Accounting & Tax Strategies for Medical Professionals
From residency to retirement, Teixeira Accounting Firm Inc. provides sophisticated tax planning, clinic accounting, and wealth preservation strategies for physicians, specialists, and healthcare clinics across Toronto.
Healthcare Accounting Shouldn't Be Harder Than Med School
As a medical professional, you face a unique set of financial challenges. Between reconciling OHIP or MSI billings, managing clinic overhead, and dealing with the confusing rules around Medical Professional Corporations (MPCs), standard accounting just doesn't cut it.
Your time is best spent on patient care, not deciphering the CRA tax code. At Teixeira Accounting Firm Inc., we act as your dedicated financial partners. We take the stress out of your finances, ensuring every dollar you earn is protected, optimized for taxes, and structured to build long-term wealth for your family.
Corporate Structuring
Maximize tax deferral and protect your medical assets.
Medical Professional Corporations (MPCs)
Incorporating your medical practice is often the most significant financial decision you will make. A Medical Professional Corporation (MPC) allows you to access the Small Business Deduction (SBD), significantly lowering your active business income tax rate compared to personal marginal rates.
This creates a massive opportunity for tax deferral. By leaving surplus cash inside the corporation, you can invest pre-tax dollars, accelerating your wealth accumulation. However, structuring an MPC requires precision.
Since the introduction of the Tax on Split Income (TOSI) rules in 2018, paying dividends to family members has become highly restricted. We help you navigate TOSI exemptions, ensuring your corporate structure is compliant while still maximizing family wealth opportunities.
- Tax Deferral StrategiesLeveraging the gap between corporate and personal tax rates to build a robust investment portfolio inside your MPC.
- TOSI ComplianceNavigating the complex Tax on Split Income rules to legally and effectively manage family remuneration.
Salary vs. Dividend: Extracting Wealth
Once incorporated, the question becomes: how should you pay yourself? The debate between salary and dividends is not one-size-fits-all. It requires a nuanced understanding of your cash flow needs, retirement goals, and provincial tax brackets.
Taking a Salary generates RRSP contribution room and requires CPP contributions, providing a safety net and tax-deferred personal growth. Taking Dividends is often simpler, avoids CPP premiums, and utilizes the dividend tax credit, but it does not build RRSP room.
Our CPAs run advanced remuneration models annually. We consider your spouse's income, child care expenses, and corporate surplus to determine the exact optimal mix of salary and dividends for your specific household.
Salary vs. Dividend Modeler
Adjust your clinic's net profit and your personal cash requirements to see how extracting wealth via Salary versus Ineligible Dividends impacts your corporate retained earnings and RRSP contribution room.
Strategy 1: Pay Salary
Retained in Corp
$198,379
RRSP Room Generated
+$22,330
* Requires CPP contributions from both employer and employee.
Strategy 2: Pay Dividends
Retained in Corp
$147,300
RRSP Room Generated
$0
* No CPP required, but does not build RRSP contribution room.
This is a simplified model for illustrative purposes based on estimated 2025 Ontario rates. The optimal mix is often a combination of both, tailored to your specific family situation, child care expenses, and TOSI exemptions.
This tool is for general information only and does not replace professional tax or accounting advice.
Comprehensive Clinic Accounting & Bookkeeping
Running a multi-practitioner clinic is running a complex business. Our cloud-based accounting solutions provide real-time visibility into your clinic's financial health.
Billing Reconciliation
Seamlessly reconciling your provincial billings (OHIP/MSI) with your bank deposits. We identify missing payments, rejected claims, and ensure every dollar billed is a dollar collected.
Overhead & Expense Tracking
Detailed tracking of medical supplies, leasehold improvements, and equipment financing. We optimize depreciation (CCA) to maximize your tax deductions year over year.
Payroll & Associate Splits
Managing complex payroll for administrative staff and nurses, alongside accurate, timely calculations for associate doctor fee splits and overhead contributions.
