The Canadian Medical Association (CMA) has raised concerns over the proposed federal government changes to capital gains taxation, arguing that they will adversely impact doctors’ retirement savings and potentially affect physician recruitment and retention in Canada.
According to CMA President Kathleen Ross, many physicians incorporate their medical practices and invest for retirement within their corporations. The proposed changes would entail increased taxes on those investments, adding financial strain to doctors who lack a pension to rely on.
Ross also contends that the tax change may affect recruitment and retention of physicians in Canada. The association argues that the proposed changes are unfair to doctors, who would not be eligible for the $250,000 exemption to the higher inclusion rate, since their investments are largely inside corporations.
The Liberal government has defended the tax change as necessary to level the playing field between those who earn income through capital gains versus employment. They also argue that it will make the wealthy pay more to support housing and healthcare for all Canadians.
However, Ross emphasized that the tax change will disproportionately affect doctors, who invest heavily in their corporations for retirement. She also noted that doctors can still invest in Registered Retirement Savings Plans (RRSPs), which offer tax advantages, but only if they pay themselves a salary out of their corporation.
A spokeswoman for Finance Minister Chrystia Freeland stated that the federal government is adjusting the capital gains inclusion rate because it is unfair for nurses to pay a higher marginal tax rate than multi-millionaires. She added that the changes are part of a $200 billion investment in healthcare and enhanced forgiveness of student loans for doctors and nurses willing to work in rural and remote areas.
The CMA’s concerns about the impact of capital gains tax changes on doctors’ retirement savings and physician recruitment and retention in Canada underscore the complex implications of tax policy decisions and the need for careful consideration of their effects on different groups and sectors within the economy.
