NLMA concerned about proposed tax changes
On July 18, the federal Finance Department announced a 75-day consultation process on tax measures, which will affect private companies.
The Newfoundland and Labrador Medical Association (NLMA) has made a written submission to federal Finance Minister Bill Morneau outlining its concerns with the proposed changes.
Approximately half of the practicing doctors in the province have registered professional medical corporations, and the proposed tax change will affect the ability of these physicians to invest their earnings in their medical practice, hire staff or plan for their retirement, the NLMA says.
Self-employed physicians do not receive health or dental benefits, life insurance or employment insurance benefits, while still managing overhead costs, the association says.
“It is critical for the federal government to comprehend how these proposed changes will affect doctors in Newfoundland and Labrador and, in turn, the province’s health care system,” NLMA president Dr. Lynn Dwyer said.
Newfoundland and Labrador competes to recruit and retain doctors, and over the past decade has lost 54 physicians annually to practice outside the province, the NLMA says.
The NLMA surveyed its members about how they will be affected by the proposed tax changes.
If the proposed tax changes are approved, 83 per cent of NLMA members said they might consider reducing their number of work hours to avoid paying higher taxes, while 62 per cent said they would consider leaving the province to find work elsewhere, the NLMA stated.
“The proposed federal tax changes will have the greatest impact in provinces that have a largely rural, generalist-based system,” said Dwyer. “The NLMA is concerned that Newfoundland and Labrador stands out as a jurisdiction that may have the most severe unintended impact of these proposed tax changes.”
The three tax measures under review by the federal government are “Income sprinkling,” the distribution of income from a private corporation to a family member to be taxed at a lower rate; holding a passive investment portfolio inside a private corporation; and the practice of converting a private corporation’s regular income into capital gains.