New Capital Gains Rule Could Make Incorporation More Attractive in 2025
If you’re launching a medical practice in Calgary or Vancouver, incorporation might not be the first thing on your mind, but it probably should be. With a major tax change arriving this year, many medical professionals are asking: “Is now the right time to incorporate?”
Let’s explore what’s changed in 2025 and why doctors, dentists, and other medical start-ups may want to act sooner rather than later.
What’s New in 2025: Capital Gains Inclusion Rate Changes
The federal government is introducing a reduced capital gains inclusion rate of one-third on the first $2 million in lifetime gains, a sharp departure from the previous flat 50% inclusion.
What does this mean practically?
- The first $2 million in capital gains are now taxed at a lower rate.
- This benefits Canadian-controlled private corporations (CCPCs), like many medical corporations.
- Professionals planning to build and sell a practice could benefit significantly under the new rules.
Why Incorporation Is Popular Among Medical Professionals
Whether you’re setting up a family medicine clinic in Calgary or launching a physio startup in Vancouver, incorporation can offer major financial and strategic advantages:
Tax Deferral Opportunities
Incorporating allows you to retain income in the corporation and pay the lower small business tax rate in Alberta or BC, potentially deferring personal taxes.
Access to the Lifetime Capital Gains Exemption (LCGE)
Incorporation is essential if you plan to take advantage of the LCGE, which allows you to shelter over $1 million in gains (2025 threshold) from tax upon selling qualifying shares.
Income Splitting (When Applicable)
Depending on family involvement and compensation structures, incorporation may offer limited income-splitting opportunities that are CRA-compliant.
Creditor & Legal Protection
Incorporation provides a legal distinction between you and your practice, important for asset protection, even though professional liability insurance remains necessary.
Is Now the Right Time to Incorporate?
Every practice is different, but here are some key signs you may benefit from incorporating now:
You Should Consider Incorporating If You…
- Anticipate strong income growth from your medical business
- Want to invest surplus income through your corporation
- Intend to sell your practice in 10–15 years
- Are launching in a competitive or high-growth market like Calgary or Vancouver
- Want to take advantage of the new capital gains inclusion threshold
You May Wait If You…
- Are still a resident, part-time, or low-income earner
- Haven’t yet started billing or built business assets
- Want to simplify your finances until your practice stabilizes
- Aren’t eligible yet for LCGE qualification or tax deferral advantages
A Calgary or Vancouver Practice? Local Tax Strategy Matters
Medical start-ups in Alberta and BC each face unique planning opportunities. For example:
- Alberta’s general corporate tax rate is lower than most provinces, attractive for deferral.
- BC’s market may offer higher resale value, which makes capital gains strategy more important.
- Both provinces require provincial licensing for medical corporations (e.g., CPSA, CPSBC), which MMT can help you navigate.
Want to compare how incorporation affects you in your province? Learn more about how we support incorporation and corporate tax planning on our Corporate Tax Accountants page.
Not Sure? Let’s Look at Your Full Picture
You’ve worked hard to build your credentials. Now it’s time to make sure your business structure is working just as hard for you.
At MMT CPA, we help medical professionals weigh the benefits of incorporation in Calgary, Vancouver, and across Canada. Whether you’re just getting started or you’re already operating under a sole proprietorship, our advisors will help you build a custom tax and business strategy.
Book a consultation today and let’s talk about the smartest structure for your medical business.
