Prime Minister Justin Trudeau speaks during a press conference in Oakville, Ontario on Wednesday, April 24, 2024. The Canadian Medical Association says the federal government's proposed changes to capital gains taxation puts doctors' retirement savings in jeopardy, but some financial experts say incorporated professionals are not as doomed as they say they are.THE CANADIAN PRESS
The Canadian Medical Association (CMA) raises concerns over the proposed capital gains tax changes by the Liberal government, fearing adverse effects on doctors' retirement savings. However, some financial experts argue that incorporated professionals, like doctors, have options to mitigate potential impacts.
The government's budget proposal aims to increase the taxable portion of capital gains from one-half to two-thirds. This change would apply to capital gains exceeding $250,000 for individuals and all gains realized by corporations, affecting doctors who often incorporate their medical practices and invest for retirement within their corporations.
Jean-Pierre Laporte, CEO of Integris Pension Management Corp., suggests that doctors can safeguard their retirement savings from capital gains tax by selling investments and establishing a registered pension plan. Contributions to such plans are tax-deductible, shielding individuals from taxes on their capital gains. However, they would still be subject to income taxes upon receiving pension payments.
Nicole Ewing from TD Wealth emphasizes the importance of considering individual circumstances before opting for a pension plan, citing ongoing compliance requirements and limitations on contributions.
The impact of the proposed tax changes on doctors remains uncertain, with experts cautioning against premature conclusions. The CMA acknowledges that opening a pension plan may be beneficial for some individuals but notes various factors to consider.
The government defends the proposed changes as measures to promote fairness and equity in taxation. While doctors have historically benefited from lower tax rates due to incorporation, the government argues that adjustments are necessary to address disparities between income sources.
Trudeau and Freeland reject calls to reconsider the changes, citing the need for additional revenue to fund essential services like housing and healthcare. They emphasize the importance of wealthier individuals contributing more to support societal needs.
The government estimates that only a small fraction of Canadians will be affected by the changes, expecting significant revenue generation over five years.
