October 2000 volume 4, issue 2 

On May 2, 2000, the Ontario government tabled what many would argue was another "good news" budget. This budget contained a significant number of changes that will affect most Ontarians, but almost hidden, in one very small section, was a proposal that could dramatically affect professionals in this province.

The government is proposing to table legislation that will allow all regulated professionals to incorporate.

Such legislation would allow certain professionals — doctors, lawyers, dentists, optometrists and even accountants, to name a few — to enjoy many of the same tax and non-tax advantages that incorporation has offered other small businesses. The government has made it clear, however, that in no way would incorporation limit the professional liability of the individual. Additionally, non-members of professional associations would be prevented from owning shares in the professional corporation. In other words, a professional’s spouse would not be allowed to own shares in a professional’s corporation unless he or she was also a member of the association governing the professional.

Incorporation can result in many tax advantages being unlocked within the professional practice, like making use of the significantly lower corporate small business tax rate, potentially accessing the enhanced capital gains exemption, reviewing income splitting opportunities, and possibly even creditor-proofing investment assets generated from your practice.

The partners at Wilkinson and Company LLP view this proposed legislation as a significant opportunity for many professionals in our community. Dan Dickinson, Jennifer Fisher and Stephen Thompson — have been assigned the task of monitoring and interpreting this new legislation, and designing a program that will help our clients take full advantage of these new proposals.

Unfortunately, we do not yet have a date for the release of the legislation. In the budget, the government committed to consult with appropriate stakeholders and then develop legislation based on the outcome of these consultations. Any changes will not come into effect until the legislation has received Royal Assent by the Ontario Legislature. The exact date of the passing of this legislation is not known, but we are keeping a close eye on the progress of this very important legislation.

In the meantime, if you have any questions about how incorporation could benefit you, please do not hesitate to call your partner at Wilkinson and Company LLP.

Steve Thompson, CA, CFP, TEP is a tax partner and Certified Financial Planner with Wilkinson & Company LLP. He is a graduate of the Canadian Securities Course, and author of the best-selling tax guide, Beat the Taxman: Easy Ways to Save Tax in Your Small Business.