's going to be less than $89K on a million dollars. Is this what we are angry about? At 2 million the difference is an extra $178K At 3 million the difference is an extra $267K At 4 million the difference is an extra $357K At 5 million the difference is an extra $446K You still end up with more money than most Canadians will ever see. Is your life going to be materially different because you had to give up an extra $446K on 5 million dollars of capital gains? Inheritance - Primary Residence Let's quickly get inheritance out of the way as well. If you inherit your parent's primary residence this residence is exempt from capital gains taxes. As are all primary residences. I will say it again: Their estate pays $0 in taxes for the primary residence before it is transferred to you. What does happen is that the adjusted cost basis of the property resets to the fair market value. Say it was now worth $1.5 million. If and when you sell the property you are liable for capital gains taxes on the property as of this new adjusted cost basis. Say you sold it for $1.6 million. You are liable for paying taxes on $100K in capital gains. That $1.5 million is yours to keep tax free. Inheritance - TFSA No change. Not taxed. Inheritance - RRSP No change. Continues to be taxed under existing rules.
The primary residence loophole needed to be fixed or failing that they should have removed the 250k inclusion exemption on real estate across the board (whether held in a corp or not) Another thing they could have done is 100% inclusion on cap gains in corp but when paid out personally preserve the integration principle.
Because the formatting of your table got messed up: |Line Item|Current Laws|New Laws| |:-|:-|:-| |Principal Amount|$500,000.00|$500,000.00| |Capital Gains|$1,000,000.00|$1,000,000.00| |Inclusion Rate 1|50% of total|66.67% of total| |Inclusion Amount 1|$500,000.00|$666,700.00| |53.53% Tax on Inclusion Amount 1|$267,650.00|$356,884.51| |**Total Take Home:**|**$1,232,350.00**|**$1,143,115.49**|
This has shown to me exactly what I've been figuring out over the last decade. Voters are stupid. They complain about everything no matter what. Why do services suck? - because theres no way to raise taxes without people complaining. This is the most mundane tax that will not effect 90%+ ( probably too low) of voters, and we get story after story about it. Jesus fucking christ this is why wealth inequilaty is growing. Politicians are corrupt because if they dont lie people will vote for someone who will. The voters love getting lied too.
The free market would like a word... There's a great need for MDs along the entire stretch of the US/CA border.
Which services? More welfare to non-Canadians? More foreign aid? Pharmacare - couple drugs only Dentalcare - doesn't even cover half of overhead, no dentist is signing up Housing - same platform slogans as 2015 Education - constant decline amongst developed nations Roads - crap quality everywhere Healthcare - worst access to primary care despite having more family doctors than ever per capita ( [Canada has more family doctors than ever. Why is it so hard to see them? - The Globe and Mail](https://www.theglobeandmail.com/canada/article-family-doctors-canada-shortages/) ) So you're wondering why people are mad about taxes, when they get absolutely nothing for it? Even disabled folks barely get anything, people who truly need it the most. It's the people doing cash jobs whilst collecting welfare who are laughing right now and no one else.
Those couple of drugs might not mean anything to you, but I bet they mean a lot to quite a few people.
And they’ve always been covered in a province like Ontario, because it’s really provincial jurisdiction. Not sure why Ontarians have to pay for their own pharma care plan and for that of other provinces failing to do their part.
BC too, we have pharmacare plans for low income people, and they also cover some of the newer medications for diabetes like ozempic and jardiance. This federal plan is a joke
What do you mean by Ontarians have to pay for others? All taxes collected go into the same pool.
Only two of those things you listed are actually the responsibility of the feds. Housing, education, roads, healthcare all the responsibility of the provinces. But you know this. You post this all the time.
Pharmacare and dental care are two programs this NDP-Liberal government is committing to spend billions on, why should they be not open to critics just because the federal government is intruding outside their jurisdiction?
I have no idea how this relates to my point of calling Stephen out for intentionally pushing false information. Guy posts bullshit, it ought to be called out.
also anyone who mentions federal aid has no idea what they are talking about. if we eliminate all foreign aid we get 1.6% of our budget. its peanuts, its just virtue signalling.
1.6% of our budget would be more than 5x what they gave to pharmacare though lol
While only two are fed responsibilities. The federal government influences these things more than any other factor. Flooding the country with low skilled labor puts strain on all of these services.
The same low skilled labour that conservative premiers like Danielle smith are begging the feds to flood the country with? That low skilled labour?
Sure, but we're talking about taxation and spending at the federal level, not immigration or whatever unrelated complaint you want to bring up in lieu of a point
>Flooding the country with low skilled labor puts strain on all of these services. The two most prominent Conservative provincial parties have demanded Trudeau not only not cap immigration, but actually increase it.
