As a Canadian physician planning for parental leave, you’re not just preparing for life with a new baby — you’re also facing the challenge of keeping your finances and medical corporation on track while stepping away. If you’re incorporated, the planning gets even more complex — and more strategic.
At MedTax, we help doctors across Canada manage these exact transitions. Here’s what to consider when planning your parental leave through a tax lens.
- Are You Eligible for EI Parental Benefits as an Incorporated Physician?
Many physicians don’t realize they can access EI maternity and parental benefits — but only if they’ve opted into EI special benefits through Service Canada at least 12 months before taking leave. That means planning ahead is crucial.
If you haven’t opted in yet and you’re considering starting a family in the next year or two, it may be worth the investment. Our advisors can help you crunch the numbers.
- Salary vs Dividends: What’s Best During Leave?
If you’re collecting EI parental benefits, you’ll need to pay yourself a salary — not dividends — to qualify.
But during leave, many physicians want to reduce their income to lower their tax burden. The key is balancing enough salary to access EI, while leveraging dividends or retained earnings for flexibility and tax efficiency. Structuring this properly is where a tax advisor comes in handy.
- Prepare Your Corporation for Your Time Off
Just because you’re stepping back doesn’t mean your corporation pauses.
We typically recommend:
- Building a financial cushion in your corp to cover expenses while you’re away
- Deferring non-essential expenses or equipment purchases until your return
- Ensuring your bookkeeping and payroll systems are automated or delegated
It’s also a good time to consider whether you need a locum and how that affects your billing, HST obligations, and corporate income.
- Don’t Forget to Plan for Your Return
Post-leave tax planning matters, too.
When you return, you may want to catch up on RRSP or TFSA contributions, adjust your salary, or revisit your dividend strategy. And if your household income dropped during leave, there may be opportunities to shift income and reduce your tax bill in the year ahead.
You Focus on Baby — We’ll Handle the Numbers
Planning parental leave as a physician doesn’t need to be overwhelming. Whether you’re already pregnant or just starting to plan, we’ll help you build a tax-smart strategy so you can focus on what matters most.
Book your free 30-minute consultation with MedTax today and let’s plan your leave — the smart way.
