Tax-change proposals could cause problems for provincial plans, say doctors

A set of proposed changes on the way corporations are taxed might impact health budgets

Tax-change proposals could cause problems for provincial plans, say doctors
Ottawa is facing a backlash against its proposed changes to crack down on tax planning through private corporations. But while the proposals are expected to affect a broad range of professionals and businesses, doctors are arguing that a tax hit on them could have a much larger impact.

Every year, provinces negotiate with the doctors’ association in their jurisdiction to settle on rates paid to physicians for procedures and services, according to a report by the National Post. During such discussions, substantial income tax breaks granted to doctors have occasionally been used as a basis for agreements to not raise those rates.

“For us, the right to incorporate was given in lieu of the fact that we weren’t going to increase the tariffs and the rates,” Dr. Manoj Vohra, president of Doctors Nova Scotia, told the Post.

Dr. Trina Larsen Soles, the Doctors of BC president, and Dr. Padraic Carr, president of the Alberta Medical Assocation, described roughly the same arguments and situations in their own provinces.

The proposed changes, which are seen to take away tens of thousands of dollars in tax benefits enjoyed by incorporated doctors annually, have caused uproar in the medical community. Should that advantage disappear, the opposing doctors argue, they may have to recoup their losses by increasing fees.

“If professional corporations cease to exist in the form that we have now, then obviously we’re going to have to explore other options to keep our businesses sustainable with the master agreement,” Carr said.

Physicians’ fees make up a significant part of provincial health budgets. Last year, the $134-billion Ontario budget earmarked $51.8 billion for health spending, with $11.5 billion in expected costs from physician compensation.

While physicians could end up increasing their fees and pushing healthcare budgets upward, the provinces might be able to soften the blow with the added revenue from the proposed changes. They could also offer other benefits in lieu of a fee hike.

Those who support the tax changes have pointed out that around a third of Canadian doctors are still unincorporated. They have also said that the tax benefits of taxation go mostly to the wealthiest incorporated doctors who have more income to shield.

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