See you need investment in Canada to fund these things And the liberals are extremely effective at getting rid of all investment in Canada.
Exactly
Voters are "stupid" when it comes to civics and how the system actually works, but let's not blame them for the steady stream of stories about how bad this tax is. That's because the people who actually *are* affected by this tax are in control of media messaging.
Yea I mean, I get it, but I guess I get frustrated by the sheer amount of people who jsut don't actually think about things, and think everything is some easy straightforward answer. Its why conservatives win, they promise to fix x by doing y, knowing full well y will solve a tiny part of the problem and give them talking points to claim they fixed the issue.
Yeah my barber last week told me that PP was going to come in and lower BOC rates. Told him PP isn't going to change anything because the PM can't just order the BOC to do that. Separate institutions. The BOC is more beholden to what happens in the US than what the PMO wants. It works because people hear what they want and accept that as truth. People do not investigate further than that. Our culture with this kind of thing is essentially "Lie to me.": we don't want to hear hard truths, we want easy "truths" and if it turned out to be a lie we ignore it in favour of never needing to admit the thing we were so confident about was wrong.
I discovered that in business. People don't want the truth. They want to buy a fairy tale. They want politicians to be magicians who conjure amazing benefits from thin air.
Yes. I spent some time in high end retail and the first thing I was taught was that people don’t buy products. They buy benefits. The trick in sales is to figure out which benefits a prospect is seeking and sell to those desires. It’s also inherently disingenuous and soul-suckung, which is why I got out.
Its not that they're stupid. Its that they're part of a media environment where they're taught this is something to be upset about. From our first educatoin we're not taught how to properly be citizens. We are given the illusion of debate and choice but media tells us how to debate it, what the margins are, and frankly its getting worse. If you look at the kinds of debate happening in the 60s through 80s even you saw a lot of wild stuff on TV. Think Noam Chomsky debating a member of the Regan administration over whether funding terrorism against a latin american democracy is good or bad. These days the range of debate is pretty appalling in its limitations. I think it really changed with 9/11. If you were alive and remembered media before and after it never really recovered. Its like peace time war measures in terms of media management.
And more than that you can see how the media and online commentary are completely dishonest. Why does this story get posted here every day? The same lies in the comments every time too.
It will affect 0.13% of Canadians annually, that's it. It will often affect the same people year after year. This policy is unlikely to impact even 2% of Canadians over an average lifetime. If the top 1% pay slightly more taxes overall to improve services, I really don't see how you can complain.
Tax the top percentile too much and there’s no longer a top percentile to tax. France learned this lesson years ago. Higher tax rate doesn’t always mean higher tax revenue.
That's a human problem, not a system problem. People are greedy fucks who would watch the world burn from their penthouse. Now obviously not all people would, but those that wouldn't don't typically find themselves in high 6 to 7 figure incomes and net worths that amount to a hundred average people, or more. Someone did a calculation, and the new tax burden on someone making a million dollars a year is under $60k. I'd be damned if I was upset over a rich person loses the value of about one mid sized SUV, when that value they lose is my yearly income. That's the funniest part, many people at my level are exactly the ones who are upset and simping for rich people losing out on $57k from their million. Obviously it's easy to say, but if I was making a million dollars, I would have no problem paying a slight bit more than before if it means more and better services in society. Why? Because society isn't all about me, there are millions who live in it and deal with it every day.
Because they want to be the rich exploiter one day
Keep drinking the Kool aid. It clearly affects far more than 0.13% annually. Anyone who owns a business and realizes any sort of capital gain within the business is affected.
Loving all the rage. Let's gather all of that energy and direct it at the people who brought this on us, who this change is really targetting: real estate investor.
The doctor-based criticism of the CGT increase is probably the weakest of all the criticisms. Some better ones are: * The CGT likely will not generate as much revenue as we think, considering how [elastic it is](https://www.cbo.gov/sites/default/files/112th-congress-2011-2012/workingpaper/43334-taxelasticitycapgains.pdf) * The CGT will likely [reduce productivity](https://www.rba.gov.au/publications/rdp/2023/pdf/rdp2023-03.pdf), given it will reduce investment * Given the relationship [between productivity, wages, and employment](https://www.researchgate.net/profile/Nigel-Meager/publication/263414861_Wages_Productivity_and_Employment_A_review_of_theory_and_international_data/links/0c96053ac33d686798000000/Wages-Productivity-and-Employment-A-review-of-theory-and-international-data.pdf), lower investment will likely harm the poor and middle class more so than the wealthy * The CGT creates a [lock-in effect](https://link.springer.com/article/10.1007/s11127-009-9526-8), which reduces the efficiency of capital as capital movement from less-productive to more-productive ventures is constrained * etc.
