Categories > Top Stories

Financial Freedom for the (Young) Family Physician

Answering Your Tax Questions

One of the focuses of the ACFP’s First Five Years in Practice (FFYP) Committee this year is to empower our membership with skills to achieve financial independence.

As a member of the FFYP Committee, I have been asked to review the Federal Tax changes for the benefit of the ACFP membership. Please note that I am not an accountant or tax expert, and all decisions made using this information should be done in consultation with a professional.

The Committee is in the process of organizing several education events for our membership in this regard. If you are a physician in your first five years of practice, residency, or even a medical student, feel free to join our FFYP Facebook group or visit our website.

Federal Tax Changes
For years, physicians have been encouraged to incorporate as a means to offset reduced compensation at the provincial level by saving on taxes. The two primary ways in which tax bills were reduced by incorporating was by income splitting and tax deferral of retained earnings. Firstly, a corporation could give dividends to a shareholder (usually a spouse or a child over the age of 18), lowering the overall family tax bill by taxing personal income in the lower income shareholder rather than taxing personal income in the hands of one person. Secondly, a physician could retain their earnings within a corporation, avoiding personal income tax on those earnings, investing those earnings to earn passive income, and withdrawing money from the corporation in years where earnings are lower (i.e. parental leave, years of illness/disability, or in retirement). However, the Federal Government has committed to two tax changes that limit these advantages.

Firstly, to avoid being taxed at the highest marginal tax rate, dividends paid to family members who are also shareholders must pass a reasonability test. That is, the amount of dividends matches the amount of contribution the family member shareholder has given to the corporation. A different reasonability test has been in place for salaries for some time, but now the concept of “reasonability” is applied to dividends as well. There are several ways to assure dividends to a family member shareholder will not be subject to the reasonability test which include if the shareholder is:

  • A spouse that is aged 65 or over,
  • Adult aged 18 or over who have made a substantial labour contribution (generally an average of at least 20 hours per week) to the business during the year, or during any five previous years,
  • Adult aged 25 or over who own 10 per cent or more of a corporation that earns less than 90 per cent of its income from the provision of services and is not a professional corporation.

This is especially unfortunate, as the income splitting benefit of corporations was an excellent way for young physicians to save on taxes to pay off debt and begin saving for retirement. Some corporations can respond to the increased taxes by raising the price on its goods and services, which unfortunately, a medical corporation can not.

Secondly, the Federal government was concerned that corporations were receiving a tax benefit on business income earned at the small business corporate tax rate and then reinvested in passive investments. The Small Business combined Federal and Provincial corporate tax rate in Alberta for 2018 is 12% on the first $500,000 of Active Business Income (the tax rate on Business Income in excess of this limit is 27%). This means a corporation could earn $500,000 of Active Business Income, pay tax at 12% = $60,000, leaving $440,000 of cash left to invest in passive investments. If the $500,000 was earned as an individual, the tax rate would be much higher–leaving less for the individual to invest. This gives a distinct tax advantage to the corporation if the money is used for passive investments.

Commencing with corporate tax years beginning AFTER December 31, 2018 (so the first full corporate tax year end subject to these new rules is December 31, 2019, giving taxpayers some time to adjust to the changes), two new rules are put in place:

  1. Corporations will have reduced access to the Small Business tax rate when their “passive income” exceeds $50,000 in a tax year. This reduced access begins at $50,001 and is graduated in until the corporation reaches $150,000 of passive income. Once $150,000 of passive income is reached, the corporation no longer has any Small Business tax rate. “Passive Income” for purposes of this test is defined to include interest, rent, royalties, and dividends from portfolio investments and capital gains. However, there is an exception for certain capital gains such as disposition of property used in an active business (including goodwill) and capital gains on disposition of shares or interest of another active business corporation or active business partnership. Additionally, the prior year passive investment income of all associated corporations is used to calculate the reduced Small Business tax rate, so you can’t use multiple corporations to eliminate this issue. Additionally, there is NO Grandfathering of existing investment pools. The only relevant calculation going forward is the “AAII” – Adjusted Aggregate Investment Income which does not take into account any grandfathering of currently held investments and is basically the current years investment income,
  2. There will be a new regime of two Refundable Tax pools. Currently there is one pool where a corporation pays an additional temporary tax on investment income which accumulates in a pool. Once the corporation pays a taxable dividend, the pool is refunded to the corporation. Now there will be two pools for different types of tax on investment income.

