In the past few weeks, we have seen an increase in interest by professionals in all medical fields (e.g. general practitioners, surgeons, dentists, etc.) looking to relocate their practices to Canada. Here is a brief overview of the tax consequences of relocating to Canada for U.S. doctors.
Why are doctors moving to Canada?
What we are hearing is that doctors want more certainty concerning the profession and the impact that certain legislation will have on their family’s futures. There are proposals to bundle payments to doctors and provide performance-based incentives. While these may sound positive, many doctors admit that the guidance on how to achieve these incentives is confusing. Many doctors fear that they will lose some of their clinical autonomy in diagnosing and determining the most appropriate treatment strategy for their patients to insurance providers and policy makers. Add to this equation the fact that administrative costs, infrastructure costs and professional insurance premiums will increase as a result of the reforms, and doctors are wondering if they can still earn a reasonable income.
Managing tax issues when moving your practice to Canada
There are a number of issues to be considered when moving your health care practice from one location to another, especially if the new location is in another country. One key consideration is what the impact of relocation will have on your overall disposable income and purchasing power.
We will work with you to help you understand the various items that will affect your after tax disposable income. Chief among these, of course, is the tax you will pay on your income. There are a number of business structure options available to doctors and we will work with you to determine the most suitable structure. Our goal is to find a structure that you understand, that provides adequate liability protection and which minimizes both tax and administrative burdens.
We will also work with you to determine what relocation and set-up costs will be deductible, if any, so that you can fully understand the tax implications of your decision.
Cost of living changes
You have looked at practice in a new city, fallen in love with the life style, found a great new home and are ready to move. The looming question is, “can you afford to live here”? We recommend that early in the investigation process, you work with a professional business and tax adviser to determine whether you will be able to maintain your present standard of living in the new location.
Our approach is to develop models that will show you whether you are making a step forward, or whether you are moving backward so that you can undertake informed negotiations. Models generally include housing costs, living costs (e.g. groceries, schooling, and utilities), medical costs, transportation costs, and taxes as chief inputs. We contrast the costs in your new location to those same costs in your current location to help you understand whether your move will result in higher or lower purchasing power.
AG TAX LLP Can Help
If you have any other tax-related queries, and/or need assistance with tax planning/filing please contact AG Tax. Our tax professionals are highly-experienced with U.S. and Canadian tax laws and can provide you the right guidance to handle your tax situation.
Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts, who are highly-qualified and experienced in handling situations related to U.S., Canada and other international tax laws.
We can assist with:
- Canadian Personal and corporate tax returns
- Cross Border Taxation and Business Planning
- Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 416-238-5920 (Greater Toronto Area, ON)
- 604-538-8735 (Greater Vancouver Area, BC)
- 780-702-2732 (Greater Edmonton Area, AB)
Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
