The Canadian Medical Association has asked the federal government to reassess its proposed changes to capital gains taxation, stating that it would affect doctors’ retirement savings.
Kathleen Ross, the President of the association, says a lot of doctors incorporate their medical practices and invest for retirement inside their corporations.
The proposed changes would lead to an increment in taxes on those investments, something the association says will increase “financial strain” for doctors that do not have a pension to rely on.
Ross argues the planned change could also affect the recruitment and retention of physicians in the country.
Medical practitioners are the latest group to speak against the tax change, which is expected to affect wealthier Canadians and businesses.
The federal budget presented recently proposes taxing two-thirds rather than one-half of capital gains, or profit made on assets sales.
The increase in the inclusion rate would apply to capital gains above $250,000 for individuals, and every capital gain realized by corporations.
In a recent interview, Ross said: “We have seen this portrayed by the government as tax fairness for every generation. But realistically, there are certain members of the population that are going to be more impacted.”
The Liberal government has argued that the tax change will level the playing field between people who earn income through capital gains versus employment.
Also, they are painting the change as a way to tax the wealthy more to support things like housing and health care for every Canadian.
Ross however pointed out that doctors would not be eligible for the $250,000 exemption to the higher inclusion rate, since the investments they make are mostly inside corporations.
Physicians however can still invest in a Registered Retirement Savings Plan — which is tax-advantaged — as long as they pay themselves a salary out of their corporation.
In a statement, Katherine Cuplinskas, the spokeswoman for Finance Minister Chrystia Freeland, said the federal government is changing the capital gains inclusion rate “because it’s unfair that a nurse pays a higher marginal tax rate than a multi-millionaire.”
She said: “These changes are in addition to the $200 billion we are investing in health care and the enhanced forgiveness of student loans for doctors and nurses wanting to work in rural and remote areas.”