Corporate tax
How to take money out of your professional corporation
The six routes out of an Ontario professional corporation, what each one costs, and the order most physicians and dentists should use them in.
6 min read
Services
Estate planning
What happens to the corporation, the practice and the household if you are not there. Written down, with the tax on each step named.
What we read
- Your will and powers of attorney, and when they were last signed.
- The share register: who holds voting shares, who holds non-voting shares, and on what terms.
- Beneficiary designations on registered plans and insurance policies.
- Any shareholders' agreement or buy-sell arrangement covering the practice.
What we assess
- Whether the corporation's shares would be taxed twice on death, and which of the standard steps prevents it.
- Who can legally hold shares under CPSO or RCDSO rules, and who currently does.
- Whether the capital dividend account is being tracked, and what would be available to your estate.
- What the practice would need in the first month, and who would be able to act.
The trade-off
| A will alone | A will with corporate planning | |
|---|---|---|
| Tax on the corporation's shares | Deemed disposition on death, and the same value can be taxed again when assets come out to the estate. | Post-mortem steps are set up in advance so the value is taxed once. favourable |
| Probate on corporate shares | Shares pass through the estate with everything else. | A separate corporate will can keep the shares outside the probated estate in Ontario. favourable |
| Who controls the practice | Decided by the executor, within the College's rules on who may hold shares. | Named in advance, with an agreement that says what happens and by when. favourable |
| Cost and effort now | One document, one meeting. favourable | Lawyer, accountant and advisor working together, with fees to match. |
| Flexibility later | Easy to change. favourable | Some structures take time to unwind, so they need to suit a household that will keep changing. |
Related reading
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
Incorporation
Should I incorporate as a physician in Ontario?
When a medicine professional corporation starts paying for itself in Ontario, what CPSO requires, who can hold shares, and the trade-offs the deferral argument leaves out.
7 min read
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