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Tax tips for retired physicians

For use in preparation of 2022 tax returns

An older couple walking by the ocean holding hands.

As a retired physician, you’re likely relying mostly on income generated from your investments, rather than the professional income you were used to. So, when it comes to preparing your tax return, things have changed.

Still, one of the most significant expenses you incur is federal and provincial income taxes. But if you take advantage of all available deductions and tax credits, you can minimize the taxes you pay and maximize your cash flow and financial position.

Federal income tax brackets

2022 taxable income

Federal tax rate

2023 taxable income

Federal tax rate

















$221,709 and up


$235,676 and up


This guide can help you understand which tax credits, expenses and other deductions may be available to you. It also covers the government benefit programs you may be eligible for, and much more.

A. Your income sources

  1. Canada Pension Plan
  2. Old Age Security
  3. Registered retirement income fund (RRIF)
  4. Other pensions

B. Tax credits for seniors

  1. Age amount
  2. Pension income credit

C. Family and caregiver deductions and credits

  1. Claim your spouse’s or common-law partner’s unused tax credits
  2. Claim an amount for supporting a spouse or common-law partner
  3. Claim an amount for supporting an eligible dependant
  4. Canada caregiver tax credit

D. Disability

  1. Disability tax credit
  2. Home accessibility tax credit

E. Other tax deductions and credits

  1. Carrying charges
  2. Medical expenses
  3. Charitable donations

F. Rethinking your corporation in retirement

  1. Winding up your corporation
  2. Converting your corporation


A. Your income sources

1. Canada Pension Plan

The Canada Pension Plan (CPP) provides a partial income replacement to Canadians when they retire. The CPP operates in all provinces except in Quebec, which has its own Quebec Pension Plan (QPP). During your working years, your province of residence determines the plan you contribute to. If you contributed to both CPP and QPP at different times during your working years, your province of residence at retirement determines which plan you should apply to.

You can apply for and receive your full CPP pension at age 65, or you can apply to receive a reduced pension beginning at age 60. You can also delay all the way until age 70, which can help provide an increased amount of secure, inflation-protected retirement income.

The CPP also provides other types of benefits, such as post-retirement benefits (through contributions you can make if you keep working while drawing CPP), disability benefits, survivor benefits, a death benefit and children’s benefits.

The amount you receive from the CPP is based on how much you have contributed and how many years you have been making contributions when you apply. Your pension entitlement is calculated only when you apply. In many cases, you can apply for CPP online; otherwise, you can mail your application forms or take them to a Service Canada Centre.

Pension income splitting: Once you have applied for your CPP benefits, you can choose to share them with your spouse, which enables you to effectively split your CPP pension income.

CPP benefits are not eligible for pension income splitting through your personal tax return itself.

Any income received from the CPP is taxable in the year it is received. A tax slip will be issued to you by the federal government.

2. Old Age Security

Old Age Security (OAS) is a monthly payment made to anyone age 65 or older who meets Canadian legal status and residency requirements. You don’t directly contribute to OAS; it’s funded by the federal government. The amount you receive is based on the number of years you have lived in Canada since the age of 18. The maximum monthly payment is adjusted quarterly in January, April, July and October.

The OAS program also provides survivor allowances and guaranteed low-income supplements for low-income individuals and couples.

OAS clawbacks: If your taxable income in 2022 exceeded $81,761 you’ll have to repay some of your OAS income by a reduction in your monthly OAS payments beginning in July 2023. The more you earn, the more you’ll have to repay. If your taxable income reached $133,141 in 2022 you’ll have to repay all your OAS income.

Delaying OAS payments: You can defer receiving OAS for up to five years. If you do defer, your payments will be larger when you start to receive them. You should think carefully about whether it makes sense for you to defer your OAS or not. If you’re a high-income earner, it might make sense to defer — that way, the larger OAS payments would come in future years, when your taxable income will likely be lower.

Any income received from the OAS (and not repaid) is taxable in the year it is received. A tax slip will be issued to you by the federal government.

3. Registered retirement income fund (RRIF)

If you contributed to an RRSP during your working years, things change the year of your 71st birthday. You need to decide whether to withdraw the funds, convert the RRSP into a registered retirement income fund (RRIF) or buy an annuity. Most people choose the second option, to convert their RRSP into a RRIF. No further contributions can be made to a RRIF account. Instead, the RRIF is subject to minimum withdrawal requirements, which must begin in the year of your 72nd birthday. You can choose to withdraw more than the minimum amount in any year.

