The Canadian Medical Association is asking the federal government to reconsider its proposed changes to capital gains taxation, arguing they will affect doctors' retirement savings.
Kathleen Ross, the association's president, says many doctors incorporate their medical practices and invest for retirement inside their corporations.
The proposed changes would increase taxes on those investments, something the association says will add "financial strain" for doctors who do not have a pension to rely on.
Ross argues the change could also affect recruitment and retention of physicians in Canada.
Doctors are the latest group to come out against the tax change, which is expected to largely affect wealthier Canadians and businesses.
The federal budget presented last week proposes making two-thirds rather than one-half of capital gains — or profit made on the sale of assets — taxable.
The increase in the so-called inclusion rate would apply to capital gains above $250,000 for individuals, and all capital gains realized by corporations.
"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," Ross said in an interview.
Ross pointed out that doctors would not be eligible for the $250,000 exemption to the higher inclusion rate, since the investments they make are largely inside corporations.
The Liberal government has argued that the tax change is about levelling the playing field between those who earn income through capital gains versus employment.
Economists in favour of the change say that increasing the inclusion rate improves the tax system by making sure all types of income are taxed similarly.
The Liberal government is also selling the change as a way to make the wealthy pay more to support things like housing and health care for all Canadians.
As a result of the capital gains tax change, the federal government estimates only 0.13 per cent of Canadians with an average income of $1.4 million are expected to pay more in taxes in any given year.
But Ross pushed back on the idea that doctors are highly-paid.
"I need to combat the messaging that physicians are highly paid, given the extensive years of their of their professional training. And the fact that we graduate with substantial debt," Ross said.
According to the Canadian Institute for Health Information, the average gross income per physician in 2022 was $357,000. Self-employed doctors also have to pay for overhead costs such as rent and staff salaries from that amount.
Physicians can still invest in a Registered Retirement Savings Plan — which is tax-advantaged — so long as they pay themselves a salary out of their corporation.
During a news conference on Tuesday, Finance Minister Chrystia Freeland was asked about the pushback from doctors.
She responded by highlighting how much the government has spent on health care, including money earmarked in the budget for pharmacare, dental care and student loan forgiveness for doctors working in rural communities.
"I think Canada's health-care professionals recognize, maybe more than anyone else, how important these investments are," said Freeland.
"They are massive and I think it's entirely appropriate, it's really fair to ask those who are doing the best in our society to pay a little bit more to fund them."
Prime Minister Justin Trudeau was also asked at a news conference about the request from physicians to reconsider the tax change.
His response overlooked the concern from doctors that all of their investments would be subject to a higher inclusion rate because they are made through their incorporated business.
"We need young people to be confident about the future," he said.
"So yes, we are asking the most successful in this country to do a little bit more."
Banner image: Nojoud Al Mallees
This report by The Canadian Press was first published April 23, 2024.
