Tax Tips for Doctors in Canada: 2025 Guide to Smarter Tax Planning

New tax rules in 2025 make tax tips for doctors in Canada and tax advice for physicians Canada more important than ever. About 60% of Canada’s 96,000 doctors use corporations, now facing higher capital gains taxes. 

This guide covers tax planning for doctors in 2025, including Canadian doctor tax deductions and tax tips for doctors in Ontario. It offers simple, practical ways for hospital doctors and private practitioners to save money and reduce stress. Stay with SAL Accounting and let’s get started!

Quick Takeaways

• Lower Your Taxes: Claim Canadian doctor tax deductions like education and vehicle costs.
• Consider Incorporation: Doctors incorporation Canada can cut taxes and save up to $971,190 when selling your practice.
• Plan for Retirement: Use RRSP contribution strategies or TFSAs to save taxes now.
• Meet Deadlines: File by April 30 (salaried) or June 15 (self-employed) to avoid penalties.
• Prepare for 2025 Changes: Higher capital gains taxes and stricter income-splitting rules need planning.

Why Tax Planning Is Important for Doctors in 2025

Your high income puts you in the top tax brackets. The Canada Revenue Agency (CRA) takes a big share, but tax planning can cut that share. Canadian doctor tax deductions, incorporation, and retirement plans can save thousands and secure your future. Let’s start with the medical practice taxes you face.

What Taxes Do Canadian Doctors Pay?

Understanding taxes helps doctors save money. Here we explain the main taxes in simple terms.

1. Personal Income Tax

Self-employed doctors report income on a T1 form. In Ontario, incomes above $246,752 face a 53% tax rate. For example, $300,000 in income might mean $140,000 in taxes without deductions. We’ll show you how to lower this.

2. Corporate Income Tax

If your practice is incorporated, you file a T2 form. The tax rate is only 12-15% on profits. You pay personal tax only when you take money out as salary or dividends. This lower rate helps keep more money in the business.

3. GST/HST

Most medical services, like Ontario Health Insurance Plan (OHIP) work, don’t require GST/HST. But if you offer services like cosmetic procedures and earn over $30,000 from them yearly, you must register and charge GST/HST.

4. Ontario Health Premium

In Ontario, if you earn over $20,000, you pay this tax. It maxes out at $900 for incomes above $450,000. You can’t deduct it, but it’s a cost of working in Ontario.

5. Payroll Taxes

If you have staff, you withhold Canada Pension Plan (CPP), Employment Insurance (EI), and income taxes from their pay. Talk to our payroll tax accountants to keep your practice compliant with medical practice taxes and avoids CRA penalties.

6. Capital Gains Tax

When you sell investments or your practice, you pay tax on the profit (capital gain). In 2025, individuals pay tax on 50% of the gain, but corporations pay on 66.7%. For incorporated doctors, this raises taxes on practice sales.

This table sums up your medical practice taxes and their deadlines. 

Tax Type	Who Pays?	Key Details	Key Deadlines
Personal Income Tax	Self-employed	Up to 53% based on province	April 30 (salaried), June 15 (self-employed)
Corporate Income Tax	Incorporated	12-15% on profits	Quarterly: Mar 15, Jun 15, Sep 15, Dec 15
GST/HST	Taxable services >$30k	Exempt for most medical work	N/A
Ontario Health Premium	Ontario doctors	Up to $900 for high earners	N/A
Payroll Taxes	Employers	CPP, EI, income tax for staff	Ongoing remittances
Capital Gains Tax	Investors/sellers	50% (individuals), 66.7% (corps)	N/A

Pro Tip: Set phone reminders or use software like Xero to track these dates. Staying organized saves money and stress. Also you can ask our medical bookkeepers to handle things for you.

Read more: “How Taxes Work in Canada: A Complete Guide for Businesses & Residents”

Tax Advice for Physicians in Canada: Ways to Save Money

Now, let’s cut your tax bill with tax advice for physicians in Canada. These strategies keep more money in your pocket.

1. Claim All Tax Deductions

Deductions lower the income the CRA taxes. Doctors can claim many physician expense deductions:

• Practice Costs: Rent, medical supplies, staff pay, and fees like CMA/CMPA (Canadian Medical Association/Canadian Medical Protective Association) memberships.
• Travel and Vehicles: Mileage or gas for work trips, like visiting patients.
• Education: Courses, journals, and conference travel for continuing medical education (CME).
• Home Office: Part of your mortgage, utilities, or rent if you work from home.
• Health Plans: Incorporated doctors can deduct Health Spending Accounts (HSAs) or Private Health Services Plans (PHSPs).

Example: Dr. Patel claims $15,000 for CME and vehicle costs. At a 45% tax rate, she saves $6,750—enough for a vacation!

Case Study: Family Doc Turns Education Costs Into Tax Wins The Problem: Dr. Patel reached out about her continuing education. “I dropped $12K on courses last year but wasn’t claiming them right. And I do telemedicine from home like 30% of the time but haven’t deducted a penny for it.”What We Did: We organized all her deductions – education, home office, car expenses for hospital visits, professional fees – and set up a super simple tracking system.The Result: She got back $8,700 on her tax return. “That’s paying for my next certification,” she said. She’s now saving about $10K yearly and spends almost no time on paperwork. “Now I can focus on patients instead of receipts.”

