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Physicians today are working in a continually changing and increasingly complex environment. You need to be aware of industry trends - from tax rules around GST / HST to changing attitudes around running a practice - and how they impact your practice to prepare for a successful future.
Many new physicians, especially those in family practice, are opting for a more balanced and flexible approach, one without a long-term commitment to the trappings of a clinic such as overhead, management and administration. The trend away from full office-based practices has provided an incentive for privately funded investors to enter the practice management and administration space.
This trend also provides an alternative for a growing number of mature practitioners planning their retirement.
While overall health care expenditures in Canada continue to grow, many jurisdictions are seeing funding cuts for certain service providers as well as cuts to certain health care services. Provincial funding models for physicians continue to morph, with alternative forms of payment, other than fee for service, continuing to develop, including capitation and salary models.
With an estimated 90 per cent of fees derived from the public sector, this places increased stress on medical association-governmental relations, and creates uncertainty for practitioners about the sustainability of their long-term income levels.
Tighter budgets overall will require practitioners to:
Physicians will also be motivated to seek alternative sources of funds, including non-insured services, potential scientific research and experimental development (SRED) tax credits, as well as private sector opportunities.
As personal income tax rates rise, access to lower corporate tax rates, via the Small Business Deduction, has become more important to incorporated physicians
However, recent legislative changes restricting access to the lower rates means physicians should review all of their practice income streams, their practice models - especially those involving group practices and related structure alternatives - to ensure tax efficiency to the greatest degree practical.
The Canada Revenue Agency (CRA) is increasingly focusing its attention on the income streams of physicians, whose services consist of both taxable and non-taxable supplies under the Excise Tax Act.
Many income streams not previously considered taxable are being scrutinized in greater detail and interpreted by the CRA as potentially taxable, for example, cosmetic procedures, independent medical examinations, and certain types of stipends, such as those associated with on-call arrangements. This could mean that a practitioner is liable for the collection of GST / HST.
Also of concern is the GST / HST issue might spill over to the various business structures used by practitioners. Given that physicians typically do not recover much of the GST/HST they incur on such costs, the potential for tax leakage could have an impact.
The environment physicians are working in is increasingly complex and that complexity continues to grow in terms of regulations, taxation and practice management, with variations from province to province. An advisory team can help you operate your practice in a more efficient manner in terms of taxation, wealth management, practice management and succession matters; and help protect from unintended consequences which could substantially impact your personal wealth.
To find out more, contact Jim Chagnon CPA, CA, TEP, Professional Services, at 905.333.9888 or
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Related Topics:Doctors; GST; HST; Income Tax
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