Tax Planning
In Alberta, the corporate tax rate on active and passive combined business income will be either 12% (Small Business rate) or 27% (General Rate). Alberta Personal Tax rates are in nine different tax brackets, but generally personal incomes over $100,000 will incur personal tax of at least 36% and will increase to 48% once personal income is over $300,000. This means that active and passive combined business income earned in a corporation will still enjoy a Tax Deferral even at the General Business Rate of between 9% (36% – 27%) and 21% (48% – 27%). This Tax Deferral, if enjoyed over a long period of time, may still be preferential even if the Small Business tax rate is eliminated.

However, this Tax Deferral can be a Tax Penalty if the cash extracted out of the corporation by way of dividends in the same year as the corporate active and passive combined business income is incurred at the General Rate. For example, if a corporation is taxed at the General Rate, then pays out the leftover cash as dividends, the Tax Penalty (considering the combined corporate and personal taxes) is over 2%.

As a result, physicians are encouraged to meet with their accountants to discuss how to limit passive income earned on corporate investments, including using investments that don’t distribute interest or dividends or investments that favour capital gains. They may also decide that paying salaries from the corporation and then investing in RRSPs and TFSAs may be a stronger option for retirement planning with limits on growth on corporate retained earnings.

This article was written in consultation with an accountant. If you have questions pertaining to the information found in this article, please contact your personal or business accountant.

About the Author

Dinesh Witharana is a family physician in Spruce Grove who primarily focuses on community primary care of palliative patients. He often brings residents with him to his hospice rounds and home visits. He also enjoys participating on The Provincial Palliative Tumor Group as an Executive Member, the AMA Section of Palliative Care Fee Committee, The ACFP’s First Five Years In Practice Committee, and soon the Core Committee for the Cancer Strategic Clinical Network. He lives in Spruce Grove with two amazing children, Nala (3 years old) and Kaius (4 months old) and a extraordinary wife, Wing.




2018 Price Comparison of Commonly Prescribed Drugs Guide – Revision Made to Page 14 (Testosterone Replacement)

Please note, page 14 (Testosterone Replacement) has been updated as of Mar 31, 2018.

In Canada, prescription medications are the second most costly component of health care, upwards of $29 billion per year. These costs largely reflect the treatment of chronic medical conditions predominantly cared for by family physicians, including heart disease, high cholesterol, hypertension, diabetes and depression.

The ACFP is pleased to share with you the annual Price Comparison of Commonly Prescribed Pharmaceuticals in Alberta document. Authored by Dr. Mike Kolber, Tony Nickonchuk, and Jayson Lee, the document identifies generic products (generally cheaper) from brand name products, a 90 day cost for standard doses (unless otherwise noted), and Alberta Blue Cross and Indian Affairs coverage.

The document is grouped by medication class and then ordered by cost. Please read the introduction for further explanation and specifically how the costs were calculated. While this document is not exhaustive, it contains many medications potentially used by office based primary care providers.

Simplified Guideline for Prescribing Medical Cannabinoids in Primary Care

Primary care physicians can incorporate medical cannabinoids into their prescribing practices by being informed with best available evidence and using a simplified, shared decision-making approach with their patients.

Visit the Toward Optimized Practice Clinical Guidelines page for more information.





New! CanMEDS-Family Medicine Competency Framework 2017

CanMEDS-FM 2017 is a competency framework designed for all family physicians regardless of practice type, location, or populations served. Together with the College of Family Physicians of Canada’s (CFPC) Family Medicine Professional Profile, it forms an overall picture of the roles and responsibilities of Canadian family physicians along with the competencies required to support their work.

Key changes and new elements in this version compared to CanMEDS-FM 2009 include:

  • An emphasis on generalism, and as part of this, community-adaptive expertise introduced within the Family Medicine Expert Role
  • Cultural safety introduced as an important feature of care provided by family physicians, with a description of related enabling competencies
  • Increased emphasis on patient safety
  • Continuous quality improvement introduced within the Leader, Scholar and Health Advocate Roles
  • The CFPC’s Four Principles of Family Medicine strengthened and reaffirmed
  • The Leader Role replaces the CanMEDS-FM 2009 Manager Role, as per changes made in CanMEDS 2015

All seven Roles were revised; however, the Family Medicine Expert Role underwent the most extensive adaptation, aiming to integrate competencies across all Roles.

