Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland are continuing to defend the 2024 federal budget’s proposed changes to capital gains taxes, which some medical professionals are claiming could affect recruitment and retention of physicians in Canada.
Doctors and medical associations have been raising red flags about the proposed changes tabled last week in Budget 2024, which will see changes to how capital gains are taxed for some individuals as well as corporations.
While there’s a limit for individuals will only face the new higher inclusion rate of two-thirds – up from one-half – for realized annual gains above $250,000, the shift would apply to all such profits made by corporations.
Kathleen Ross, the Canadian Medical Association president, told the Canadian Press that many doctors incorporate their medical practices and invest for retirement inside their corporations.
The proposed changes would increase taxes on those investments, something the association says will add “financial strain” for doctors who do not have a pension to rely on. Ross argues the change could also affect recruitment and retention of physicians in Canada.
Doctors are the latest group to come out against the tax change, which is expected to largely affect wealthier Canadians and businesses.
Freeland, who was asked about whether doctors should receive an exemption from the proposed changes at an event promoting Budget 2024 in Toronto on Tuesday, focused on the high bar for individuals paying more on their capital gains profit.
“It is fair to ask those who are doing really well to contribute a little bit more,” she told reporters.
Ross pointed out that doctors would not be eligible for the $250,000 exemption to the higher inclusion rate, since the investments they make are largely inside corporations.
Freeland highlighted other health-care focused investments in the budget including forgiving student loans for nurses and doctors working in rural and remote communities and a framework for pharmacare to cover contraceptives and diabetes medications.
She said these measures would benefit medical professionals, and defended the capital gains changes as a path to fund those investments in a “fiscally responsible” manner.
“I think Canada’s health-care professionals recognize, maybe more than anyone else, how important these investments are. They are massive,” Freeland said.
“I think it’s entirely appropriate, it’s really fair, to ask those who are doing the best in our society to pay a little bit more to fund them.”
Physicians can still invest in a Registered Retirement Savings Plan — which is tax-advantaged — so long as they pay themselves a salary out of their corporation.
But Dr. Andrew Park, president of the Ontario Medical Association, said Tuesday that the changes come at a time when governments at all levels should be working towards solving a shortage of family doctors in Canada, not disincentivizing physicians from starting new practices.
“This is just another knock against family doctors in particular,” he said in a press conference over Zoom.
“This is one of those things that doctors are looking at from a financial perspective and making hard decisions about where they are going to be in the next few years.”
Trudeau was also asked Tuesday about a possible exemption for doctors, but he, like Freeland, focused on the changes to capital gains for individuals in his response.
The prime minister reiterated that the 2024 federal budget was focused on “bringing back fairness for young people” in Canada, and pushed back on criticisms that the proposed capital gains taxes would negatively affect some Canadians more than others.
“I understand there are those who’ve been very, very successful off the way the system used to be who don’t want to see the system changed,” Trudeau said at an event in Saskatoon.
“But this is about intergenerational fairness. It’s also about making sure our economy succeeds into the future.”
– with files from the Canadian Press