Top Tax Strategies for Incorporated Doctors in Quebec

More and more doctors are choosing to incorporate to take advantage of tax and financial benefits. If you’re an incorporated physician in Quebec, smart tax planning can help you reduce your tax burden, protect your wealth, and build a comfortable retirement.

In this article, we cover the most effective strategies to maximize your income while staying compliant.

Why should doctors incorporate?

Incorporation allows doctors to separate their professional income from personal finances. This structure offers many advantages:

• Access to lower tax rates on retained earnings in the corporation.

• Flexibility in compensation (salary vs dividends).

• Ability to build investment portfolios within the corporation.

• Better protection against creditors.

  
  

Essential tax strategies for incorporated doctors

Income splitting

Although recent tax rules have tightened opportunities for income splitting, it is still possible in certain cases to split some income with a spouse or adult children. This can help reduce the overall household tax rate.

Optimal compensation: salary or dividends?

Deciding between salary and dividends is a key strategic choice. Salary allows you to contribute to an RRSP and build retirement benefits, while dividends can be tax-efficient if your corporation earns passive income or eligible dividends.

Using an Individual Pension Plan (IPP) and RRSP

Even when incorporated, it is often beneficial to continue contributing to an RRSP. Drawing a salary increases your RRSP contribution room.

An IPP can also be a powerful tool for those wanting to build a defined benefit retirement plan through their corporation.

Corporate-owned life insurance

A life insurance policy owned by your corporation can be used as an estate planning tool or long-term savings vehicle. Upon death, the tax-free death benefit can be paid to your estate efficiently. For more on this strategy, visit our partner Compar Assurance.

Investing through your corporation

Many incorporated doctors choose to invest surplus funds retained in their corporations. Real estate is a popular option since it allows for passive income generation and

diversification. Learn more at Immobilier Lucratif.

However, it’s important to watch the annual passive income threshold (currently $50,000), which can impact your small business tax rate.

Estate planning and wealth protection

Estate planning is often overlooked but crucial to ensuring the continuity of your wealth and protecting your loved ones.

This includes:

• Drafting a proper will.

• Setting up a family trust if needed.

• Securing appropriate insurance coverage.

  
  

Conclusion

Incorporated doctors in Quebec have exceptional opportunities to optimize income, protect their families, and prepare for the future. A personalized strategy with a specialized advisor is essential to take full advantage.

For personalized support, explore our wealth management services or contact us today.

👉 Looking for tailored corporate insurance? Visit Compar Assurance.

👉 Interested in real estate investments? Check out Immobilier Lucratif.