How to use CanMEDS-FM 2017

Principles and suggestions for using CanMEDS-FM 2017 are as follows:

  • It applies to all family physicians. The Role descriptions and enabling competencies are independent of practice context, practice type, and population served. Taken as a whole, it captures both the common and distinctive competency requirements for family physicians
  • It defines the abilities needed by family physicians across the educational continuum of undergraduate, postgraduate, enhanced skills training, and continuing professional development
  • It does not define levels of competence, also referred to as benchmarks or milestones
  • It can be used by others who work with family physicians in medical education, family medicine research, quality improvement, and more broadly within the health care system.

The 63rd ASA is SOLD OUT! Registration is now closed.

ASA Registration is now closed. Thank you for your support!

If you are a Research Participant or a Speaker and still require to register please contact


63rd Annual Scientific Assembly | March 2-4, 2018 | Rimrock Resort Hotel, Banff, AB

The ACFP’s ASA brings together more than 350 family physicians, family medicine residents, and medical students to network and share best practices in primary care.

Relevant and Thought-Provoking Topics

  • Medical cannabis,
  • reconciling indigenous health,
  • seniors care,
  • addictions, chronic respiratory and pain management,
  • HPV/STI/BV evidence update,
  • refugee/newcomer health,
  • the diabetic foot,
  • transgender health, and much more.

For full session details, visit the 63rd ASA Agenda page or for more information visit the 63rd ASA Conference site.

Don’t Miss Out! Register Today!

The ACFP is pleased to offer a number of registration type options to fit the ASA attendee. We are also happy to offer a number of prorated registration options for those members who cannot commit to the full ASA schedule or are only interested in attending our Pre-Conference courses. Take a look at the registration options available to you.

Book Your Room Early!

Why wait? Make sure you are not disappointed and book your room at the official host hotel now, the Rimrock Resort Hotel. Reserve your room by calling 1-888-746-7625.

Best Advice Guide: Team-Based Care in the Patient`s Medical Home

Team-based care is an integral part of the Patient’s Medical Home (PMH) model. The continuous, comprehensive, patient-centred care provided by these family practices is made even more effective by building a strong, well-connected team that strives for the same goal.

This guide examines the benefits of team-based care for both practice efficiency and patients’ health outcomes.

More Best Advice Guides

Presented and developed by the College of Family Physicians of Canada, the Best Advice Guides are short, practical documents designed to help family physicians implement the pillars of the Patient’s Medical Home in your practice.

Past guides are available on the PMH website and new guides are always under development and added to this library as they become available.

First Five Blog: Should You R3?

By Dr. Shan Lu

If you are in your second year of residency, you may be considering whether or not to do an R3. I had the same question in my second year and, to some extent, still do. This blog shares my personal story and links to the CFPC website for additional information about their Certificate of Added Competence (CAC) program.

First, the story. I became interested in the Care of the Elderly (COE) when I was in my second year of Family Medicine Residency. At the time, I was already five months pregnant with my first child. I had decided that I was interested enough in the field of COE that I would like to specialize in it, so I went ahead and applied for an R3. I was accepted and the University of Alberta even agreed to a deferred start date so I could have my maternity leave as planned.

As my deferred start date drew closer, I became increasingly aware of the difficulties I might face in balancing residency and a child under one year old. I wanted to get working (part-time at that). I had previously established enough connections in the COE field that helped me to land a related part-time position, and I’ve been working at a job I love, and learning in the field, since. Occasionally, I’ve consider returning to do a 6-month accelerated R3 in COE—mostly so that I could have the CAC behind my name.

Now the details. The CFPC currently only allows those who have completed an R3 program in the areas of COE, Sports and Exercise Medicine (SEM), Family Practice Anesthesia (FPA), Palliative Care (PC), and Emergency Medicine (EM). Newly approved domains are Addiction Medicine and Enhanced Surgical Skills.

The CFPC website states they are evaluating how people who have on the job learning could apply and be qualified for a CAC within their chosen field. For example, Emergency Medicine (EM) is a bit different, as you could gain enough experience on the job to then challenge the exam or to go through an R3 EM program. More details are available on their website:

Everyone’s experience will be different but, here are some factors you may want to consider when deciding whether or not to do an R3:

  1. Your stage of life,
  2. If you can do the same job without the extra year or if the extra year is crucial to get into the field you like,
  3. How easily you would be able to obtain the CAC if you don’t do the R3 right after your R2 year.

