Congratulations on opening your dental practice in Toronto or the Greater Toronto Area!
After many years of study, it’s time to reap the rewards of your hard work. You’re an expert in your field of dentistry, but you probably have many questions about the business, accounting, tax and bookkeeping aspects of your practice such as:
Rest assured, Stern Cohen Accountants have many dentists as clients and we can provide guidance and assistance with all of these matters and more.
As a practicing dentist, it may come as a surprise that the Canada Revenue Agency will be taking close to half of your hard earned money. Did you know the marginal tax rate for income over $150,000 is about 48% and increases to almost 50% for income over $220,000?
As accountants specializing in advisory, accounting and bookkeeping for privately-held businesses and professionals like dentists and doctors in Toronto and the GTA, our clients look to us to help them keep or invest as much of their income as possible – all while complying with tax rules. Based on our experience working with Toronto dentists, we have a few suggestions to help minimize your tax burden and maximize your returns…
In Ontario, the tax rate on the first $500,000 of active business income earned by a PC is only 13.5%. The average tax rate to earn the same amount of income personally is about 45%. The PC provides a 30% deferral of tax leaving you with more cash to reinvest in your practice. Personal tax will be payable when funds are extracted from the PC however this tax can be deferred to the extent you don’t require the cash for personal expenditures.
If a family member performs administrative duties for the practice, you can pay him or her a salary as long as it is reasonable (i.e. comparable to what you would pay anyone else to perform the same duties). If your family member is in a lower tax bracket, this would result in an overall tax savings.
If you would like to take advantage of these tax planning opportunities for your dental practice, we can help. Please contact us today.
*No tax other than the Ontario Health Premium.