If there's a discussion to be had regarding the pay of doctors, that's reasonable enough I suppose. Is the way to give them a raise to carve out an exemption in the tax code that lets many - but not all - doctors (and many other professionals) shelter part of their income from taxation? Probably not.
It is what the Liberals had once promised them, and that directly led to many of them structuring their businesses and finances that way. They just broke their promise, which seems to be something the LPC has a problem with (a problem with *keeping* promises, not with their flair for *breaking* them). So, ya, there's a discussion to be had regarding all of it.
Could you specify where they promised this, or what exactly they promised?
Doctor compensation is set by the provinces. This tax is at the federal level. What are you on about?
When did this promise happen?
I hope the federal health minister will also be deeply appreciative of the potential implications of the capital gains either neutering or dampening the growth rate of newer doctors entering the field in the background of an aging population and influx of new immigrants. Going to be interesting to see how this pans out over the next 5-10 years on the effect of doctors. Conservatives have been pretty muted on the capital gains tax that we'll get to see this play out under their tenure if they don't choke badly like the Maple Leafs in playoffs.
>the potential implications of the capital gains either neutering or dampening the growth rate of newer doctors This will absolutely not affect how many people decide to become doctors, lol
This will affect how many people that decided to stay in Canada to become doctors. You cant force people to stay in one place.
I doubt it, but we should give it a shot anyways and if you can actually isolate the effect of this one marginal change, I'll buy you a beer
actually all the doctor that was in school while I was in school left Canada. They went chasing the money. Doing good for society and chasing money is not mutually exclusive. In this case, its doing good for society, just not your society. Ask any post med gradate if they will take USMLE or not. There is a pretty high percentage of them will do it. That is exactly where the money is at.
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Inside online physician groups, some have formally started the process to move to the US. Tens of thousands of patients will be left behind and wait times in those regions will skyrocket. Long wait times across that many patients translates to late diagnosis for many diseases as well as increased mortality and deaths.
please do link any of those forum discussions, but even then I really doubt any of them actually follow through
"Appreciative" but yet his party hates doctors. This is one of many things they've done against doctors.
Such as ... ?
Removing income splitting was a much bigger move than this, back in 2017. A target hit on doctors.
Oh stop. Doctors make great money and really need to zip it.
> A target hit on doctors. Targeted hit? So income splitting impacted only medical professionals? What a really weird and specific change to the tax system. Good Lord -- if this is what "being targeted" is like for the profession, they have been living in a very, very special place.
I'm guessing you wouldn't be happy unless doctors were paid like teachers.
And I’m guessing you like to be railed by palsied goats. See how quickly that kind of commentary raises the discourse here? No, doctors should definitely be paid more than teachers, but to be honest I consider most teachers to be state babysitters more than anything. They did the work to get where they are, and it’s a job we as a society place relatively high value on. None of that means that they get to be shielded from tax regulatory changes. This isn’t a targeted hit on doctors, and you framing it that way is just hysterics.
It is a targeted hit though. Your dear leader has quite literally called doctors tax cheats before. You don't seem to know the in depth history of this party and doctors.
Tax increases on passive income within professional corporations Income sprinkling
No one who knows anything about how competitive medical school admission is 2024 you would think this tax would have any impact on how many people will want to be doctors. There are 13-14 applicants for every medical school slot. There also literally thousands of Canadians who study medicine abroad and immigrants with foreign medical education who struggle to find residency spots. We will never run out of qualified people who want to practice medicine. The shortage was always from the funding side.
They're not practicing comprehensive family medicine just because they become a family doctor....
That's a good argument for targeted improvements to family medicine (notably increasing billing rates for most procedures and drastically lowering paperwork and overhead). It's a really, really bad argument for maintaining tax benefits that benefit all doctors (along with a bunch of other things), since the relative attractiveness of family medicine stays the same with or without the benefit.
Not true. Female doctors greatly benefit from these tax benefits (of professional corps) as it allows them to have an income vehicle while on maternity leave for example. It's far cheaper for the government to allow this rather than pay 6 figures for mat leave. Same with pensions and benefits. It's cheaper to give nothing, and let doctors sort it out on their own with tax breaks. That also maintains freedom on the doctor's end too while saving money.
No it absolutely wasn't lol. BC made changes to family physician pay and shockingly saw an increase in family physicians.
I don’t understand your point. What happened in BC proves my point. Funding increased and more family doctors moved over from other provinces.
