Here are some of the main tax measures which will affect the 2019 tax returns of physicians.

1.Decrease in Small Business Tax Rate

As we all know, the Federal small business tax rate decreased from 10% to 9% causing the combined Federal and Ontario small business tax rate to become 12.5% from January 1, 2019.

Now, this reduction has made long-term deferral of income in a corporation more appealing. This is because a smaller tax rate enhances the deferral opportunities available for the income earned and left in the corporation.

2.Dividend Tax Credits

With the decrease in the small business tax rate, the taxation of non-eligible dividends will be adjusted to reflect the same. Keep in mind that non-eligible dividends are distributed from corporate income taxed at the small business rate.

3.Restricting Tax Deferral Opportunities for Passive Investments in a Private Corporation

The following changes will take place after 2018.

  1. Steps will be taken to limit the ability of Canadian-controlled private corporations (having considerable passive investments) to benefit from the small business tax rate.
  2. These corporations will also be restricted from getting refunds on taxes paid on their investment incomes while they are distributing dividends from income which is taxed at the general corporate rate.

4.Tax Deductions to be provided for Employee Contributions to the Enhanced Canada Pension Plan

In 2019 the Canada Pension Plan is being enhanced which means that the more contributions you make the more benefits you will receive.

The first phase of the enhancement involves the introduction of a Tax Deduction (instead of a Tax credit) for employee contributions to the enhanced part of the CPP. This is very beneficial since the deduction is calculated based on your effective tax rate while the previous tax credit was at the lowest rate of about 20.05%.

This information is referenced from Department of Finance Canada: List of Tax Measures coming into effect in 2019.

Get in touch with us if you have any questions about any tax changes that you think might affect you. You can reach us at 647-499-6636 or at You’ll also find a ton of useful information on our website