Navigating GST/HST in Medical Practices
A common misconception is that medical professionals do not need to worry about GST/HST because medical services are "exempt." While true for core patient care, the reality of a modern medical practice is far more complex.
If your clinic provides cosmetic procedures, completes third-party medical reports (like insurance assessments or legal reports), or acts as a landlord by sub-leasing space to other practitioners, you may be generating taxable supplies.
If your taxable supplies exceed $30,000 in a calendar quarter, you are required to register for, collect, and remit GST/HST. Furthermore, this opens the door to claiming Input Tax Credits (ITCs) on a portion of your overhead expenses. Teixeira Accounting conducts thorough GST/HST risk assessments to ensure compliance and recover eligible tax credits through precise apportionment methodologies.
Passive Income Rules & Wealth Management
As your MPC accumulates wealth, it generates passive investment income. In 2018, the CRA introduced rules that grind down your Small Business Deduction (SBD) if your corporation's passive investment income exceeds $50,000 in a year. Once passive income reaches $150,000, the SBD is entirely eliminated.
This requires highly strategic wealth management. We work alongside your investment advisors to implement tax-efficient portfolios. We frequently utilize Holding Companies (Holdco) to separate active business risk from accumulated wealth.
For high-earning specialists, we also explore Individual Pension Plans (IPPs). An IPP is a defined benefit pension plan set up by your corporation. It provides higher contribution limits than an RRSP, and the contributions are fully tax-deductible to your MPC, offering a powerful way to bypass the passive income grind while securing your retirement.
Holding Companies
Creditor protection and inter-corporate tax-free dividends to safely warehouse your wealth.
Capital Dividend Account (CDA)
Tracking the tax-free portion of capital gains and life insurance proceeds to extract wealth tax-free.
Practice Valuation, Acquisition, and Sale
Whether you are an associate ready to buy into a partnership, or a retiring physician looking to sell your practice, the tax implications of the transaction structure are massive.
Buying a Clinic
When purchasing a clinic, buyers typically prefer an Asset Sale to step up the cost base of the assets and claim higher depreciation (CCA). We assist with financial due diligence, analyzing historical cash flows, lease agreements, and patient rosters to ensure you are paying a fair valuation. We also structure the acquisition financing to maximize interest deductibility.
Selling a Clinic
Sellers heavily favor a Share Sale to utilize their Lifetime Capital Gains Exemption (LCGE), which allows you to shelter over $1 million of capital gains from tax. However, your corporation must meet strict "Qualified Small Business Corporation" (QSBC) tests. We implement "purification" strategies years in advance of a sale to ensure your MPC qualifies for this massive tax break.
Medical Clinic Benchmarking & Analytics
Are your overhead costs aligned with industry standards? We use advanced analytics to compare your clinic's performance against national and provincial averages.
Overhead Ratio Analysis
We break down your facility costs, medical supplies, and administrative payroll, identifying precise areas where you are leaking profit compared to top-performing clinics.
Billing Efficiency
We track rejection rates, average billing per practitioner, and collection timelines to ensure your revenue cycle management is operating at peak efficiency.
Associate Profitability
We provide detailed reporting on associate fee splits versus their specific overhead allocations, ensuring your compensation agreements remain profitable for the clinic.
Outsourced Back-Office & CFO Services
As your clinic grows, managing the financial back-office becomes a full-time job. Our fractional CFO and outsourced accounting services allow you to focus entirely on patient care.
We handle the entire financial lifecycle: from cloud-based bookkeeping (integrating your EMR/EHR billing data directly into QuickBooks Online or Xero) to managing complex bi-weekly payroll for your administrative staff, nurses, and associate physicians.
Our team provides monthly financial dashboards, highlighting key performance indicators (KPIs) and cash flow projections, so you always know the exact financial health of your clinic before expanding to new locations or hiring additional staff.
Frequently Asked Questions
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