Money withdrawn from a RRIF is taxable in the year you receive it. You’ll get a tax slip from the financial institution where you hold the RRIF.

4. Other pensions

You might receive other pension amounts from a registered pension plan if you worked as an employee of an organization during your career. If you were an incorporated physician and set up an individual pension plan (IPP) or retirement compensation arrangement (RCA) during your working years, you might receive retirement income from these plans as well. Generally, all pension income you receive is considered taxable income.

Pension splitting

If you were resident in Canada as of December 31, 2022, you can elect to allocate up to 50% of your pension income to your spouse or common-law partner. Pension income that is eligible for splitting is generally the amount that qualifies for the pension income credit (see “Pension income credit”) as well as certain amounts distributed from a retirement compensation arrangement (if you are age 65 or older).

  • Note: Pension splitting enables spouses to shift taxable income from one to the other and can effectively lower your combined tax liability for the year. However, think carefully about how the shifting of income might affect any OAS repayment, and which spouse should claim charitable donations and medical expenses. Many types of tax-preparation software can determine for you whether pension splitting makes sense and what the optimal level would be.


B. Tax credits for seniors

1. Age amount

If you were 65 or older on December 31, 2022, and your net income (line 23600 of your tax return) was less than $92,479, you are entitled to an age credit. If your net income was less than $39,826, you are eligible for the maximum age credit for 2022, which is $1,184.70 ($7,898 x 15%).

For 2022, the age credit is gradually reduced as your net income exceeds $39,826 and is fully phased out at $92,479.

2. Pension income credit

You are entitled to a federal pension income credit of $300 ($2,000 x 15%) if you report eligible pension income on your tax return.

Eligible pension income generally includes:

  • income from registered pension plans, annuities, RRIF payments
  • foreign pension plans
  • pension income transferred from a spouse

Eligible pension income does not include:

  • OAS benefits
  • CPP/QPP benefits
  • retiring allowances
  • death benefits
  • payments from a retirement compensation arrangement
  • amounts withdrawn from an RRSP

C. Family and caregiver deductions and credits

1. Claim your spouse’s or common-law partner’s unused tax credits

If your spouse or common-law partner has little or no income, they may have tax credits, including provincial credits, you can use when completing your tax return. The tax savings can be substantial.

Schedule 2 of your income tax return outlines the non-refundable tax credits that can be transferred from one spouse to the other.

  • How is a common-law relationship defined?

Two individuals living in a conjugal relationship are usually deemed to be common-law partners if they have cohabited continuously for at least one year or have a child together (whether natural or by adoption). It is your responsibility to declare your status properly. Failure to do so may result in lost benefits, assessed interest charges and potential future penalties for making false returns. 

2. Claim an amount for supporting a spouse or common-law partner

If you were married or in a common-law relationship at any time during 2022 and either you or your partner earned less than $14,398, the other partner can claim a non-refundable spouse/common-law partner amount for federal tax purposes.

Amount: For 2022, the amount of this credit is calculated by subtracting the low-income spouse/partner’s net income from $14,398 and multiplying the remainder by 15%. This can translate into federal tax savings of up to $2,159.70 ($14,398 x 15%, if the spouse/partner had no earnings). Generally, a similar provincial credit will also be available. 

3. Claim an amount for supporting an eligible dependant

If at any time during the year you were single or separated from your spouse/common-law partner and you supported an eligible dependant, you may qualify for the same maximum $14,398 federal tax credit available to married or common-law taxpayers who support their spouse.

Note: A taxpayer can claim the $14,398 amount only once. That is, you may be eligible to claim the personal amount for a spouse (item 2, above) and for another dependant under the eligible dependant rules (item 3), but you cannot make both claims in the same year.

4. Canada caregiver tax credit

If you are supporting an eligible family member who has a physical or mental impairment, you may be entitled to claim the Canada caregiver credit. This federal non-refundable tax credit can be claimed by a caregiver for a dependant with a physical or mental impairment who is an eligible relative, such as a spouse, common-law partner, child, parent, grandparent, sibling, uncle, aunt, niece or nephew. There is no requirement that the dependant live with the taxpayer. The caregiver credit does not permit a claim for dependants without physical or mental impairments.

Amount: For 2022, the caregiver credit provides a maximum credit of $7,525 per infirm dependant but is reduced dollar-for-dollar by the dependant’s net income over $17,670. Also, depending on your relationship to the dependant, you may be eligible to claim an additional caregiver credit of $2,350; for details, see the CRA website.

