Dental professional corporations in Ontario.

Dental professional corporations in Ontario

Dentistry is one of exactly two professions in Ontario — medicine is the other — whose professional corporations are exempt from the usual rule that only members of the profession may hold shares. That exemption is the reason dental incorporation is worth treating as its own subject rather than a variation on the general theme.

Who may hold shares

Under Ontario Regulation 665/05, section 3, a dentist corporation follows this structure:

• every voting share must be owned, legally and beneficially, by a member of the Royal College of Dental Surgeons of Ontario;
• non-voting shares may be held by a College member, by a family member of a voting dentist shareholder, or by trustees in trust for that shareholder's minor children.

“Family member” is defined tightly — spouse, child or parent — and extends to someone you have demonstrated a settled intention to treat as a child of your family. It stops there. Siblings and more distant relatives cannot hold shares in a dental professional corporation, however sensible that might seem commercially.

Associates, hygienists and practice structures

Dental practices are frequently built on associate arrangements, shared premises and equipment-holding entities, and the professional corporation is only one part of that picture. A corporation restricted to the practice of dentistry cannot be the vehicle for everything: the articles must restrict its business to the practice and activities ancillary to it. Where a practice owns premises or significant equipment, or brings in associates, the structure usually needs more than one entity, and getting that division right at the outset is considerably cheaper than unwinding it later.

The tax question, stated honestly

Non-voting family shares are often sold as an income-splitting device. The federal tax on split income rules changed that materially: dividends to family members who are not genuinely active in the business are restricted, and the “excluded shares” exception is closed to professional corporations by definition. Deferral inside the corporation is still real and still valuable. Whether your particular family arrangement survives the rules is a question for your accountant, and it should be answered before the shares are issued rather than after.

Certificate of authorization and naming

The Royal College of Dental Surgeons of Ontario must issue a certificate of authorization before the corporation may practise. The name must comply with the Business Corporations Act, include the surname of a shareholder who is a College member, indicate the health profession practised, and end with “Professional Corporation”. Numbered companies are not available, and the certificate must be kept current.

What incorporating does not do

It does not limit your liability for your own professional negligence. That exposure stays with you and stays with your insurer. What the corporation offers is tax deferral, planning flexibility, and some protection from ordinary business liabilities unconnected to clinical work.

Physicians operate under a near-identical regime with a different College — see medical professional corporations — and all other professions follow the general Ontario rules.