Who We Help · Physicians · Incorporation
Should you incorporate your medical practice? The honest MPC math
Incorporation helps a physician in exactly one big way: profit left inside a Medicine Professional Corporation is taxed around 12.2% instead of up to 53.53%, leaving roughly 41 extra cents per dollar invested for you. Since the 2018 income-splitting rules, that deferral is essentially the whole case. So the decision turns on one question — how much of what you bill do you actually spend?
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
The deferral is the whole game now
An MPC is a timing machine. Profit retained in the corporation faces Ontario's small business rate of about 12.2% on the first $500,000, while the same profit on a T1 at the top bracket loses 53.53% immediately. Here is the same $100 of practice profit under each route:
| $100 of practice profit | Unincorporated, top bracket | Retained in an MPC |
|---|---|---|
| Tax this year | $53.53 | $12.20 |
| Left working for you | $46.47 | $87.80 |
| Tax later | Nothing further | Personal tax when salary or dividends come out — integration roughly evens the total |
Because of integration, the lifetime tax bill converges once money leaves the corporation. The win is nearly double the capital compounding in the meantime, plus the option to withdraw in low-bracket years — parental leave, a sabbatical, retirement — rather than peak billing years. If you spend everything you bill, an MPC is an expense, not a strategy.
What CPSO requires of an MPC
An MPC is an Ontario corporation holding a Certificate of Authorization from the College of Physicians and Surgeons of Ontario, renewed annually. The name follows the College's format — your name plus Medicine Professional Corporation — and the articles restrict the corporation to practising medicine and ancillary activities, which includes investing its surplus. Voting shares must be held by CPSO members; your spouse, children, and parents may hold non-voting shares, a concession only medicine and dentistry received.
Be clear-eyed about what family shares still accomplish. TOSI taxes dividends to a spouse who doesn't work in the practice at top rates, with the main exceptions being dividends to your spouse after you turn 65, family members who genuinely work in the clinic, and capital gains that qualify for the lifetime exemption. Many physicians now incorporate with physician-only shareholders and add family later, only once a specific TOSI-proof purpose exists.
Salary, dividends, and the passive-income grind
Most incorporated physicians end up paying themselves a blend. Salary creates RRSP room and CPP contributions and requires a payroll account; dividends skip CPP and the remittance calendar but build no RRSP room. The right mix shifts with age, debt, and savings habits — we model it inside physician CFO work rather than defaulting to either camp.
The portfolio your MPC accumulates has its own tax gravity. Once the corporation's passive investment income exceeds $50,000 a year, the federal small business limit shrinks by $5 for every additional dollar and disappears at $150,000. Ontario chose not to mirror that clawback, which softens the hit, but a large corporate portfolio still deserves deliberate asset location across the MPC, your RRSP, and your TFSA.
Timing: residency, locums, and your first staff position
Residents and fellows should almost never incorporate. Compliance costs are real, and with student debt and moderate income, the TFSA, RRSP room, and debt repayment beat a low corporate rate you can't yet exploit. Incorporate when billings comfortably exceed household spending — for many physicians that's the first or second year of independent practice.
Locum physicians can be good candidates earlier: an MPC gives one consistent entity across engagements while income runs high and overhead runs low. A US fellowship year, US telehealth moonlighting, or a 401(k) left behind from training adds a layer the corporation has to be planned around — we cover it on the cross-border tax page for physicians.
After the articles: certificate, accounts, OHIP
Sequence matters: incorporate under the OBCA, obtain the CPSO Certificate of Authorization, then open the bank account and CRA program accounts before the corporation bills a dollar. You will typically need an RC account for the annual T2 and an RP payroll account once the corporation pays you a salary or hires staff. Most MPCs skip GST/HST registration because physician services are exempt — but medico-legal reports, third-party exams, and other work not done for a patient's care can be taxable, and $30,000 of it in four rolling quarters forces registration.
Finally, update your billing arrangements so OHIP revenue flows to the corporation from a clean start date, and keep the minute book current — the College and your bank will both ask for it. Our incorporation and compliance service handles the full chain.
Common questions.
How much does an MPC actually save?
It defers more than it saves: about 41 cents per dollar of retained profit stays invested instead of going out as tax, and integration collects the difference when you eventually withdraw. The benefit scales with how much you retain and for how long.
Can I split income with my spouse through the MPC?
Usually not anymore. TOSI taxes dividends to a non-working spouse at top rates, with the main exceptions arriving after you turn 65 or where the spouse genuinely works in the practice.
Do physicians need a GST/HST number?
Most don't — physician services are exempt. Taxable side income such as medico-legal reports changes that once it passes $30,000 in four rolling quarters.
Related reading
Run the MPC math on your own numbers.
Book a consultation and get a plain answer on exactly what applies to you.