The Canadian Medical Association is urging the federal government to reconsider its proposed changes to capital gains taxation, warning that it will impact doctors’ retirement savings.
Kathleen Ross, the association’s president, explains that many doctors incorporate their medical practices and invest for retirement within their corporations.
The proposed changes would result in higher taxes on these investments, creating financial strain for doctors without a pension plan.
Ross argues that this change could also affect the recruitment and retention of physicians in Canada.
Doctors are among the latest group to oppose the tax change, which is expected to predominantly affect wealthier Canadians and businesses.
The federal budget unveiled last week suggests taxing two-thirds of capital gains instead of half, representing profits from asset sales.
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The increased inclusion rate would apply to capital gains exceeding $250,000 for individuals and all corporate capital gains.
“The government presents this as tax fairness for every generation, but in reality, certain segments of the population will be disproportionately affected,” Ross stated in an interview.
The Liberal government argues that the tax adjustment aims to level the playing field between those earning income through capital gains and employment.
Furthermore, they promote the change as a means for the wealthy to contribute more towards housing and healthcare for all Canadians.
However, Ross notes that doctors would not qualify for the $250,000 exemption from the higher inclusion rate, as their investments are primarily within corporations.
Physicians can still utilize a Registered Retirement Savings Plan, which offers tax advantages, provided they pay themselves a salary from their corporation.
In response, a spokesperson for Finance Minister Chrystia Freeland explained that the federal government is adjusting the capital gains inclusion rate “to address the disparity where a nurse faces a higher marginal tax rate than a multi-millionaire.”
“These changes complement the $200 billion investment in healthcare and enhanced student loan forgiveness for doctors and nurses willing to serve in rural and remote areas,” Katherine Cuplinskas added.
