Capital gains change: CMA ‘deeply concerned’ about impact on health care
The Canadian Medical Association says it is “deeply concerned” about how the federal government’s plan to increase the capital gains inclusion rate could further harm the health-care system.
In a statement Thursday, the CMA says the rate change proposed in the federal budget will worsen barriers to retaining and recruiting physicians as Canadians continue to struggle with access to care.
“The reality is that the federal government is putting at risk its own health care agenda, which is contingent on broadening access to family medicine, the foundation of our health care system,” CMA president Dr. Kathleen Ross said in the statement.
Ross says physicians are feeling “betrayed, discouraged and deflated” by the tax change, which Prime Minister Justin Trudeau recently announced will start June 25 this year.
“We must not create more roadblocks that will add further stress to the health workforce or prevent prospective physicians from choosing to practise in Canada,” Ross said.
Finance Minister Chrystia Freeland tabled the federal government’s 2024 budget on April 16, which included a proposal to raise the inclusion rate — the portion of capital gains on which tax is paid — to 66.7 per cent for individuals realizing more than $250,000 in capital gains annually.
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People realizing up to $250,000 in capital gains will continue to pay tax on 50 per cent of their capital gains. For corporations and trusts, however, there is no threshold. The inclusion rate for them will increase to two-thirds for all realized capital gains.
The CMA says most community-based physicians rely on their professional corporations to save for important life events, as most do not have access to employer or government benefits, sick leave or paid vacation.
The association says it is worried that the rate change will affect physicians’ ability to save for retirement, as many begin their careers in their 30s with an average of $300,000 in student debt.
The change may also cause a “significant care and infrastructure deficit,” the CMA says, because new physicians will likely feel less inclined to pay for what’s needed in a community-based medical practice.
On the physician shortage, the association adds that “creating favourable and enduring conditions to attract and retain physicians are necessary if we’re serious about expanding access to care.”
“The CMA remains convinced that an exemption for medical professional corporations … is needed to stabilize and future-proof access to community-based medical care for patients today and into the future,” the association says in its statement.
Other groups representing family doctors have also been raising concerns over the new rules.
Canadian physician Dr. David Poon, who started a Facebook group called Professional Corporation Advocates, told Global News in April that the capital gains change is “essentially a tax on our savings.”
“This is an affront to doctors. It is grossly inappropriate to lump us in with these ultra wealthy,” he said.
The Ontario Medical Association said in a statement in April that the proposed changes “will negatively impact physicians in Ontario and ultimately affect access to patient care.”
— with files from Global News’ Uday Rana