For many physicians, the decision to incorporate their practice is a turning point. Incorporation opens doors to new opportunities for building wealth and reducing taxes, but it also introduces complexity. Salary or dividends? Income splitting and tax deferral? Corporate investments or personal? Each choice shapes a doctor’s long-term financial security.

Few professionals understand these challenges as deeply as Todd Zanatta, CPA, CA, a Sudbury-based accountant who works with hundreds of physicians across Northern Ontario at Baker Tilly SNT LLP. With over 18 years of experience, Todd specializes in helping medical professionals turn their high incomes into lasting financial strength.

The most common misstep Zanatta sees among doctors? Neglecting tax planning.

“Without a strategy, doctors often end up paying more tax than necessary,” Zanatta says. “Proper planning ensures every dollar is working as efficiently as possible.”

Why doctors are different

While many business owners grapple with loans, payroll, or inventory costs, physicians often operate from a stronger cash position. “The OHIP system compensates physicians in Ontario,” Zanatta says. But if their finances aren’t managed properly, the tax bill can be massive.

This dynamic makes tax planning especially important for doctors. Incorporation can help by allowing physicians to defer taxes and create long-term savings inside their professional corporations. “If you earn $100 and only spend $30 on personal lifestyle, you can keep $70 in the company and do really good things with it,” Zanatta says.

Smart strategies for incorporated physicians

Income splitting

Income splitting remains one of the simplest and most effective tools for physicians. By shifting income to a spouse or family member in a lower tax bracket, households can reduce their overall tax burden. “In certain situations, doctors can save $30,000 to $40,000 a year through income splitting,” Zanatta says. “That’s significant.”

Salary vs. dividends

Another major consideration for incorporated physicians is how to pay themselves. The right approach depends on income levels and personal circumstances. Generally, once medical profit passes the $500,000 mark, a salary becomes more tax-efficient since the corporate tax rate jumps significantly. For those earning less, deciding between salary and dividends requires a more tailored analysis to strike the right balance, Zanatta says.

Salaries build RRSP contribution room and CPP benefits, while dividends can create flexibility and in some cases reduce taxes. Often, the best approach is a blend.

Corporate investing

Corporate savings are perhaps the most powerful wealth-building tool for doctors. By investing funds that remain inside the corporation, physicians can create long-term retirement income. “If a doctor earns $100 and only spends $30, that leaves $70 in the company they can invest,” Zanatta says. “Over 20 years, that $70 can grow. Later, when they retire and have no medical income, they can draw this money slowly and pay much less tax than if they weren’t incorporated.”

“Corporate savings are the absolute hallmark of a medical professional corporation.”

Insurance inside the corporation

Life insurance is another important tool. Properly structured, it can help physicians create tax efficiencies and preserve wealth for family or charitable giving.

Collaboration matters

Doctors have unique financial situations, and no single professional can cover all aspects. That’s why collaboration is critical. “Financial planners look at investments, insurance, estate planning—they also work with lawyers and accountants,” Zanatta says. “Together, they create the proper long-term plan. Doctors need that team approach.”

Advice for every stage

For physicians just starting out, Zanatta’s advice is simple: “Get a tax accountant and an investment advisor from the start—and make sure they have experience with physicians. The physician world, tax-wise, is very different. Specialized knowledge makes all the difference.”

For those later in their careers, planning is equally important. Coordinating withdrawals from the corporation with Canada Pension, Old Age Security, and other pensions can reduce taxes and create a smoother retirement income stream.

Building long-term security

At its core, financial planning for doctors is about being intentional—understanding how today’s decisions will affect tomorrow’s opportunities. With the right structure, physicians can reduce taxes, build wealth, and create lasting security for themselves and their families.

“Tax planning is about more than just saving money today,” Zanatta says. “It’s about making sure your hard work translates into the lifestyle, retirement, and legacy you want.”

With proactive planning, doctors can turn professional success into financial freedom that lasts well beyond their years in practice.

Todd Zanatta, CPA, CA, is a Sudbury-based accountant at Baker Tilly SNT LLP with over 18 years of experience specializing in tax and financial planning for physicians. He represents medical students, residents, practicing doctors, and retired physicians across northern Ontario, helping them minimize taxes, grow wealth, and secure their financial futures.

^{This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Kilgour Group Private Wealth Management is solely responsible for its content. Seek advice on your specific circumstances from an IG Advisor. Insurance products and services distributed through I.G. Insurance Services Inc. Insurance license sponsored by The Canada Life Assurance Company. Views of third-parties may not be shared by IG Wealth Management.}