When you stop practising, your medical corporation has to change too

A medical professional corporation exists to practise medicine. Once you stop, it can't stay one. The money inside, though, doesn't have to come out all at once. Here's how retirement generally works for an incorporated Ontario doctor.

General information only. This is not advice.

This guide explains how medical professional corporations generally work in Ontario. It isn't tax, legal, accounting, investment or insurance advice, and it doesn't recommend any course of action. Rules change and every doctor's situation is different. Please talk to your own accountant and lawyer before making any decision about your corporation.

Last reviewed: October 2026

First question: are you fully retired?

A medical corporation can only practise through a CPSO member. So the trigger isn't your age or a date on the calendar. It's whether you're still doing any medical work.

Since April 1, 2026, the CPSO has a retired class of registration, at half the regular annual fee.
Doctors in the retired class can't provide any health-care services, including independent medical exams, administrative medicine or medical-legal opinions.
A doctor still doing some of that work stays in the regular class and can generally keep the corporation running.
In Alberta, the CPSA says a physician's professional corporation closes automatically when their practice permit ends.

The three usual paths

Sell the practice

Possible if there's a buyer and something to sell: patients, equipment, a lease, goodwill. Only another physician can buy the voting shares. After an asset sale, the corporation still has to be converted or wound up.

Convert to a holding company

Same company, new name and new rules. The money stays invested and is drawn out gradually over many years.

Wind up (dissolve)

Sell what's left, pay the bills and taxes, pay out the balance to the shareholders, and close the company. Everything comes out as taxable dividends, so the tax deferral ends.

Some planners use a rough rule of thumb: if the corporation holds less than about a year of living expenses, winding up is often considered; if it holds more, converting often is. It's a starting point for a conversation with your accountant, not a rule.

Converting to a holding company: the usual steps

1
Close the practice properly, including patient notice and records. CPSO policy requires at least 90 days' notice to patients.
2
Stop all medical work through the corporation.
3
Plan the timing with your accountant, including the final year of salary.
4
File articles of amendment with Ontario to remove "Professional Corporation" from the name and lift the medicine-only restriction.
5
Update the CPSO. The Certificate of Authorization ends, along with the annual renewal.
6
Review who owns the shares. Once it's no longer a professional corporation, the college's limits on shareholders no longer apply.

Because it's the same company, its bank and investment accounts and any corporate-owned insurance policies generally stay where they are. It still files a corporate tax return every year.

Drawing income in retirement

The general idea is to draw money out steadily, in lower-tax years, rather than all at once. Common tools include:

Taxable dividends. Paying them can also release a refund of part of the tax the corporation paid on its investment income.
Capital dividends. These are tax-free and come from a "capital dividend account" built up from the untaxed half of capital gains and from life insurance proceeds. An election has to be filed before each one.
Dividends to a spouse. Once the doctor turns 65, these are generally exempt from the TOSI rules.
Pension income from HOOPP or an IPP, which can be split with a spouse.

Once salary stops, RRSP room and pension contributions stop building too.

If a doctor dies

If it's still a medical corporation, a shareholder's death doesn't automatically cancel its certificate. But with no physician left to practise through it, the CPSO can revoke it, and the executor then converts or winds it up.
At death, a person is treated as having sold their shares at fair market value. That gain is taxed on the final tax return, unless the shares go to a spouse, which defers it.
When the estate later takes money out of the corporation, it can be taxed again as dividends. Accountants have time-sensitive techniques to reduce this "double tax", some of which must be done within the estate's first tax year.
Ontario's Estate Administration Tax is 1.5% of an estate's value above $50,000. Many doctors use a second will for private company shares, which isn't probated.
In a group practice, a shareholder agreement matters, because only another physician can buy the voting shares.

Where insurance sometimes fits

Some doctors use permanent life insurance owned by the corporation as part of their estate planning. In general terms:

The corporation pays the premiums with dollars taxed at corporate rates rather than personal rates.
At death, the proceeds above the policy's cost base can be added to the capital dividend account and paid out to the estate tax-free.
That cash can help pay the tax at death without selling investments at a bad time.
Age and health affect cost and approval, so it's usually looked at well before retirement.

It isn't right for everyone. If the corporation is small and will be wound up, or the money will be spent during retirement, it may not make sense.

Common mistakes to avoid

Letting the certificate lapse by accident while still practising.
Forgetting that "Professional Corporation" has to come out of the name once it stops being one.
Assuming retirement on its own opens up income splitting with a spouse. The clear TOSI exception is the doctor's 65th birthday.
Paying a capital dividend without filing the election first.
Taking one huge dividend in a single year instead of spreading it out.
Waiting until health changes to think about estate planning.

Questions worth asking your accountant

1.Based on what's in my corporation, should we convert it or wind it up?
2.Which years are the cheapest for me to draw dividends?
3.Is my spouse a shareholder, and when can dividends to them avoid TOSI?
4.What would the tax bill look like if I died this year, and how could we reduce it?
5.Do I need a second will for my corporation's shares?

FAQ

Do I have to close my corporation when I retire?

Not necessarily. It can't stay a medical corporation once you stop all medical work, but it can often be converted into a regular holding company instead of being dissolved.

Can I keep doing a little work and keep my corporation?

Generally yes, if you stay in the CPSO's regular registration class. The retired class doesn't allow any health-care services.

Do my investments have to be sold when the corporation converts?

Generally no. It's the same company with a new name and articles, so its accounts and policies usually stay in place.

What happens to my corporation if I die?

Your executor deals with it, usually by converting or winding it up. Tax planning after death is time-sensitive, so executors should involve an accountant early.

Is this page advice?

No. It's general information only. Talk to your accountant and lawyer about your own situation.

Keep reading

Medical professional corporations: the basics →

Before you act on anything here

This page is general education, written for Ontario physicians. It is not advice for your situation.
Tax rates, college rules and government programs change. Figures are current as of October 2026.
Nothing here is a recommendation to buy, sell, convert or wind up anything, including any insurance or investment product.
Your accountant and lawyer should review any change to your corporation before you make it.

Sources

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