HealthcarePapers 17(4) April 2018 : 77-86.doi:10.12927/hcpap.2018.25572

Measuring Physicians’ Incomes with a Focus on Canadian-Controlled Private Corporations

Lars Nielsen and Arthur Sweetman


Understanding physician remuneration and its growth is extremely complex, much more so than for a typical worker. Highlighting one narrow aspect of this issue, this paper focuses on governments' increased incentives for physicians to incorporate and the ensuing physician response in the period 1996–2011. Nationally, incorporation rates increased for both general practitioners and specialists between 1996 and 2011. We observe that the largest changes in provincial regulation were in Ontario, and incorporation increased from 18% in 2001 to 54% five years later. Incorporation is less common in Quebec, where the incentives were the weakest. Married male physicians, middle-aged physicians (regardless of sex), physicians with higher incomes and physicians born outside of Canada are all more likely to incorporate their practices. On average, incorporated physicians realized a 4% reduction in personal income taxes and accumulated retained earnings of at least $10,000 per annum in their Canadian-controlled private corporations in our data period. The benefits of incorporation stem largely from retained earnings and income splitting. Many physicians benefit from one or both; however, the benefits of incorporation are not equally distributed. Sex, marital status and income affect the magnitude of the financial benefit of incorporation.



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