Corporate Investing Guide for Physicians

For many physicians, the professional corporation (PC) serves as the jumpstart for long-term wealth creation.

When used correctly, it becomes one of the most powerful financial tools available to physicians in Canada. When used incorrectly — similar to the lesson we learned messing around with the defibrillators at our last doctor visit — it can be downright painful. In fact, it can result in tax problems, inflexibility, and missed opportunities. Are we… Clear!? (OK, we’ll knock it off.)

This guide explains how corporate investing works, when it makes sense, and how to structure it in the most tax-efficient way — without unnecessary complexity or unforeseen shocks to the system.

What Is Corporate Investing?

Corporate investing means investing retained earnings inside your medical professional corporation, rather than taking all income out personally and investing in your own name.

Physicians choose to do this for several important reasons: Lower corporate tax rates mean more money remains ​ invested. That tax deferral allows compounding to work faster over time. Corporate assets also add flexibility in retirement, help prevent an overly large RRSP, and support smoother income later in life.

In practical terms, corporate investing allows physicians to turn surplus income into long-term wealth — intentionally, rather than accidentally.

A helpful way to think about it:Your corporation functions like a custom-built pension plan that you control.

Why Corporate Investing Is So Powerful

The power of corporate investing comes from a combination of tax efficiency, scale, and flexibility.

Corporations pay approximately 12% tax on the first ~$500,000 of active business income (province dependent). Compare that to personal tax rates for physicians, which often fall in the 45–53% range. The result is simple: Far more after-tax money is available to invest.

Because taking money out personally triggers high tax, leaving it inside the corporation preserves capital. Over long periods — 10, 20, even 30 years — that retained capital compounds meaningfully.

Corporate assets also offer advantages later in life. They are not subject to RRIF minimum withdrawals, meaning income can be drawn strategically rather than forced. When structured properly, corporate withdrawals can also help reduce or avoid OAS clawbacks (the pension reduction method that sounds most likely to require medical attention, btw) by preventing large taxable income spikes.

Taken together, these features make corporate investing one of the most effective long-term wealth strategies available to physicians.

When Corporate Investing Makes Sense

Corporate investing isn’t for every physician at every stage, but it becomes especially powerful under the right conditions.

It is usually a strong fit when a physician can consistently leave $20,000–$40,000 or more inside their corporation each year, earns $200,000+ consistently, and wants more control over long-term income planning. It’s also particularly valuable for physicians who want to avoid a future RRSP “tax bomb” and need a flexible, tax-efficient retirement strategy.

Importantly, corporate investing is most effective once personal debt from medical school or earlier training has been paid off. The strategy works best when surplus income is truly surplus.

The Tax Basics of Corporate Investing (aka, “Explain it to me like I’m 5, but more like a five-year-old Doogie Howser”) )

Corporate investing doesn’t require deep tax expertise, but a few fundamentals matter.

First, active business income is taxed at a low rate, which leaves more after-tax money available to invest.

Second, investment income is taxed differently depending on the source. Interest, dividends, and capital gains all receive different tax treatment inside a corporation.

Third, withdrawals are fully flexible. You decide when and how to pay yourself — through dividends, salary, or a combination of both.

Fourth, capital dividends can be tax-free. Half of capital gains flow into the Capital Dividend Account (CDA), which can be paid out to shareholders without personal tax.

Finally, refundable taxes (RDTOH) mean corporations can receive tax refunds when eligible dividends are paid.

These mechanics are what allow corporate investing to work — and why structure matters so much.

Smart Investment Placement: Where to Hold What

Like accidentally slipping a syringe into the pocket of your scrubs, failure to put investments in the right place can have unwanted consequences. ​

Different investments generate different types of income. Each type is taxed differently depending on whether it’s held inside a corporation, an RRSP, or a TFSA. Placing the right investments in the right accounts can significantly increase long-term wealth and help protect the small business deduction.

Interest-producing investments such as GICs, bonds, and high-interest savings ETFs are taxed at the highest rate inside a corporation and count toward the $50,000 passive income limit. These are generally better held in an RRSP.

Canadian equity and broad index ETFs are very efficient inside a corporation. They generate eligible dividends and capital gains, benefit from corporate dividend refunds, and create CDA credits that can later support tax-free withdrawals.

U.S. dividend stocks and ETFs are fully taxed inside a corporation and are typically more efficient inside an RRSP, where U.S. withholding tax can be eliminated.

High-yield REITs and high-distribution funds are inefficient in corporations because they’re taxed like interest. These are usually better suited to a TFSA.

Capital gains–focused portfolios are ideal for corporations. Only 50% of gains are taxable, they help manage the passive income threshold, and they support long-term compounding.

Why this matters for physicians is simple but profound: Proper investment placement helps minimize total tax, preserve the small business deduction, reduce OAS clawback risk, build long-term flexibility, and keep investing decisions simple and clear.

Many doctors ​ have never had this explained cleanly, and the long-term tax savings are significant.

Common Corporate Investing Pitfalls

Even well-intentioned strategies can quietly go off track. (See also: most of our 2026 New Year’s resolutions.)

Leaving large amounts of cash idle inside the corporation creates cash drag and erodes long-term compounding. Holding too much interest income can trigger passive income issues and jeopardize the small business deduction.

Paying only dividends for too long eliminates RRSP room and reduces future flexibility. Over-contributing to RRSPs can create forced high taxable income later through RRIF minimums. Failing to plan a retirement withdrawal strategy often leads to income spikes and unnecessary tax.

And finally, mixing personal and corporate expenses is one of the fastest ways to attract CRA attention.

Yearly Corporate Investing Checklist

Each year, corporate investing should be reviewed intentionally.

That includes determining how much to leave inside the corporation, reviewing the salary and dividend strategy, maximizing TFSA contributions, and deciding whether RRSP contributions are beneficial.

Corporate cash should be fully invested; investment income should be tracked relative to the $50,000 passive income threshold; retirement income smoothing should be planned; and corporate tax estimates should be updated regularly.

Consistency here matters more than perfection.

Meet With an Advisor

Corporate investing is one of the most powerful tax strategies available to physicians — but only when structured correctly.

We help doctors:

You Do Health. We Do Wealth.

Book a session to build the right strategy for your medical corporation.