How a medical professional corporation works, in plain English
Most Ontario doctors practise through a corporation. It plays by stricter rules than an ordinary company, and those rules matter most when you retire. Here's a plain-English tour of how it works.
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
What makes it different from a regular company
A medical professional corporation (often called an MPC) is an Ontario company with extra conditions set by the Business Corporations Act and the College of Physicians and Surgeons of Ontario (CPSO).
- It has to be incorporated in Ontario. Federal corporations can't qualify.
- Its name must be the doctor's surname plus "Medicine Professional Corporation", with nothing else added.
- Only CPSO members can own voting shares, and only physician shareholders can be directors or officers.
- Non-voting shares can be owned by the doctor's spouse (including common-law), children (including step-children) or parents, or held in trust for minor children. Holding companies and parents-in-law can't own shares.
- It needs a Certificate of Authorization from the CPSO, renewed every year. If a renewal is missed, the CPSO can revoke the certificate after 60 days' notice.
- It can only practise medicine and do related things, which includes investing surplus money.
- It does not protect the doctor from malpractice claims. Professional liability stays personal.
Why so many doctors incorporate
It comes down to the gap between corporate and personal tax rates. In Ontario in 2026:
- Active business income up to $500,000: 11.2% tax inside the corporation from July 1, 2026 (12.2% before that).
- Investment income earned inside the corporation: about 50.17%, with part refunded when dividends are paid out.
- Top personal rate on regular income: 53.53%.
Money left inside the corporation is taxed again when it comes out, usually as dividends. So incorporating is mainly a way to defer tax and choose when to pay it, not a way to avoid it.
One catch while practising: once the corporation earns more than $50,000 a year of investment income, the federal small business tax rate starts to shrink, and it's gone entirely at $150,000.
Splitting income with family: mostly closed since 2018
Paying dividends to a spouse or adult children used to be a common way to lower a family's tax bill. Since 2018, the tax on split income (TOSI) rules generally tax those dividends at the top rate unless an exception applies. For medical corporations, the main exceptions are:
- The family member worked in the practice an average of at least 20 hours a week, either this year or in any five earlier years.
- Once the doctor turns 65, dividends paid to their spouse are generally exempt, whatever the spouse's age. This doesn't extend to children.
- A "reasonable return" for family members 25 or older, based on what they've contributed. It's vague and hard to rely on.
An exception that helps many other business owners, called "excluded shares", isn't available to professional corporations.
Pension options while practising
- Since January 2025, an Ontario medical corporation can become a HOOPP employer, so the doctor and their staff can join the Healthcare of Ontario Pension Plan.
- An Individual Pension Plan (IPP) is another option some doctors look at, usually from their 40s on.
- Both need the doctor to be paid a T4 salary from the corporation. Dividends alone don't create pension room.
Questions worth asking your accountant
- 1.Is my corporation's share structure still right for my family?
- 2.Does my spouse qualify for any exception to the TOSI rules?
- 3.How close is our investment income to the $50,000 threshold?
- 4.Would more salary make sense, for RRSP room or a pension?
FAQ
Can my holding company own shares of my medical corporation?
No. In Ontario, only CPSO members, certain family members, and trusts for a doctor's minor children can own shares.
Does incorporating protect me from a malpractice claim?
No. The corporation doesn't limit a doctor's professional liability.
Can my adult children own shares?
Yes, as non-voting shareholders. But dividends paid to them are generally caught by the TOSI rules unless an exception applies.
Is this page telling me what to do?
No. It's general information only. Your accountant and lawyer can tell you what applies to you.
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
- CPSO: Incorporation issuance and renewal
- CPSO: Frequently asked questions about incorporation
- CPSO: Relevant regulations and by-laws (PDF)
- CI Global Asset Management: Tax highlights from the 2026 Ontario Budget
- Siskinds: Expanded TOSI rules for professionals
- HOOPP: Ontario physicians eligible to join HOOPP
Questions about your own corporation?
Start with your accountant and lawyer. If insurance or pension questions come up along the way, I'm happy to talk them through, no pressure.
Book a 20-minute chat