By Raz Toor, Lawyer and Founder of Falcon Law PC
For many Ontario physicians, incorporation eventually becomes part of the discussion about how to structure their medical practice.
A Medicine Professional Corporation can provide a useful framework for earning professional income, retaining funds in the corporation, organizing a growing practice and, in some circumstances, involving family members in the share structure.
But incorporation is not automatically beneficial for every doctor. It also does not shield a physician from liability for professional negligence, and a Medicine Professional Corporation is subject to rules that do not apply to an ordinary Ontario corporation.
I’m Raz Toor, the founder of Falcon Law PC. We advise Ontario physicians and clinic owners on professional corporations, clinic structures, shareholder agreements, associate arrangements, medical director agreements, commercial contracts and the purchase and sale of medical practices.
This article focuses specifically on Medicine Professional Corporations. If you are looking for a broader comparison that applies across regulated professions, see our guide to Professional Corporation vs. Regular Corporation in Ontario.
What Is a Medicine Professional Corporation?
A Medicine Professional Corporation is an Ontario corporation through which one or more physicians may practise medicine after the corporation has been properly established and has obtained a Certificate of Authorization from the College of Physicians and Surgeons of Ontario.
The corporation itself is incorporated under Ontario’s Business Corporations Act, but that is only the first step.
CPSO requires an incorporated medical practice to obtain a valid Certificate of Authorization before practising medicine through the corporation.
That distinction is important. Registering an ordinary corporation with the Ontario government does not by itself create a Medicine Professional Corporation.
Why Do Ontario Doctors Incorporate?
The reasons are usually financial and organizational rather than related to professional liability.
A physician earning professional income personally generally pays personal income tax on that income as it is earned. When professional income is earned through a properly structured corporation, the corporation may be able to retain income after paying corporate tax rather than requiring the physician to withdraw everything personally in the same year.
That can create a tax-deferral opportunity where the physician earns more than they need to withdraw for personal spending.
The corporation may also provide a cleaner structure for expenses, investments of retained corporate funds, ownership of certain practice assets and the long-term organization of the physician’s professional practice.
The actual tax benefit depends heavily on the physician’s circumstances. A doctor who needs to withdraw essentially all corporate earnings every year may have a very different result from a doctor who is able to retain substantial funds within the corporation.
For that reason, I generally recommend that the legal incorporation decision be coordinated with the physician’s accountant rather than treating incorporation as an automatic tax-saving strategy.
The Small Business Tax Rate Can Be Important — But the Analysis Is More Complicated Than It Sounds
A qualifying Canadian-controlled private corporation may be eligible for the federal and Ontario small business deductions on qualifying active business income within the applicable business limit.
That can produce a substantially lower initial corporate tax rate than the physician’s top personal marginal rate.
But the phrase “lower corporate tax rate” can be misleading if it is presented as a permanent tax saving.
When money is eventually paid out of the corporation to the physician as salary or dividends, personal tax consequences arise. Canadian tax rules are designed around a concept of tax integration, although the practical outcome will depend on the circumstances.
There are also rules dealing with associated corporations, passive investment income, personal services businesses and other issues that can materially affect the expected result.
The better question is therefore not simply, “Will I pay less tax if I incorporate?” It is whether incorporation fits the physician’s income, spending needs, investments, family circumstances and long-term practice plan.
Who Can Own a Medicine Professional Corporation?
Ontario gives physician corporations somewhat more ownership flexibility than many other professional corporations.
All voting shares must be owned, directly or indirectly, by physicians who are members of CPSO.
However, non-voting shares may also be held by certain family members of a voting physician shareholder. Under the current regulation, qualifying family members include the physician’s spouse, children and parents. Trust structures for minor children can also be permitted in the circumstances set out in the regulation.
This can create useful planning opportunities, but family share ownership should not be implemented casually.
The corporate-law rules, tax rules and the physician’s family and estate-planning objectives all need to line up. In particular, tax rules such as the tax on split income can limit the expected benefit of paying dividends to family shareholders.
The fact that Ontario corporate law permits a particular shareholder does not necessarily mean that paying income to that shareholder will produce a favourable tax result.
A Non-Physician Cannot Control the Medical Practice Through Voting Shares
The family-shareholder exception does not allow a non-physician spouse, investor or business partner to take voting control of the Medicine Professional Corporation.
Voting shares remain restricted to physicians.
This becomes particularly important when physicians operate clinics with non-physician entrepreneurs.
A medical spa, multidisciplinary clinic or healthcare business may have a separate ordinary corporation responsible for the commercial side of the operation while the physician practises medicine through their Medicine Professional Corporation.
Those two corporations can contract with one another where the arrangement is legally appropriate, but the commercial company should not be given improper control over clinical decision-making or the physician’s professional obligations.
