The federal budget announced proposed tax increases on some capital gains, which has caused concern among family doctors, who fear that the changes may impact their ability to save for retirement. Dr. David Poon, a Canadian physician, started a Facebook group called ‘Professional Corporation Advocates’, which aims to rally professionals, especially doctors, against the changes. These changes to how capital gains are taxed have been proposed as a way for the government to make up for the big spending measures announced in the budget. The inclusion rate for individuals with more than $250,000 in realized capital gains in a year will increase to two-thirds from one-half, affecting the way doctors save for retirement through professional corporations.
The majority of family doctors in Canada practice through professional corporations, which they use to help save for retirement. They invest excess dollars into marketable securities and rental properties, but the proposed changes will impact the way they save for the future. The government’s argument for the changes is based on treating capital gains and other forms of income equally, to prevent people from taking advantage of preferential treatment of capital gains over dividends. The changes aim to have individuals choose income streams based on fundamental reasons rather than tax system advantages.
Groups representing family doctors, such as the Ontario Medical Association, have raised concerns over the new rules, stating that they will negatively impact physicians in Ontario and affect patient care. The proposed changes come at a time when Canada is facing a family doctor shortage and burnout, which may be exacerbated by the federal government’s capital gains proposal. Dr. Poon believes that increasing taxes on doctors will disincentivize them to work and harm the already strained healthcare system, leading to decreased productivity and potentially worsening the doctor shortage.
The budget document states that for 99.87% of Canadians, personal income taxes on capital gains will not increase. The argument for treating dividends and capital gains equally is based on fairness and preventing people from manipulating the tax system to their advantage. The changes are meant to ensure that people choose income streams based on sound financial reasons rather than tax advantages. The Canadian Medical Association, the College of Family Physicians of Canada, and other groups have not provided comments on the proposed changes, leaving family doctors concerned about the impact on their ability to save for retirement and on patient care in Ontario. Dr. Poon and other family doctors fear that the changes will deter them from working and harm the healthcare system further.