2. Incorporate Your Practice

If you earn a lot, incorporation can save big. It means setting up a company for your practice. Incorporation lowers taxes to 12-15% on profits, with personal tax paid later. Selling a practice can skip tax on $971,190. It is like a tax savings account. You keep more money in the business until you need it.

You can pay yourself in two ways:

1. Salary: Taxed now, builds RRSP room, includes CPP/EI.
2. Dividends: Lower taxes, no CPP/EI, paid from company profits.

Who should incorporate? Doctors earning over $200,000 who can leave money in the business. Talk to our business incorporation tax experts.

Case Study: Specialist Saves Big Through IncorporationThe Problem: Dr. Martinez from Toronto called us frustrated. “I’m making good money at $350K but watching half disappear to taxes. Everyone keeps telling me to incorporate, but is it really worth it?”What We Did: We set him up with a professional corporation, created a smart salary/dividend mix, and added a Health Spending Account. We also got his spouse properly on the books for admin work.The Result: First year savings? A cool $45,000. “Should’ve done this ages ago,” he told us. He’s now building a better retirement through an IPP and keeping more cash in his practice for growth.

Read more: “Business Structures in Canada: Pros, Cons & Tax Implications”

3. Share Income with Family

Income-splitting shares income with family in lower tax brackets to cut taxes. Here’s how:

• Hire Family: Pay your spouse or kids for real work, like bookkeeping. Their income is taxed less.
• Pay Dividends: If a family owns 10% or more of your company’s shares, you can pay them dividends. Follow Tax on Split Income (TOSI) rules, which need proof they work in the business.
• Low-Interest Loans: Lend money to a spouse at 5% for investments. Their profits are taxed at their lower rate.

Warning: The CRA checks income-splitting. Keep records of work, hours, and fair pay to avoid problems.

4. Save with Retirement Savings Plans

Retirement plans lower taxes today and build wealth. Here are three options:

a. Registered Retirement Savings Plan (RRSP)

Contributions up to 18% of income, or $33,070 in 2025, lower taxes and grow tax-free until withdrawn. Early contributions maximize growth over time.

Best For: All doctors.

b. Individual Pension Plan (IPP)

Contributions, 30-40% higher than RRSPs based on age and income, offer larger tax savings. The company pays, deducting costs as a business expense.

Best For: Incorporated doctors over 40.

c. Tax-Free Savings Account (TFSA)

Contributions up to $7,000 in 2025, plus past unused room, earn tax-free and allow tax-free withdrawals anytime, offering flexibility.

Best For: Doctors wanting flexible savings.

Here is a comparison table:

Option	Contribution Limit	Tax Benefit	Best For
RRSP	18% of income, up to $33,070	Lowers taxes now	All doctors
IPP	30-40% more than RRSP	Company deduction	Incorporated, 40+
TFSA	$7,000 + carryover	Tax-free growth	Flexible needs

Read more: “Taxes for US Citizens Working Remotely for Canadian Companies”

Advanced Tax Tips for Doctors in Canada

Want to save more? Read these tax tips if you are a doctor in Ontario and across Canada.

Health Spending Accounts (HSAs)

If you’re incorporated, an HSA pays medical bills—like prescriptions or dental work—with pre-tax money. A $2,000 dental bill might cost just $1,000 after tax savings. It’s a great physician expense deduction.

Private Health Services Plans (PHSPs)

PHSPs let incorporated doctors deduct health plans for themselves or staff. They cover dental work, prescriptions, glasses, physiotherapy, and medical equipment. The company pays, and you get tax-free benefits.

Smart Investing

To pay less tax on investment income:

• Use RRSPs or TFSAs to avoid taxes on growth.
• Choose investments that earn capital gains, which are taxed less than interest income.

Tax Planning for Doctors in 2025: What’s New?

New rules in 2025 affect tax planning for doctors. Here’s what’s coming and how to handle it:

Higher Capital Gains Tax

Selling a practice or investments creates a profit, taxed as a capital gain. In 2025, corporations pay tax on 66.7% of the profit (up from 50%), while individuals pay on 50%. 

Solutions:

• Sell as an individual to use the lower rate.
• Time sales before 2025, if possible.
• Consult our medical accountants for deferral options.

These steps can reduce the tax burden significantly.

Passive Income Limits

Company investment earnings over $50,000 reduce the small business tax rate; over $150,000 eliminates it. For example, $60,000 in stock income raises taxes by shrinking the rate. 

Solutions:

• Focus on business projects, not investments.
• Fund a pension plan to lower taxable income.

Taking action helps preserve the lower rate.

Stricter Income-Splitting Rules

Sharing income, like dividends, with family requires proof of their practice work. Without records, audits or penalties may follow. A spouse bookkeeping without logs, for instance, risks CRA issues. 

Solutions:

• Log their hours and tasks clearly.
• Pay a fair wage for their work.

Proper records avoid penalties and ensure smooth income-sharing.

Conclusion

This guide gives Canadian doctors the lowdown on saving taxes. It covers deductions, incorporation, and retirement planning, plus key 2025 changes like higher capital gains taxes and tighter income-splitting rules. These tips are a must for smart tax planning next year.

With these changes coming, getting expert help is a smart move. SAL Accounting specializes in 2025 tax planning for doctors. We offer advice for Canadian and Ontario physicians, help maximize deductions, and keep you CRA-compliant. Reach out to focus on patients while we handle the tax stuff.

FAQs: Your Tax Questions Answered