Medicine Professional Corporations: the Ins and Outs and Costs of Incorporation

Back in March 2014 we wrote a blog called “Are you a Doctor or Dentist? It May be Time to Incorporate”, illustrating the potential benefits of incorporation – virtually all related to tax advantages. Now that you are familiar with the benefits of incorporation we are going to explain to you the process and

Incorporationand items to consider when incorporating a medicine professional corporation (“MPC”).

Once you have decided to incorporate your own medicine professional corporation you should meet with both your lawyer and accountant to discuss incorporation and the other steps that have to be taken. It generally takes one day to complete the incorporation once we have the requisite information from you and about two to three weeks to obtain a Certificate of Authorization from the College of Physicians and Surgeons of Ontario.

Name of MPC

One of the first items we will ask you is what would you like the name of your MPC to be. There are strict rules that must be adhered to. It must include the physician’s surname as it appears on the College’s register. It may also contain given names or initials and may include “Dr.”. If there is more than one physician member, it need only contain at least one of the names of the physician members. It must also include the words “Medicine Professional Corporation”. So for example if your name is Dr. Joe Smith an appropriate name may be J. Smith Medicine Professional Corporation.

Who can own shares of a MPC and What Type of Shares are Issued?

Voting shares of a MPC must be owned by the licensed doctor. The good news for doctors is that family members can be shareholders of the MPC. Family members, however, can only own non-voting shares of the MPC. Family members include the doctor’s spouse, parents and children (this includes step-parents, step children and common law spouses). If the doctor has minor children (under 18 years old) the licensed doctor must hold the shares for the minor children in trust until the child becomes 18 at which time the shares will be transferred to that child directly.

The type and number of shares being issued to you and your family members is most often determined by your accountant and lawyer.

There are often three (3) classes of shares that we normally issue – common, preference and special shares which most often are issued for the following purposes:

(a) Preference Shares

See below under the heading “Rollover Agreement to Transfer Practice to the MPC”. As noted you will be transferring your practice to the MPC at its tax values in order to avoid the payment of income tax. In consideration of you transferring your practice to the MPC the MPC will issue you Preference Shares which are frozen in value and equal to the valuation of your Practice at the time of transfer to the MPC. This value is most often determined by your accountant.

(b) Special Shares

Special shares are normally frozen in value when issued (and do not share in the growth of the MPC) – for example at $1.00. They are often issued to family members in order to enable you to declare and pay dividends to your family members. We always issue a different class of special shares to each family member.

This allows the doctor to declare different amounts of dividends to each family member (or not to declare a dividend to a particular family member). Once a child reaches 18 years of age he or she would have little or no outside income and therefore substantial dividends could be declared and paid to that child with little or no tax. However, once that child starts earning his or her own outside income (which makes the payment of dividends of no tax benefit) no further dividends will be declared for that child. Parents and a spouse may also be issued Special Shares for the same reason. Because the Special Shares are frozen in value the MPC can redeem the Special Shares at any time.

(c) Common Shares

Common Shares are also known as growth shares and are usually issued to the doctor shareholder.

The decision as to what type of shares are to be issued is made with the assistance of your accountant and lawyer.

MPC Structure

There are several nuances between a regular corporation and a MPC. For example, the articles of your MPC must provide that “the corporation cannot carry on a business other than the practice of medicine and activities related to or ancillary to the practice of medicine”. It is also important to note that only the doctor can be an officer or director of the MPC. You should ensure that you retain a lawyer familiar with medical corporate law to ensure compliance with the requirements and the proper structure of your MPC.
Post Incorporation

(a) Application to the College of Physicians and Surgeons of Ontario

Once your MPC has been incorporated we will send you a copy of the articles of incorporation which you can take to your bank to set up a new bank account for the MPC or simply to change the name on your existing practice account.We will complete the application to the College of Physicians and Surgeons of Ontario and meet with you to sign and then submit the application along with the college fee of $350.00 in order to receive a Certificate of Authorization for the MPC.

(b) Rollover Agreement to Transfer Practice to the MPC

In order to transfer your existing Practice to the MPC on a tax free rollover basis you and the MPC would enter into a S. 85(1) Rollover Agreement which is a fairly normal agreement to transfer your Practice to the MPC. Both you and the MPC will elect in the rollover Agreement under S. 85(1) of the Income Tax Act, Canada (“ITA”) to rollover the Practice at its tax values in order that there are no taxes to pay under the ITA. In consideration of you transferring your Practice to the MPC the MPC will issue shares (most likely Preference Shares) to you which shares would have a value equal to the value of your Practice.

(c) Assign Lease

If you are a tenant under a Lease it may be a requirement under the lease where you assign your Practice to a new name (the MPC in this case) to obtain the Landlord’s consent. We would normally review your lease on your behalf and discuss it with you. This will entail a review of your lease.

(d) Retainer/Employment Agreement

We will also provide you with a Retainer/Employment Agreement whereby you personally agree that all services being provided to patients by you are being made on behalf of the MPC and all payments received by you personally are being paid to you personally and are held by you as trustee for the MPC. Canada Revenue Agency has taken the position that if you receive payments personally and do not have this agreement you may be taxed personally for these payments rather than in the MPC.

(e) Renewal of Certificate of Authorization

It should be noted that each MPC must apply for a renewal on the anniversary of the certificate’s date of issue. The college charges $125.00 for applications.


We do not charge to meet and/or consult with you on the incorporation of your MPC. Once you decide to go forward with the incorporation of your MPC we charge $2,750.00 which includes the incorporation of your MPC as well as preparing and filing your application to the College and obtaining your Certificate of Authorization and all post-incorporation matters noted above including (i) the Rollover Agreement, (ii) the Retainer/Employment Agreement and (iii) reviewing and discussing your lease. This fee includes all disbursements including $50.85 for your name search, $39.56 for the certificate of status (required for the application), $356.00 for the Ministry incorporation fee and $63.00 for the minute book for the MPC. The only extra cost for you will be the $350.00 fee to the RCDSO.


It is important to follow the strict guidelines for MPCs to ensure you are in compliance with applicable laws and the requirements of the college. If you want to discuss any of these matters please do not hesitate to e-mail or phone. We do not charge for your initial meeting.


Topics: Medicine