Medical professional corporations in Ontario.

Medical professional corporations in Ontario

Physicians in Ontario can incorporate their practice as a professional corporation, and the rules that apply to them are not the rules that apply to most other professionals. Medicine is one of only two professions — dentistry is the other — that Ontario treats differently on the question of who may own shares.

The share rule that makes medicine different

The general rule in the Business Corporations Act is that every issued share of a professional corporation must be owned by a member of the same profession. Physician corporations are expressly exempt from that rule. Under Ontario Regulation 665/05, section 2, a different structure applies:

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

Family member has a precise meaning here: spouse, child or parent. Not siblings. Not nephews. The definition does reach a person you have demonstrated a settled intention to treat as a child of your family, which matters in blended families more often than people expect.

Where the tax planning actually stands

The ability to issue non-voting shares to family is often described as an income-splitting opportunity. That description is roughly a decade out of date. The federal tax on split income rules restrict dividends paid to family members who are not genuinely active in the business, and the “excluded shares” exception that saves many private companies is unavailable to a professional corporation as a matter of definition.

That does not mean the structure is pointless — tax deferral inside the corporation remains real, and some family situations still qualify under other exceptions. It means the analysis belongs with your accountant before the share structure is built, not after. We structure the corporation; we do not give tax advice, and we will say so plainly rather than guess.

The certificate of authorization

Incorporating does not entitle the corporation to practise. The College of Physicians and Surgeons of Ontario must issue a certificate of authorization first, and the corporate name has to satisfy the College's own naming regulation: it must include the surname of a shareholder who is a College member, indicate the profession being practised, end with “Professional Corporation”, and contain nothing else. A numbered company will not do.

The certificate is not a one-time hurdle either. It carries renewal obligations, and a corporation that falls out of good standing with the College has a problem that is not fixed at the corporate registry.

What it protects — and what it does not

This is the point most often misunderstood. A medical professional corporation does not shield you from personal liability for your own professional negligence. You remain personally responsible for your clinical work, and your insurance remains what stands between you and a claim. What the corporation can offer is deferral, planning flexibility, and some protection against ordinary business liabilities that have nothing to do with practising medicine.

A structure is only worth having if you understand what it does. Dentists face a near-identical regime with its own College — see dental professional corporations — and every other profession sits under the general Ontario rules.