Residents & Fellows

The Registered Retirement Savings Plan (RRSP) contribution deadline to receive a tax deduction on your 2024 income tax return is March 03, 2025.  The RRSP allows individual taxpayers to deduct the amounts contributed.   The earnings (interest, dividends, capital gains), accumulate in the plan free of current tax so that they grow more quickly than the taxable earnings of investment made by the taxpayer directly in a taxable account would. Thus there are two benefits to an RRSP: first the current tax savings resulting from the deduction of contributions, and second the accumulation of tax-free earnings on money while in the plan.

You can deduct RRSP contributions based on the sum of your current year contribution limit plus your carryforward contributions. The maximum amount that can be contributed to your 2024 RRSP is the lesser of (1) 18% of your earned income from the previous year (wages/salary and self-employment income) or (2) $31,560 plus your carryforward contributions.   You can obtain your 2024 RRSP contribution limit on your 2023 Notice of Assessment or at My CRA. If you exceed the maximum contribution limit, the excess amount will be subject to a 1% per month penalty until you correct the excess contribution by withdrawing the excess amount.

Canada’s income tax system levies federal and provincial taxes on individuals. Canada uses a progressive (graduated) income tax system where your earnings are taxed at higher rates (tax brackets) as your income increases. Tax brackets determine the rate of tax paid for each additional dollar of income within the defined bracket/threshold. Those with lesser incomes pay a lesser percentage of taxes on the income earned in lower tax brackets, while those earning higher incomes in higher tax brackets have to pay a higher rate of tax.

In addition to federal income tax, provincial taxes are imposed by the province or territory in which you reside or carry on business or professional activities. Therefore, a physician working in multiple provinces or territories will be required to allocate their professional earnings between the various provinces or territories. Provincial tax rates, tax brackets, and credits vary by province and are calculated using the taxable income calculated under federal income tax rules on schedules accompanying the T1 Individual tax return.

On April 17, 2024, the Minister of Finance presented the Budget 2024: Fairness for Every Generation. This blog post briefly summarizes all the tax announcements from the Federal Budget 2024 relevant to physicians.

2024 Federal Budget

Capital Gains Inclusion Rate: Budget 2024 proposes to increase the inclusion rate (the portion of capital gains on which tax is paid) for capital gains realized.  The new rules will apply to capital gains realized on or after June 25, 2024.

• For individuals with more than $250,000 in capital gains in a year, the capital gain inclusion rate will increase from one-half to two-thirds. Individuals will continue to only pay tax on 50 percent of any capital gains up to $250,000 per year.  Capital gains from principal residences will remain tax-free to ensure Canadians do not pay capital gains taxes when selling their home.  These proposals are expected to have limited impact on physicians unless they realize a significant one-time gain in a year i.e sale of cottage and dispositions on death.
• For corporations and trusts the inclusion rate will increase to two-thirds for all capital gains (no exemption up to $250,000).  We note that these proposed inclusion rate changes likely disincentivize incorporated physicians, resulting in degrading the integration principles.  Incorporated physicians should consider whether acceleration to trigger capital gains before June 25, 2024, is appropriate.

Canada’s income tax system levies federal and provincial taxes on individuals. Canada uses a progressive (graduated) income tax system where your earnings are taxed at higher rates (tax brackets) as your income increases. Tax brackets determine the rate of tax paid for each additional dollar of income within the defined bracket/threshold. Those with lesser incomes pay a lesser percentage of taxes on the income earned in lower tax brackets, while those earning higher incomes in higher tax brackets have to pay a higher rate of tax.

In addition to federal income tax, provincial taxes are imposed by the province or territory in which you reside or carry on business or professional activities. Therefore, a physician working in multiple provinces or territories will be required to allocate their professional earnings between the various provinces or territories. Provincial tax rates, tax brackets, and credits vary by province and are calculated using the taxable income calculated under federal income tax rules on schedules accompanying the T1 Individual tax return.