Incorporation
Dentistry professional corporation in Ontario: when it is worth it
What RCDSO requires for a dentistry professional corporation, who can hold shares, what it costs, and how the associate and owner cases differ.
6 min read
If this is you
- The practice, the corporation and the household run off one balance and one nagging feeling.
- Overhead keeps running if you cannot work, and your coverage only replaces your own income.
- Retained earnings sit in cash because nobody has explained what the passive income grind would cost you.
What changes after a review
- A pay-yourself plan that separates practice cash, corporate surplus and household spending.
- Coverage sized for both sides: income replacement for you, overhead expense for the practice.
- A corporate investing plan that names the $50,000 threshold and what your portfolio's yield does to it.
Corporate vs. personal investing
Compare investing surplus cash inside your corporation vs. investing it personally.
Illustration only. Figures use Ontario 2026 rates; see the assumptions.
Corporation (after withdrawing as dividend)
$615,055
Personal
$1,096,189
- 1: Corporation $46,799, Personal $52,306
- 2: Corporation $96,406, Personal $107,023
- 3: Corporation $148,989, Personal $164,263
- 4: Corporation $204,728, Personal $224,143
- 5: Corporation $263,810, Personal $286,784
- 6: Corporation $326,438, Personal $352,313
- 7: Corporation $392,823, Personal $420,863
- 8: Corporation $463,192, Personal $492,575
- 9: Corporation $537,782, Personal $567,593
- 10: Corporation $616,848, Personal $646,070
- 11: Corporation $700,658, Personal $728,166
- 12: Corporation $789,496, Personal $814,047
- 13: Corporation $883,665, Personal $903,888
- 14: Corporation $983,484, Personal $997,872
- 15: Corporation $1,089,292, Personal $1,096,189
Passive income crosses $50,000 in year 13.
On these numbers, investing personally leaves about $481,134 more after 15 years.
Assumptions
- 2026 tax year. Sources: CRA T4127 Payroll Deductions Formulas, 122nd Edition, effective Jan 1 2026 (https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4127-jan/t4127-01-26e.pdf: federal K/V table, Ontario V-table, Ontario surtax V1 formula, Table 8.18 Ontario BPA) and CRA's 2026 indexation adjustment page (https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/adjustment-personal-income-tax-benefit-amounts.html: federal bracket thresholds and BPA). Verify each January.; Ontario 2026 Budget, Annex (https://budget.ontario.ca/2026/annex.html): small business CIT rate cut from 3.2% to 2.2% effective July 1, 2026, prorated for taxation years straddling that date; combined federal+Ontario small business rate falls from 12.2% to 11.2%. Federal small business rate (9%) and general combined rate (26.5%) unchanged, no 2026 change announced.; CRA line 40425, Federal dividend tax credit (https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-40425-federal-dividend-tax-credit.html) for gross-ups and federal credit rates (unchanged for 2026); Ontario 2026 Budget Annex (https://budget.ontario.ca/2026/annex.html) confirms the Ontario non-eligible dividend credit stays 2.9863% through 2026, dropping to 1.9863% only from Jan 1 2027..
- The 11.7 per cent combined small business rate is a calendar-2026 blend of 12.2 per cent to 30 June 2026 and 11.2 per cent after it, because Ontario's lower rate drops on 1 July 2026. Exact proration for a fiscal year straddling that date is not modelled.
- No other personal or corporate income is assumed.
- Both the corp and personal paths are always computed in full for comparison; investInsideCorp only selects which one is reported as `highlighted`.
- Passive investment income earned inside the corporation is not separately taxed in this model (real CCPC passive-income taxation and RDTOH refund mechanics are ignored) — this overstates the corporation's after-tax compounding relative to reality.
- Corporate and personal contributions are assumed invested at the start of each year and compound for the full year (annuity-due convention).
- The small business deduction limit is applied to the annual surplus in isolation each year, not blended with other active business income the corporation may earn.
- Personal-side investment growth is taxed every year at the single marginal rate implied by the salary needed to fund the contribution — a simplification; a real portfolio mixes interest, dividends and capital gains taxed differently.
- sbdGrindStartYear flags the first year passive income (plus any passiveIncomeAlready) exceeds the $50,000 grind threshold; it does not model the resulting gradual reduction of the small business limit toward $150,000.
- Ignores the Ontario Health Premium.
Worth reading first
Corporate tax
The $50,000 passive income rule and your small business limit
How passive investment income above $50,000 grinds a professional corporation's small business limit, what the grind really costs, and what to do about it.
6 min read
Insurance
Dentist disability insurance: CDSPI or a private contract?
CDSPI DisabilityGuard is a guaranteed non-cancellable contract, not a thin group plan. What to compare against a private policy, and where overhead coverage fits.
6 min read
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