Ontario’s Doctors Issue Call: Make Tax Policy Fair for Doctors and Small Business

Open Letter To Federal Party Leaders:

The Ontario Medical Association, which represents more than 31,000 practicing physicians, is calling on the federal parties to reconsider tax changes imposed in 2017-18, which negatively impacted hundreds of thousands of Canadians who operate small businesses, including the medical practices of doctors.

Over the past couple of years, the Department of Finance imposed the most significant changes to the taxation of private corporations since 1972. These changes altered the ability of physicians to use their corporation for certain tax planning strategies such as income-sprinkling and earning of passive income within the corporation.

In addition to more than 20,000 incorporated Ontario physicians, these changes negatively impacted hundreds of thousands of Canadian small business owners including farmers, restaurateurs, convenience store owners, and others.

The OMA strongly believes that these tax changes will adversely affect all doctors in all stages of their careers, and this will directly impact patient care.

Ontario’s doctors are calling on the federal parties to work together with physicians and small businesses across Canada to review tax policy issues affecting private corporations and restore fairness and a level playing field for all.

The Facts

• Nearly two-thirds of active physicians use a professional corporation to manage their businesses, save for retirement and co-ordinate tax planning.
• Doctors use corporations to fund equipment purchases, upgrade leases and hire staff.
• Many female physicians use their corporation to fund their pregnancy and parental leaves.
• Taxing a physician who has prudently planned to address the financial impact of a leave indirectly discriminates against young female physicians.
• Physicians save for their children’s education through their corporation.
• Corporate investments double as retirement savings – many retired doctors live off their corporate investments.

There is global competition to attract and retain physicians for growing and aging populations. Ontario continues to have a lower number of physicians than most other jurisdictions in the world. We currently have 2.4 physicians for every 1,000 patients, whereas Germany has about 4 physicians for every 1,000 patients.

Removing tax incentives discourages physicians from practicing in Canada, and ultimately jeopardizes national physician human resources.

Physicians are mobile and can relocate to the United States (or other jurisdictions) where the tax systems are more favourable. These jurisdictions have lower marginal tax rates, favourable tax brackets, and the ability to be taxed at the family level.

Economic Contribution of Ontario's Doctors

• Ontario's doctors treat 340,000+ patients per day.
• 30% of funds that doctors receive from OHIP billings (the government) is spent on running their clinics.
• One doctor contributes to 4 or more full-time jobs in their community.
• 96,000 full-time jobs created.
• $5.5 billion GDP in Ontario's economy.
• $1.4 billion in municipal, provincial, and federal government taxes.

Ontario’s doctors are working with the provincial government to fix our health care system, solve critical issues like hospital over-crowding and deliver the high-quality care our patients deserve.  These are our priorities.

We are calling on the federal parties to take a step back and consider the significant impact these tax changes have and will continue to have on doctors’ ability to serve our patients properly now and in the future.

Together we can find solutions.

Yours truly,

Dr. Sohail Gandhi
OMA President

Allan O'Dette 
OMA CEO  

About the OMA

The Ontario Medical Association represents Ontario’s 43,000 plus physicians, advocating for and supporting doctors while strengthening the leadership role of doctors in caring for patients.  Our vision is to be the trusted voice in transforming Ontario’s health-care system. 

For more information, please contact: 
OMA Media Relations at 416.340.2862 or toll-free at 1.800.268.7215, ext. 2862 
media@oma.org @OntariosDoctors