Should I incorporate as a physician in Ontario?
By Amal Mahendran · Reviewed by Amy Tong
Published 18 September 2026 · Last reviewed 18 September 2026 · 7 min read
Short answer
Incorporating helps when you leave money in the corporation. Ontario's blended 2026 combined small business rate is 11.7 per cent on the first $500,000 of active business income. The top personal marginal rate is 53.53 per cent, but $200,000 averages about 32 per cent. Spend what you earn and it adds cost without a tax gain.
If you incorporated in the last five years, or your accountant has raised it twice and you have not decided, the real question is not whether a medicine professional corporation saves tax. It is whether you will leave money inside it.
At what income does incorporating start to pay?
The corporate advantage is a deferral, not a discount.
Active business income kept inside the corporation is taxed at a combined federal and Ontario small business rate of 11.7 per cent on the first $500,000, for a corporation with a 2026 calendar year end (Canada Revenue Agency; Ontario Ministry of Finance). That figure is a blend: 12.2 per cent on income earned to 30 June 2026 and 11.2 per cent after it, because Ontario's lower rate drops from 3.2 per cent to 2.2 per cent on 1 July 2026. Ontario's top combined personal marginal rate is 53.53 per cent. That is the rate on the next dollar once you are past $220,000 of taxable income, not the rate a whole income pays.
At the top of the personal scale the gap is about 42 cents on the next dollar. Lower down it is narrower, because the average personal rate on a given income is well below the marginal rate. Either way it is money you invest instead of remitting, for as long as it stays in the corporation. Take it all out in the same year and the gap mostly closes. Canada's integration rules are built so that earning through a corporation and paying everything out lands you within roughly a percentage point of earning it personally.
So the threshold is not a billing number. It is a surplus number.
A family physician billing $320,000 who needs all of it to live on has almost nothing to defer. A specialist billing $620,000 who lives on $230,000 has a large surplus, and the deferral on that surplus compounds for decades.
What does CPSO require before you can practise through a corporation?
A medicine professional corporation needs a certificate of authorization from CPSO. Practising without one, or holding yourself out as a professional corporation without one, is an offence.
The application fee is $400 and the annual renewal fee is $175 (CPSO). You must be a registered CPSO member when you apply, and the certificate has to be renewed every year through the Member Portal. If renewal lapses, CPSO issues a notice to revoke the certificate in 60 days.
None of that is onerous. It is simply a second set of deadlines that did not exist when you billed personally.
Who can own shares in a medicine professional corporation?
This is the point competitors get wrong most often.
Voting shares must be held by physician members of CPSO. A holding company cannot hold shares of a medicine professional corporation. The only trustee ownership CPSO permits is an individual holding non-voting shares in trust for minor children who are beneficiaries of a voting physician shareholder.
Family members may hold non-voting shares, subject to the College's rules, and you must tell CPSO within 15 days about any change in shareholders who are also College members.
Holding non-voting shares and receiving useful dividends are different things. The tax on split income rules tax dividends paid to a family member at the top rate unless that person meets an exception, such as working in the business on a regular, continuous and substantial basis. Assume nothing here without advice.
What does the structure actually cost to run?
| Sole proprietor | Medicine professional corporation | |
|---|---|---|
| Tax on the first $500,000 of practice income | About 32 per cent on a $200,000 income, rising to 53.53 per cent at the margin | 11.7 per cent if retained favourable |
| Tax on income you spend | Personal rates | About the same after integration |
| Filings each year | One T1 favourable | T1, T2, payroll or T5 slips |
| College obligations | None beyond registration favourable | Certificate of authorization, renewed annually |
| RRSP room | Created automatically favourable | Only if you pay yourself salary |
| Liability for clinical acts | Personal | Still personal |
Ask your accountant what they charge for a T2 return and corporate bookkeeping before you decide. In marginal cases that fee, not the tax rate, settles the question.
What incorporating does not do
It does not shelter money you spend. It does not protect you from a claim about patient care. It does not make investment income cheap: once the corporation earns more than $50,000 of passive investment income in a year, the small business limit starts to grind away.
And it does not create RRSP room. Room comes from salary. If you pay yourself entirely in dividends, you build no RRSP room and no Canada Pension Plan entitlement, and you cannot join the Healthcare of Ontario Pension Plan, which requires employment earnings from your corporation.
- CCPC
- Canadian-controlled private corporation. The status that gives your corporation access to the small business deduction.
- Medicine professional corporation (MPC)
- An Ontario corporation authorised by CPSO to practise medicine, owned under the College's share ownership rules.
- Certificate of authorization
- The CPSO document that lets the corporation practise. Applied for once, renewed every year.
- Active business income
- Income from practising, as opposed to investment income. Only active business income qualifies for the small business rate.
- Small business deduction
- The federal and Ontario reduction that brings the rate on the first $500,000 of active business income down to 11.7 per cent for 2026.
How should you decide?
Work out your surplus for the next five years, not your billings. Ask your accountant for the annual compliance fee. Then decide how you would pay yourself, because salary and dividends change the answer. The salary vs. dividends calculator will show you the split for your own numbers, and the corporate vs. personal investing calculator will show what the deferral is worth over time.
One more piece of timing. Incorporating mid-year means a short first fiscal period and a second set of filings for the stub, so most physicians pick a year-end that gives the corporation a clean twelve months and keeps the remuneration decision inside one calendar year.
If the surplus is thin, wait. Incorporating early costs money every year until the surplus arrives, and nothing is lost by incorporating two years later with a larger balance to shelter. The structure is easy to add and tedious to unwind, so the bias should be towards waiting until the numbers are clear rather than towards moving early.
What to bring to a 20-minute review
Bring last year's T1 and your practice billings, an estimate of what your household actually spends, and your accountant's quote for corporate compliance. If you are already incorporated, bring your last T2 and your CPSO certificate renewal date. Twenty minutes is enough to tell you whether the structure is earning its keep.
Book a 20-minute reviewCommon questions
At what billing level should an Ontario physician incorporate?
There is no billing threshold. The number that matters is surplus, not revenue. If you expect to leave roughly $50,000 or more in the corporation each year for at least five years, incorporating usually covers its own cost. If you spend what you bill, it does not.
Can a holding company own my medicine professional corporation?
No. CPSO does not permit a holding company to hold shares of a medicine professional corporation. Voting shares must be held by physician members of the College, and non-voting shares only by physicians or by specified family members, with a narrow trustee exception for minor children.
Does incorporating protect me from a malpractice claim?
No. A professional corporation does not shield you from liability for your own clinical acts. It can limit exposure on commercial matters such as a lease or a staff contract, but your CMPA membership, not your corporate structure, is what answers a claim about patient care.
Do I still need an RRSP if I am incorporated?
Often yes. RRSP room is created by salary, not dividends. Paying enough salary to build RRSP room, and paying into the Canada Pension Plan, gives you registered space and a base pension that corporate investing does not. It is a trade-off against a smaller corporate deferral.
Sources
Where to go next
Read next
Insurance products and advice are provided by licensed advisors of AT Financial Group. Licensed in Ontario.