Your Medicine Professional Corporation Does Not Have to Be the Same Corporation That Operates the Clinic
This is one of the more important structural concepts for physicians who own or work within clinics.
The Medicine Professional Corporation may be the vehicle through which the doctor earns professional medical income.
A separate ordinary business corporation may operate the clinic itself by leasing the premises, employing administrative staff, paying for marketing, owning non-clinical equipment and handling other management functions.
Whether two corporations are actually necessary depends on the business.
For a physician with a simple solo practice, adding multiple corporations may create unnecessary cost and administration. For a larger clinic involving non-physician owners, several practitioners, medical aesthetics or substantial non-clinical operations, separating the professional and management sides can become much more important.
The agreements between those entities need to reflect the actual relationship rather than merely adopting a U.S.-style “MSO” structure without considering Ontario healthcare regulation.
Incorporation Does Not Protect a Doctor From Professional Negligence
This is probably the biggest misconception about Medicine Professional Corporations.
Practising medicine through a corporation does not eliminate the physician’s personal responsibility for their professional services.
Ontario’s Business Corporations Act specifically preserves the professional liability of members practising through professional corporations.
If a physician commits professional negligence, incorporation is not a shield between the doctor and the patient.
The physician therefore still needs appropriate professional liability protection and remains personally accountable to CPSO for the practice of medicine.
There Can Still Be Value in Corporate Limited Liability
The absence of protection from professional negligence does not mean the corporation provides no liability separation at all.
Like other corporations, a Medicine Professional Corporation is a separate legal entity.
Ordinary corporate liabilities may belong to the corporation rather than automatically becoming personal liabilities of the shareholder. However, that protection is subject to important exceptions.
A physician may personally guarantee a bank loan or commercial lease. Directors can have statutory liabilities in certain circumstances. And, as discussed above, the doctor’s own professional negligence remains personal.
The liability benefit should therefore be understood accurately rather than described as a blanket shield.
The Corporation Can Only Carry On the Professional Practice and Related Activities
A Medicine Professional Corporation is not designed to be a general-purpose holding company for every business venture the physician owns.
Ontario professional-corporation legislation generally restricts the corporation to practising the profession and carrying on activities related or ancillary to that practice, including investing surplus funds earned by the corporation.
That does not mean the physician cannot own other businesses.
It means those unrelated businesses may belong in a separate ordinary corporation rather than inside the Medicine Professional Corporation.
For example, a physician who also owns an unrelated technology company, restaurant or real estate venture should not simply assume those activities belong in the same professional corporation through which medicine is practised.
The Name of the Corporation Is Restricted
Medicine Professional Corporations also have special naming requirements.
The corporation cannot simply use a numbered-company name. Its name must comply with the Ontario professional-corporation rules and the requirements applicable to physician corporations.
This is another reason I prefer establishing the professional-corporation structure correctly at the beginning rather than incorporating a generic company first and trying to retrofit it afterward.
CPSO Authorization Is an Ongoing Requirement
The Certificate of Authorization is not merely a startup formality.
CPSO maintains ongoing requirements for incorporated medical practices, including renewal of the corporation’s authorization and reporting information relating to the corporation and its physician shareholders.
Changes to the share structure, physician ownership or other corporate information should therefore be assessed not only under ordinary corporate law but also under the applicable CPSO requirements.
A physician buying out another physician, introducing a family shareholder or reorganizing the corporation should make sure the corporate records and regulatory records remain consistent.
Two Doctors Practising Together Need More Than a Professional Corporation
If two or more physicians own a Medicine Professional Corporation together, the corporation answers only part of the legal problem.
They should also think about what happens if one physician wants to leave, retires, becomes disabled, dies, loses their licence or simply no longer wants to practise with the other shareholder.
Those are shareholder-agreement issues.
A properly drafted agreement can deal with governance, distributions, buyouts, valuation, restrictions on transfers and what happens when a physician can no longer satisfy the professional requirements associated with ownership.
The corporate structure should therefore be built around the professional relationship rather than assuming that equal share ownership will sort itself out later.
Associate Physicians Usually Need Separate Agreements
Incorporating also does not determine the relationship between a clinic and its associate physicians.
A physician may provide services through their own Medicine Professional Corporation while working within another clinic. The agreement between the physician and the clinic still needs to address matters such as compensation, overhead, billing, scheduling, patient records, termination and restrictive covenants where appropriate.
The fact that the associate invoices through a corporation does not, by itself, resolve every employment or contractor-classification issue either.
The written agreement and the actual working relationship both matter.
Medical Spas and Physician-Led Aesthetic Clinics Need Particular Care
Professional corporations increasingly arise in medical aesthetics, IV therapy and other private-pay healthcare businesses.
The physician may own a Medicine Professional Corporation and act as the medical director while nurses or other practitioners provide services within the clinic.