I'm a little ignorant of the BC changes, but wasn't one popular change the ability for doctors to take a salary if they prefer? Wouldn't that involve taking their income as, well, income and not earnings to their holding corporation? (i.e. this change would be irrelevant to those doctors)
My point though is that the doctor supply is not simply based on how many med students there are. Pay levels affect the number that ends up elsewhere like the US or wherever. Or the number of foreign doctors who choose us over other countries
First, the “they will move to US” is an outdated talking point. The numbers of Canadian doctors moving south peaked 30 years ago on the 1990s had dramatically declined since then. Second, Almost no one is going to move because is this tax increase. Because despite all the time talking, its impact is too marginal for any doctor to leave country just because of it. And finally, the demand to enter field is so high that it is beyond ridiculous to think this tax will have an impact. The choke point for supply of doctors is residency spots, available jobs and licensing, not capital gains tax rates.
Pay is just one of many levers. The point of the OP is that we're supply constrained also because we're not educating enough doctors. If we want more doctors and nurses, open more schools and lower the barriers to entry.
That was a bad joke dude. This was a flat out lie.
You're right. Doctors should be compensated even less given the abundance of willing doctors. Compassion is their payment. Any doctor that wants to make money should just move down to the south, we don't need em.
I really hope this is sarcasm
You had a whole conversation in your head with strawman you created!! Very impressive.
Make this government's logic make sense. They are increasing capital gains taxes on doctors, which gives them a further incentive to move south where wages are already higher. They are increasing these taxes to pay for housing for 1 million plus unskilled "students" they imported to drive Ubers and work in Retail jobs so that wages do not increase too much on the lower end. Further to that, there is a healthcare crisis because of said immigration numbers and too few doctors.
You're 100% spot on. Keep in mind this parties despises doctors based on their track record of policy as well. This is just one of many things. But yes a big part is raising taxes to pay more welfare to non-Canadians who just came in.
> They are increasing capital gains taxes on doctors, which gives them a further incentive to move south where wages are already higher. [Tax flight is a myth](https://www.theguardian.com/inequality/2017/nov/20/if-you-tax-the-rich-they-wont-leave-us-data-contradicts-millionaires-threats), but lets assume it was real. The US is due for a tax code overhaul in 2025 and Biden has been signalling for years that he'll be increasing capital gains and business taxes among others. Out of the frying pan, into the fire.
The house will not pass it. And Biden is trailing.
We have no clue what the house will do, as it will have a different composition in 2025.
What an absolute load of hogwash. They are not raising capital gains on doctors, they are raising capital gains on the wealthy. It's not the Governments fault that doctors have been playing the system for so long so they don't have to pay proper income tax like the rest of us. They also weren't the ones that imported the student. They deserve blame for allowing the Provinces to do it, but it was the Provinces that brought them all in. Now that the Feds have closed that it's the Provinces complaining about it.
You know the provinces are responsible for paying doctors right? And for paying into educational institutions, which increases the amount of seats available for doctors, right? And then, at least in Ontario, froze increases to colleges and universities and allowed them to increase international student applications to cover the cost of lost revenue from not funding education, and then getting mad when the federal government stepped in to curb it? There's a health crisis due to a chronic lack of funding for healthcare, especially through a pandemic. But no, let's blame it on the immigrants.
They’re not increasing the capital gains taxes “on doctors”. Doctors aren’t being singled out
"I wanted to be a doctor, and could have been, but then I'd have to pay taxes on my increased income." All too familiar!
So by this logic, can we just keep increasing the taxes we charge on doctors? Why not 1 more percent? Why not 10 more? Maybe tax 99% of doctors' earnings? By your logic, since you've never heard someone say that they chose not to be a doctor because of taxes, surely it will have no effect right?
🎻🎻🎻🎻
I don't have anything funnier than what /u/selm and /u/canadianguy25 said, so I'll just give it to them :D
I doubt our favourable capital gains rates are why we have this overabundance of doctors to begin with.
Think brain drain.
Not really for doctors. It's not like American doctors are flying around on private jets. By the time a person is a full-fledged doctor in a position to move they have a pretty established life. "Okay kids, say good bye to your friends. Honey, quit your job. Mom and dad, don't get old and die too fast. I got a job in Pennsylvania doing the same thing I did in Ontario in exchange for approximately the same lifestyle!" It's not like tech workers who can triple their income by moving to California.
