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Improvements to the CPRSP program for BC Doctors

15/03/2020


For many years, BC physicians have been able to claim matching RRSP contributions from the province as part of the Contributory Professional Retirement Savings Plan (CPRSP). This plan was set up as part of the Physician Masters Agreement made between the province of BC and Doctors of BC on behalf of physicians practicing in BC and is administered by Doctors of BC. The plan forms part of the benefits available to physicians in BC, which also includes the CMPA and Continuing Medical Education rebates.

Each year, the program calculates a basic benefit and length of service (LOS) benefit for every physician practicing in BC.  

  • The basic benefit is primarily driven by a physician’s billings from the previous year up to a maximum benefit. In 2019, the maximum basic benefit was $4,100.
  • The LOS benefit is primarily based on the number of years the physician has been practicing. The maximum LOS benefit is reached after 20 years of service and was $3,480 in 2019.

Historically, the program would make a dollar-for-dollar matching contribution to a physician’s RRSP up to the basic for the year. Also, as long as the physician contributes the full basic amount, the program will contribute the LOS amount as well.

As an example, assume a physician is eligible for the full basic and LOS amounts of $4,100 and $3,480 respectively.

  • If the physician contributes $4,000 to their RRSP, the program will match that amount only as it is less than the total basic amount.
  • If the physician contributes at least $4,100 to their RRSP, the program will contribute $7,580 to the RRSP — the basic amount plus the LOS amount.

In April 2019, a new Physician Master Agreement was made that included two major changes to the CPRSP program. Starting in 2019, new-in-practice physicians (those who started to practice medicine between 2014 and 2018) were eligible to claim their CPRSP benefits without having to make any matching contributions.

The second change becomes effective April 1, 2020 and should apply when the 2020 CPRSP benefit forms are sent out in November 2020. The modified program adds two key changes:

  • Eliminate the requirement for all physicians to make matching contributions
  • Give physicians the option of having contributions go to their RRSP or their TFSA

These changes will provide physicians with more flexibility when it comes to saving for their retirement.   However, it should be noted that before implementing these changes, the Doctors of BC benefits committee needs to ensure that the changes are permissible under applicable federal and provincial laws.

While these changes provide additional access and flexibility to physicians, it is important to consider the personal tax consequences of the new options. For example, the amounts that the program contributes to a physician’s RRSP or TFSA are taxable to the physician and included in their personal income in the year the contributions are made. When the contributions are made to an RRSP account, the additional income would generally be offset by the deduction the physician receives for the contribution. Typically, the physician would not see an increase in the overall personal taxes.  

However, if a contribution is made to a TFSA, the physician will not get a deduction to offset the income inclusion and will see an increase in their personal taxes. When it comes to choosing which option is best, it will be important for physicians to be communicating with their tax and financial advisors.

While these decisions may seem minor, they can have a significant impact on your personal taxes. To understand your options and get a tax strategy that maximizes your earnings, contact Michael Furnell, CPA, CA, Partner, Professional Services at 250.734.4311 and [email protected]