In that situation, simply having an MPC does not resolve the regulatory issues.
The clinic still needs to consider who performs patient assessments, which services involve controlled acts, how delegation and medical directives are used, who is responsible for clinical decisions, how records are maintained and how professional and commercial fees flow through the structure.
The corporate documents should support the healthcare arrangement rather than being treated as separate from it.
Buying or Selling a Medical Practice
The existence of a Medicine Professional Corporation can also become important when a physician buys or sells a practice.
The parties need to determine whether the transaction involves purchasing assets from the professional corporation or acquiring shares of the corporation itself.
That distinction can affect tax treatment, liabilities, patient records, contracts, employees or associates, leases and the regulatory steps required after closing.
A buyer should also understand exactly what is being acquired. A medical practice is not simply a list of patients. It may include equipment, leasehold improvements, contracts, goodwill, telephone numbers, websites, intellectual property and other operational assets, while patient information remains subject to separate professional and privacy obligations.
For more on these transactions, see our guide to buying or selling a medical practice in Ontario.
Does Incorporation Make Sense for a New Physician?
Not necessarily immediately.
A physician early in practice may have significant personal expenses, student debt, a mortgage or other reasons to withdraw nearly all professional income personally.
If very little money will remain in the corporation after personal withdrawals and corporate expenses, the financial benefit of incorporation may be limited compared with the legal, accounting and annual compliance costs.
On the other hand, a physician whose income materially exceeds their personal cash requirements may find the ability to retain earnings within a corporation more useful.
That is primarily a financial and tax-planning calculation, and the accountant should be involved before the corporation is established.
What Happens When the Physician Retires?
Retirement does not automatically make the corporation disappear.
The physician may still need to deal with retained investments, outstanding receivables, tax obligations, patient-record responsibilities and other assets or liabilities before the corporation can eventually be wound down.
A practice sale may occur before retirement, or another physician may purchase some of the practice assets.
Long-term succession planning is therefore another reason to keep the minute book and corporate structure current throughout the life of the practice.
A Recent Issue We See in Practice
In 2026, we have advised physician-led clinics where the physician’s professional corporation was only one part of a broader healthcare operation involving nurses, clinic administration and private-pay medical services.
In those situations, the important legal question was not merely whether the physician was incorporated.
We had to understand what the professional corporation was responsible for, what the clinic business was responsible for, how other healthcare professionals fit into the model and whether the contracts reflected the actual allocation of clinical and commercial responsibility.
That is why I generally view the Medicine Professional Corporation as one component of the practice structure rather than the complete structure by itself.
The example above has been generalized to protect client confidentiality.
The Main Drawbacks of a Medicine Professional Corporation
The most obvious drawback is additional administration.
The physician now has a separate corporation requiring accounting, tax returns, corporate records and ongoing CPSO authorization. Legal and accounting costs generally increase compared with practising personally.
Ownership and business activities are also restricted. The physician cannot treat the professional corporation like an unrestricted business company, and incorporation does not remove professional liability.
The tax benefits can also be overstated. If essentially all income is withdrawn personally, or if the physician’s particular circumstances make corporate retention unattractive, incorporation may provide less financial value than expected.
The Main Benefits
For the right physician, incorporation can nevertheless be very useful.
It can create tax-deferral opportunities where earnings can remain in the corporation, provide a structured vehicle for the medical practice, permit qualifying physician and family ownership arrangements, facilitate certain practice-expansion and succession strategies, and provide separation from some ordinary business liabilities.
The value comes from using the corporation as part of an intentional legal and financial structure—not from incorporation for its own sake.
How Falcon Law PC Can Help
Falcon Law PC assists Ontario physicians with the business and corporate side of medical practice.
We can advise on establishing a Medicine Professional Corporation, ownership and share structures, CPSO Certificate of Authorization requirements, physician shareholder agreements, clinic-management structures, associate and medical director agreements, commercial leases, clinic reorganizations and the purchase or sale of medical practices.
We regularly work alongside the physician’s accountant where tax planning affects the corporate structure.
For broader physician business matters, see our Corporate Lawyer for Medical Doctors in Ontario page.
Should You Incorporate Your Medical Practice?
For many established Ontario physicians, a Medicine Professional Corporation can make sense. But the answer should follow from the physician’s actual financial and practice circumstances.
Before incorporating, I would want to know how the physician earns income, how much they expect to withdraw personally, whether they own or operate a clinic, whether other physicians or family shareholders will be involved and what they expect the practice to look like several years from now.
Those answers usually tell us much more than simply asking whether other doctors have incorporated.
This article is intended for general informational purposes only and does not constitute legal, tax, accounting or financial advice. Physicians should obtain advice based on their particular practice structure, income, ownership arrangements and long-term objectives.