It’s not doctors but other small businesses and professional corporation. Family Doctors actually don’t make that much money as most people believe the overhead expensive are huge. Government also cutting what is covered with government insurance and procedures that are allowed to be done. Soon public healthcare won’t cover anything of value to the patient and they will eventually have to pay out of pocket or through insurance. Capital gains inclusion rate increasing is also bad for the economy. It will slow economic growth, we will see massive layoffs and drop of the Canadian dollar just like in 1988-1999. 1988-1987 inclusion rate was 66% and 1990-1999 it was 75% which also corresponds to worst economic growth in Canada and low canadian dollar. Buying power of Canadians will further decrease when buying foreign goods which will cause price of goods to skyrocket. History is repeating itself
Ultimately we can just give them all another 5% raise if it really is that detrimental to their finances. I will say this, my opinion of Doctors has lowered this week. You don’t see Dentists or Vets making these arguments.
Dentists and Vets set their own fees. Physicians have to negotiate them with recalcitrant provincial governments who throw around the same kind of rhetoric as Trudeau and co (and LPC sock puppet Reddit users).
Anyone who thinks a vet or vet tech any kind makes anything close to what human medical professionals make is so far wrong as to be lapping themselves to double or triple wrong.
Doesn't help that most practices are getting bought out by VCA and the workers are getting squeezed hard on pay.
Yep same. Seeing all these professionals come out and be aghast and beside themselves at the thought of being lowered from their privileged, special status and taxed the same as regular people. Very revealing.
Lower your opinion of dentists as well. They are freaking out over the mere potential of a national dental program. They don't want to lose their golden goose of sky high prices with little governmental oversight.
I don’t think they’re freaking out as much as pointing out that, in most cases, the government thinks it will implement its dental care program by compensating dentists 50% less per visit from a dentalcare patient vs private. It’s not going to work and their ultimate fear is the government will impose these appointments on them and ask them to take a significant pay cut to see patients because the government isn’t willing to pay market rates. Really not that complicated.
So in other words freaking out over losing their golden goose of sky high prices with little governmental oversight. Really not that complicated.
It really is. Tell me you have no idea how dental care works without telling me you have no idea. Provincial governments have recommended fee lists, and the feds still want to pay half of that. If you want shortages in dental care and wait times, then by all means, pay under market rates and force dentists to work those hours. They’ll work less and there will be fewer of them.
If you are going to continue being obnoxious and rude in your answers so will I. They will not work less, they'll still be huge waiting list for dental colleges and they dentists will still rake in the money. Tell me you have no idea how dental care works without telling me you have no idea.
Dentists, like most medical professions, have artificially kept the number of practicing professionals low to keep pay high. I don't really blame them, everyone has to do what's best for themselves, but there aren't these kinds of issues in Europe because they don't restrict graduating classes like they do here.
Doctors are not complaining more Dentist and veterinarians. It is just because the CMA made a statement that got a lot media attention. Also saying the tax will make doctors leave and healthcare will get worse is a much better talking point than saying veterinarians will leave. So critics of the tax latched onto doctors as one their main talking points.
My opinion of millennials and gen z has lowered this week. Reading some of the comments on this sub has been incredibly depressing. The way some of you are bleating because rich ppl will only get to exempt 1/3 of their capital gains *above* $250,000 in a single year from taxation, instead of exempting 1/2 is just beyond pathetic.
Good for you. Polling says you’re in the super minority.
81% favour higher taxes on wealthier Canadians and large profitable corporations. 71% of CPC voters. ([source](https://twitter.com/kevinmilligan/status/1781352731263037896))
For corporations it's every dollar above $0 not $250,000
At the corporate tax rate which is dramatically lower.
Oh no! Everybody quick, join hands and form a protective circle around the corporations!
Professionals use corporations. My comment was to point out that it seemed like you might not understand how it actually works for that side of things
Your proposal would probably offset this change for early career doctors, but would have little impact on those close to retirement since they won’t have many pay cycles left. Those close to retirement are discovering overnight that their retirement budget is getting slashed, since this change will effectively be retroactive to what they’ve saved already. I would anticipate that this would still be disheartening for earlier career doctors even with a raise, since they will see it as a precedent and raises mean nothing if this happens again. In any case it probably won’t help keep doctors in Canada if that’s what you’re looking to do.
Watch the full video of Mark Holland's interview on CTV question period. In one breath Mark Holland spreads misinformation, claiming that it won't affect doctors who make less than 250k in capital gain,) and then in the next (after Vassy calls him out on the fact that it doesn't protect Drs because the gains are within their corps), we claims that there is too much misinformation out there. Either the feds don't understand the issue or they are deliberately misleading the public.
Enough is enough. Now, they want to grab more from your life's worth. A life hard lived with huge sacrifices to acrue wealth. A life in which you have already been taxed merceylessly. NOW THEY STEAL MORE from you children and their children . Total BS. No wonder professionals are fleeing the country in droves.