Physicians urge Liberal Government to Rethink Capital Gains Tax Adjustment

The Canadian Medical Association is urging the federal government to reconsider its proposed changes to capital gains taxation, warning that it will have a negative impact on doctors’ retirement savings.

Kathleen Ross, the association’s president, highlights that many doctors incorporate their medical practices and invest for retirement within their corporations.

The projected changes are expected to raise taxes on these investments, leading to financial strain for doctors without a pension plan.

Ms. Ross also raises concerns that the alteration could influence the recruitment and retention of physicians in Canada.

Doctors are among the latest groups to voice opposition to the tax revision, which is anticipated to primarily affect wealthy Canadians and businesses.

The recent federal budget proposal includes plans to tax two-thirds instead of half of capital gains, or profits earned from asset sales.

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The adjustment in the inclusion rate is set to apply to capital gains exceeding $250,000 for individuals, as well as all capital gains realized by corporations.

“The government has framed this as a move towards tax fairness across generations. However, there will be specific segments of the population bearing a disproportionate impact,” Ms. Ross stated in an interview.

The Liberal government’s rationale for the tax modification revolves around achieving equity between capital gains earners and wage earners.

They are pitching the alteration as a means to increase contributions from the wealthy to support essential services like housing and healthcare for all Canadians.

Ms. Ross highlights that doctors would not qualify for the $250,000 exemption under the revised inclusion rate, given that their investments are primarily within corporations.

Physicians retain the option to invest in a Registered Retirement Savings Plan, which offers tax advantages, provided they receive a salary from their corporation.

In response, a spokesperson for Finance Minister Chrystia Freeland emphasized that the federal government is adjusting the capital gains inclusion rate “to rectify the situation where a nurse faces a higher tax rate than a multi-millionaire.”

“These changes complement our $200 billion investment in healthcare and enhanced student loan forgiveness for doctors and nurses willing to serve in rural and remote areas,” Katherine Cuplinskas added.