Some doctors in Nova Scotia are warning that potential changes to federal income taxes may worsen the physician shortage in the province.
The changes target those who split income through a professional corporation, but some say it could create another barrier for a region that’s already struggling to recruit and retain doctors.
“That will make it no longer tax efficient to try to income split with, for example, a spouse or an adult child,” says Rob Miedema, a tax lawyer in Dartmouth.
The proposed changes will close what the federal finance minister says are loopholes that allow high-income earners to pay lower taxes through corporations.
Ending income-splitting could bring in another $250 million a year in federal taxes, but some worry it will force doctors out of Nova Scotia, worsening the shortage.
Dr. Paul Young is among the nearly 70 per cent of physicians who are incorporated in Nova Scotia. Like many doctors, he says he uses that corporation to help pay for insurance and plan for retirement.
Now, he says he’s trying to figure out how to make things work in Nova Scotia.
“Young physicians such as myself who have families are in the middle of paying back their student-loan debt won’t be able to afford to continue practising in Nova Scotia, says Young, a family physician in Bedford.
Doctors Nova Scotia says its members may consider leaving for one of the seven provinces where physicians are paid more, in order to offset a tax bill that is suddenly tens of thousands of dollars higher.
“Physicians have no capacity to address this,” says Kevin Chapman of Doctors Nova Scotia. “They can’t raise their price, they can’t sort of go out and market.”
“All of a sudden, to have that change, really turns your life kind of upside down,” says Young.
Miedema says the changes will impact more than just Canada’s top income earners.
“In my experience, this impacts almost all small business people and all professionals,” he says.
The Canadian Federation of Independent Business says Atlantic Canadians are disproportionately affected.
“The cumulative tax burden is one of our biggest challenges and these new changes proposed by the federal government could make it even more difficult for small business owners,” said Jordi Morgan, vice-president of the Atlantic chapter of the Canadian Federation of Independent Business. “There is worry, frustration, and in many cases, outright anger.”
The federal government is continuing consultations on the proposed changes until October.