Proposed Legislation Likely to Increase Taxes of Canadian Physicians as Soon as 2018
A monthly financial service specifically for Physicians On July 18th, federal Finance Minister Bill Morneau announced proposed changes to the income tax regime that, if implemented, are likely to increase the tax bill of Canadian physicians who are incorporated as a private corporation. An overview follows of the three main changes as contemplated.
Currently, owners of private corporations who draw salary income/dividends from their businesses may reallocate some of that income in the form of salary or dividends to family members who earn less and are therefore taxed at a lower personal rate than the principal shareholder.
The principal shareholder will then pay more taxes.
Start talking about money. Now.
Raising children in a wealthy household can create some special challenges for parents. It’s no secret that most families don’t like to talk about money, even wealthy ones. Managing money, whether we’re earning it or spending it, is a part of everyone’s life. Knowing how to use money is important practical knowledge our children actually need and will use in their adult lives. Your children are going to learn about money from someone – so it should be you. Take every opportunity to be the positive, guiding influence they can trust.
Protect Your Income with Disability Insurance
Your ability to earn an income, in your specific health profession, is probably your most valuable asset. More valuable over the long term than your home or certainly your car – two big items we always insure. You invested years of study and tens of thousands of dollars in your earning potential, and that’s something to protect into the future. As a high- performing, high-earning skilled health professional, disability insurance should be an essential element of your financial security plan. Disability insurance (or more accurately called income protection insurance) provides you with financial security by replacing a portion of your income in the event you can’t work after suffering a disability resulting from an illness or injury.
Start Your Plan with Your Will
Eat kale. Exercise more. Get 8 hours of sleep. Hearing you need a will is just one of those things you already know, but maybe haven’t done anything about? You’re not alone – more than half of adult Canadians don’t have a will. A will really is a foundational part of your financial security plan. And yes, you need one.
Plan and Nurture to Preserve Your Family’s Long-term Wealth
If you want to ensure your family’s wealth beyond the third generation, it takes strategic planning, a longterm outlook and active engagement. Without effort and a process, most estate planning efforts will fail. The familiar adage “shirtsleeves to shirtsleeves in three generations” is as true for intergenerational family wealth transfer as it is for business families. The first generation creates wealth, the second stewards it and the third squanders it with frequently sad outcomes. The causes of wealth destruction are deeply rooted in how we view our family’s true sources of wealth, the amount of effort we exert and methodology we use to plan our estates, and our family’s communication practices. We often plan only with the short-term in mind and ignore the powerful, dynamic intergenerational forces that are fundamental to long-term wealth succession.