When incorporation actually pays
The MPC's advantage is simple: practice income retained in the corporation is taxed at about 12.2% instead of your personal marginal rate, and the difference compounds until you take it out. That advantage only exists for money you do not spend. A first-year attending servicing student debt, setting up a household and catching up on life often spends close to everything, and for that year the corporation mostly buys paperwork.
So we treat it as arithmetic, not doctrine. If you can retain a meaningful slice of income each year, the deferral outruns the setup and annual costs quickly; if you cannot yet, waiting is the better tax plan. One honest caveat belongs up front: an MPC gives no protection from malpractice claims. Professional liability follows you personally and CMPA protection remains essential, so liability is never the reason to incorporate; tax and flexibility are.
The CPSO layer on top of ordinary incorporation
An MPC is an Ontario business corporation with a second rulebook bolted on. The articles must restrict the business to the practice of medicine and activities related or ancillary to it, including investing surplus funds. The name must follow the required format, and the corporation cannot practise until the College of Physicians and Surgeons of Ontario issues a Certificate of Authorization, renewed annually thereafter. Get the articles wrong and the College bounces the application; we draft them to pass the first time.
| MPC requirement | The rule |
|---|---|
| Corporate name | Your surname, optionally with given names or initials, plus the words Medicine Professional Corporation |
| Voting shares | Physicians who are CPSO members only |
| Non-voting shares | Your spouse, children and parents; a trust may hold shares for minor children |
| Directors and officers | Must be physician shareholders |
| Permitted business | The practice of medicine plus related or ancillary activities, including temporary investment of surplus funds |
| Licence to practise | Certificate of Authorization from the CPSO, renewed every year |
Family shares: a real feature with a TOSI-shaped limit
Ontario's rules give physicians and dentists something no other regulated profession here gets: family members may hold non-voting shares of the professional corporation. The catch arrived in 2018. TOSI taxes most dividends paid to family shareholders at the top personal rate, and the excluded-shares exemption is closed to professional corporations, so simple income sprinkling is finished.
What survives is narrower but genuinely useful: dividends to your spouse become TOSI-free once you are 65, mirroring pension splitting, and a family member who genuinely works around 20 hours a week in the practice can qualify under the excluded-business test. We usually still build the family share classes at setup, because adding them later means a reorganization, and the age-65 rule alone gives them long-run value. The annual who-gets-paid-what decision then belongs to Tax Planning & Advisory.
Timing the switch for a new attending
Incorporation mid-career is a Tuesday; incorporation in your first years needs sequencing. Income earned before the Certificate of Authorization is issued is personal income, so the changeover date sets a hard line through your year. Around it we coordinate the pieces in order: articles and CPSO application, corporate bank account, CRA program accounts, payroll registration if salary is part of the plan, and the switch of your billing arrangements so OHIP pays the corporation rather than you.
Two decisions at setup repay attention. The fiscal year-end does not have to be December 31; a well-chosen year-end can smooth the first short year and spread filing work away from personal tax season. And the opening share structure should anticipate the family classes above, even if no family dividends are planned for years. Our Incorporation engagement covers the articles, the College application and the CRA setup as one package, quoted in writing.
What it costs to run, and when to say no
An MPC is a permanent client of the compliance system: an annual T2, a Certificate of Authorization renewal, corporate records, and payroll filings if you take salary. Those costs are modest against the deferral for a physician retaining income, and a bad trade for one who is not there yet. If you are weighing it, a free 15-minute discovery call is enough for us to tell you which side of the line you are on, and we will say plainly if the answer is not yet.
