Old fella wrote: ↑Tue May 22, 2018 6:58 am
What annoys me the most(although legal) is professional people specialist doctors and high end lawyers etc setting up incorporated companies for the sole purpose of greatly reducing their taxable income. As has been noted such people utilize family members, kids even as directors/ employees or whatever to get around tax issues. I understand now rules have tightened up somewhat but it was grossly unfair to begin with. The average wage earner and retiree like me cannot incorporate to avoid the CRA hands. I bet many of these high income earning professionals pay less that myself and wife do on our retirement pensions and RIF deductions, as a matter of fact I get into heated discussions with a family member who does exactly that. The response is “ well tis perfectly legal” which it is.
Doctors and lawyers who incorporate themselves are entrepreneurs running small bussiness. No different than someone running a corner store or a lawn care company. They all require capital investment, have overhead, debt servicing, employees, risk, bussiness insurance, and yes they are taxed as a small bussiness. None of them have access to employment insurance, paternaty leave, pensions, disability insurance or health coverage.
In the case of doctors we could drastically reduce the amount we pay them by making them employees of the province rather than contractors. But if we do the tax payer will be on the hook for office space, equipment, health insurance, malpractice insurance, paternity leave, pensions and so on.
As employees we forget what we really are compensated. Your salary, plus Medical, plus dental, plus the employers side or EI and CCP, plus pension.
Malpractice insurance is probably one of the biggest reasons the province wants doctors to be contract employees.
We can’t have it both ways. We have chosen the small bussiness route for a reason. It drives efficiency and jobs. Is it perfect? No. Income sprinkling was just an abuse IMO.
If we want to ellinimate some groups from being entrepreneurs we had better be very careful of the consequences. In the case of doctors for example, higher taxpayer cost, less effiency and less of them as they flee south of the boarder to a more bussiness friendly environment.
A doctor who is a general practitioner for example can easily spend 30-40% or more, of thier totall billable income on overhead. So maybe they make 175K billing the government. After over head it’s not that much.