Working as a medical professional comes with no shortage of challenges. At Padgett Business Services®, we can’t help you with the day-to-day responsibilities you have to your patients, but we can help give you peace of mind by ensuring your finances and taxes are handled properly.  To this end, we have created this list of six tax tips for the Medical Professional.

6 Tips for Medical Professionals

Here are six tips to consider as you organize and operate your business:

1. Maintain Accurate Records

Accounting for Canadian taxes means keeping accurate records, especially if you’re a medical professional with your own practice. Even if you’re fully entitled to a tax credit or deduction, the Canada Revenue Agency (CRA) can reject it if you cannot present a receipt or appropriate document to justify it. Keeping accurate records will protect you against the risk of assessments, re-assessments, or audits in the future.

3. Consider Incorporating

At Padgett Business Services®, we get this question on a daily basis.  For medical practitioners, incorporating provides them with an added amount of protection against civil lawsuits, the ability to smooth out their income through the delay of the payment of taxes, and some level of income splitting.  It also provides a good mental separation between one’s business activities and personal financial affairs.  Although incorporating is not for everyone, it is worth reviewing from time to time with an accounting professional.

4. Claim Your Union Dues

As a medical professional, your union dues (e.g. for PARO, Maritime Resident Doctors, AUPE, CUPE etc.) are deductible, so be sure to claim this spending on your taxes.  The same goes for any dues you pay for membership in a medical association that’s required to maintain your professional status (e.g. the College of Physicians and Surgeons). These are all deductible expenses.

5. Deduct Your Malpractice (CMPA) Premiums

Similarly, the tax on medical professionals in Canada can usually be reduced further by writing off the amount you pay for your malpractice insurance. However, you must subtract any rebates you receive from a provincial reimbursement or any other programs.

5. Claim Employment Expenses

If you are an employee, certain expenses may qualify for deductions. For example, if you’re a family medical resident, you may use your own vehicle to make house calls. If so, the related costs of travel (e.g. gas) would most likely qualify as employment expenses and, thus, should be deducted.  It should be noted that claiming employee expenses requires the diligent keeping of gas receipts, repair receipts and car insurance documents.  You also need to keep a good mileage log or day timer.  You also need to get a T2200 – Conditions of Employment declaration from your employer.  With all of this being said, this deduction only applies if you don’t already receive a tax-free allowance or reimbursement from your employer to cover such costs.

6. Keep an Eye on Pending Income Splitting Proposals

Recently, the government announced a number of proposals that may affect how business owners – especially those with corporations – pay their taxes. If, like many medical professionals, you’ve used “income sprinkling” in the past to lighten your burden – and an estimated 50,000 Canadians do at the moment – a newly proposed “reasonableness test” could change which family members qualify and for how much.

Get Expert Help with assistance from Padgett Business Services® Calgary SE & Okotoks Locations

While these six tips should prove helpful when handling your accounting for Canada taxes, feel free to contact us if you’d like further assistance. The team at Padgett Business Services® is made up of experts on this topic who would be more than happy to ensure you don’t pay more than you need to in taxes as a medical professional.

 

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