Posted on December 17th, 2020 in Domestic Tax, Healthcare & Other Professionals

Important Considerations for Medical Professional Corporations

male doctor holding a chart and pen. White background.

As December 31st approaches, many medical practitioners are preparing for their second year-end amidst the pandemic. We’ve prepared a summary of some important items relevant to this industry.

1. Claiming Business Use of Home Expenses

The COVID-19 pandemic has forced many practitioners to reduce in-office patient appointments and the amount of hours they are spending in their office (or hospital). As a result, many physicians are working more from their homes, as telehealth and video appointments have become the new norm. The question that has become increasingly prevalent is “Can I claim home office expenses?”

In our article on Working from Home During COVID-19, we explore the eligibility requirements and what is deductible.  However, in our experience, most medical practitioners cannot deduct insurance or property tax as these expenses can only be claimed if commission income is earned.  In all cases, mortgage interest and capital cost allowance are not deductible.  As an alternative, the shareholder may want to consider charging rent to the professional corporation for use of a small space in the home.  The corporation would deduct the rent.  The shareholder would include this rental income on their return but would be able to deduct the prorated portion of a wider range of costs against the rental income (mortgage interest, property tax, utilities, insurance). However, one must be careful of the HST and principal residence exemption issues with such a strategy.

If office furniture, computer equipment, and other items need to be purchased for use solely for working within the home, we suggest purchasing these items through your medical professional corporation.

2. Canada Recovery Hiring Program (CRHP)

The Canada Recovery Hiring Program (CRHP) is a hiring subsidy that supports employers with a subsidy of up to 50% on incremental remuneration paid to eligible working employees (I.e., the portion of remuneration exceeding the remuneration of the baseline period). It was offered from June 6, 2021, to November 20, 2021, to qualifying employers who have seen a drop in revenue due to COVID-19.

On October 31, 2021, the government is proposing extending the Canada Recovery Hiring Program until May 7, 2022, for eligible employers with current revenue losses above 10 percent and increase the subsidy rate to 50 percent. The extension would help businesses continue to hire back workers and to create the additional jobs Canada needs for a full recovery.

Read more on the CRHP.

For assistance in any of the above discussed considerations, we recommend you contact one of our experienced Healthcare Industry Professionals.

All information detailed in this article is up-to-date as of November 2021. Further updates are expected to the programs noted, please refer to the CRA website for the most up-to-date information.