Hope this has been helpful.

New – Canadian Guideline for Opioids for Chronic Non-Cancer Pain

Driven by a common interest in tackling the overuse and abuse of prescription opioids in Canada, the College of Family Physicians of Canada (CFPC) is pleased to be one of eight national organizations to form the Pan-Canadian Collaborative on Education for Improved Opioid Prescribing. This Collaborative formed in response to Health Canada’s 2016 Joint Statement of Action to Address the Opioid Crisis and shares a commitment to a coordinated, pan-Canadian approach to the safe, effective, and compassionate management of pain in our communities. The Collaborative is committed to providing education for improved opioid prescribing and to addressing the issue comprehensively and collectively.

The 2017 Canadian Guideline for Opioids for Chronic Non-Cancer Pain, developed by the Michael G. DeGroote National Pain Centre at McMaster University, the guideline will assist health care providers in practice decisions regarding the safe and effective use of opioids for chronic non-cancer pain management. It aims to keep patients safe from the potential harms of opioids while recognizing the therapeutic benefits of these medications.

The Collaborative is composed of members from the following organizations: the Canadian Centre on Substance Abuse, the Canadian Medical Protective Association, the Canadian Medical Association, the Federation of Medical Regulatory Authorities of Canada, Memorial University of Newfoundland MDcme, the Michael G. DeGroote National Pain Centre at McMaster University, the Royal College of Physicians and Surgeons of Canada, and the College of Family Physicians of Canada.

On May 18th The Honourable Jane Philpott, Minister of Health called for a review of the guideline development process by the Canadian Institutes for Health Research (CIHR). We understand that this may create questions about the quality of the new guideline so we want to provide you with the following information.

First, because of the importance of the opioid guideline to Canadian physicians and their patients, the CFPC understands the Minister’s decision to undertake a review that will allow all parties affected by the guideline to be certain about its credibility. The guideline development process was validated nationally and internationally and the resulting recommendations and guidance statements underwent multiple levels of review.

Based on our current knowledge, we believe the guidelines are based on the best available evidence and are appropriate to inform clinical practice, pending the outcome of the independent review. Together with our Collaborative partners, the CFPC remains committed to addressing the opioid crisis that is affecting people every day. We will keep you informed of the outcome of the independent guideline review as information becomes available.

Links and resources

The 2017 Canadian Guideline for Opioids for Therapy and Chronic Non-Cancer Pain is available online at

The guideline is also available at
This is an interactive, dynamic website and mobile app, that features decision aids and facilitates decision making between patients and providers.

For more information on Opioid Management visit the Opioid Management page.

2017 Price Comparison of Commonly Prescribed Drugs Guide

The ACFP is pleased to share with you the annual Price Comparison of Commonly Prescribed Pharmaceuticals in Alberta
document. Authored by Dr. Mike Kolber, Tony Nickonchuk, and Jayson Lee, the document identifies generic products (generally cheaper) from brand name products, a 90 day cost for standard doses (unless otherwise noted), and Alberta Blue Cross and Indian Affairs coverage.

The document is grouped by medication class and then ordered by cost. Please read the introduction for further explanation and specifically how the costs were calculated. While this document is not exhaustive, it contains many medications potentially used by office based primary care providers.

We Want to Hear From You – Please Take a Moment and Complete the Impact Assessment

We wish to hear about your experiences with and the impact the document has on your daily practice. The survey should take you ~5 minutes to complete. Questions are pertinent to the most recent year you have been using the document.


CFPC Launches Poverty Tool for Primary Care Providers

The College of Family Physicians of Canada (CFPC), eight of its provincial Chapters, and the territories, in collaboration with the Centre for Effective Practice (CEP), launched a new resource called Poverty: A Clinical Tool for Primary Care Providers to help family physicians identify patients who may suffer health issues as a result of living in poverty.

Individualized for Alberta

The Poverty tool is:

This clinical tool offers specific resources to help health care providers screen for and respond to poverty concerns in patient encounters, particularly when caring for underserved, vulnerable, and marginalized populations. Social determinants of health, such as poverty, play a major role in patients’ health outcomes. The CFPC and the Centre for Effective Practice (CEP) have joined forces to expand and disseminate an Ontario poverty tool, which the CEP developed with clinical leadership from Dr Gary Bloch, to raise awareness among family physicians and other health professionals of how poverty affects their patients.

Next Page »