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Canadian Medics Urged To Oppose Recent Tax Proposal

by Mike Godfrey, Tax-news.com, Washington

10 August 2017


The Canadian Medical Association (CMA) says it is opposed to the Government's proposed crackdown on tax planning strategies that involve private corporations.

In July, Finance Minister Bill Morneau launched a consultation on how best to tackle three tax practices that the Government believes are being used to gain unfair tax advantages.

The Government wants to tackle so-called income sprinkling, whereby income is diverted from a high-income individual to family members with lower personal tax rates, or to family members who may not be taxable at all. It also wants to ensure that the tax treatment of passive investments retained in a corporation is fair, and to prevent the surplus income of a private corporation from being converted to a lower-taxed capital gain and stripped from the corporation.

Granger Avery, President of the CMA, has written to colleagues to ask for support in "bring[ing] forward a convincing opposition" to the measures. He urged colleagues to write to local MPs and provincial or territorial representatives, and said that the CMA intends "to demonstrate that implementing these changes will cause greater impact than many realize."

Avery said the CMA's members are "rightly concerned by these potential changes, not just for them[selves], but for millions of independent Canadian small business operators."

According to the CMA, most doctors in Canada are small business owners, and receive payment in the form of fees rather than a salary. A CMA factsheet prepared for its members stated that "the use of legitimate tax and financial planning strategies provide an essential measure of security and financial stability to doctors, which is critical for operating a viable medical practice, and retaining a sufficient number of doctors in Canada."

The factsheet added: "The loss of this government sanctioned tax strategy will affect physicians who operate a medical practice, thinking them to rethink their practice, hours of operation, service models, and location of practice."

Avery commented: "These changes are unacceptable; physicians and other small business operators have been allowed to incorporate for decades. The right to incorporate reflects the unique – and precarious – nature of operating as an independent business operator."

"Unlike employees of large organizations or governments, most self-employed individuals have paid no parental leave, pension plans, mandatory vacation time, sick leave, or disability benefits. We see this as affecting women, entrepreneurs, and everyday Canadians."

The Government's consultation is open until October 2.

TAGS: individuals | compliance | tax | investment | small business | business | tax compliance | tax incentives | public health | private healthcare | entrepreneurs | employees | fees | tax authority | tax planning | tax rates | Canada | tax reform | trade association | trade

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