If you claim a spousal amount or eligible dependant amount, only you can claim the caregiver credit for that dependant. In other circumstances, however, it may be shared by multiple caregivers who are supporting the same dependant, as long as the total claim does not exceed the maximum amount for that dependant.

D. Disability

1. Disability tax credit

Canadian taxpayers suffering from a severe and prolonged impairment may be eligible to claim a disability tax credit on their personal income tax return.

Amount: For 2022, the federal non-refundable tax credit is 15% of $8,870.

Who is eligible: You can claim the disability tax credit if:

  • you have a severe and prolonged mental or physical impairment (the impairment has lasted or is expected to last at least one year);
  • the impairment markedly restricts your ability to perform a basic activity of daily living, or you must dedicate a certain amount of time to life-sustaining therapy; and
  • a doctor or other accepted medical professional has certified in writing that the two conditions above are true. 

Ask your doctor whether they can certify that you have a qualifying impairment, and talk to your tax advisor about whether claiming this tax credit makes sense for you.

2. Home accessibility tax credit

The federal non-refundable home accessibility tax credit is for expenses related to work performed or goods acquired for a qualifying renovation of an eligible dwelling.

The tax credit can be claimed by anyone who is:

  • 65 years or older before the end of the tax year,
  • eligible to claim the disability tax credit at any time in the tax year, or
  • a spouse, common-law partner or certain supporting relatives of a qualifying individual.

Expenses qualify if they are of an enduring nature and integral to the dwelling, when they are made in relation to a qualifying renovation or alteration to an eligible dwelling. This includes alterations to the land (generally, up to half a hectare of land) that forms part of the dwelling.

Many accessibility renovations also qualify as medical expenses. The same expenses, if qualified, can be claimed as a home accessibility tax credit and as medical expenses. Unlike for the home accessibility tax credit, there is no upper limit to medical expenses.

Amount: The home accessibility tax credit is 15% of qualifying expenses, up to a maximum of $10,000 per year, thus allowing a maximum non-refundable tax credit of up to $1,500 per year.

E. Other tax deductions and credits

1. Carrying charges

Expenses you incur to earn investment income (in non-registered accounts) are deductible for tax purposes. Examples include investment management fees, fees for investment advice, and interest paid on money borrowed for income-earning investment purposes. 

2. Medical expenses

If you, your spouse and your dependent children incur significant medical expenses (including dental and eye care expenses) that are not covered by an insurance plan, you may be able to claim them as a non-refundable medical expense tax credit.

Amount: For 2022, you can claim a 15% federal non-refundable tax credit on qualifying medical expenses in excess of either $2,479 or 3% of your net income, whichever is less.

What medical expenses are eligible? You can find an extensive list of eligible medical expenses on the CRA website. Beyond the usual prescription drugs and medications, dental services, and medical devices, here are some eligible medical expenses that are often overlooked:

  • attendant care and care in a facility
  • renovation or construction expenses to provide greater mobility
  • bathroom aids
  • lift or transportation equipment
  • scooter
  • vehicle modification to enable wheelchair users to drive

Any 12-month period: The CRA allows you to deduct medical expenses for any 12-month period ending in the year of the tax return.

Eligible family members: You can claim medical expenses for yourself, for your spouse or common-law partner, and your or your spouse’s children who are under 18 before the end of the taxation year. In certain circumstances, you may also be able to claim medical expenses for  another family member who is dependent on you (or your spouse) for support. Restrictions apply, so talk to your tax advisor.

3. Charitable donations

Your first $200 of eligible donations to qualifying charities qualify for a federal non-refundable tax credit of 15%. Any contributions over and above that amount entitle you to a non-refundable tax credit of 29%. This tax credit rate increases to 33% if you have enough taxable income to be subject to the top 33% federal income tax rate.

Combine your claims: If you and your partner make separate charitable contributions, consider claiming all your donations on a single return. This way you will qualify for the lower tier (15% rate on the first $200) only once, as opposed to twice if donations are claimed individually, and more of your contributions will be eligible for the higher-tier tax credit.


F. Rethinking your corporation in retirement 

Generally, once you no longer maintain your licence to practise medicine, provincial colleges of medicine won’t allow you to keep your corporation as a medical professional corporation.

1. Winding up your corporation

If you don’t have a lot of assets in your corporation, you can formally wind it up. This involves liquidating and paying out the remaining assets, filing a final corporate tax return and having your lawyer legally dissolve the corporation.

2. Converting your corporation

If you have built up investments in your corporation and there is benefit in keeping it, you can simply convert it to a holding company with a new name.

For information on what to do with your corporation, including why it’s important to create a tax- efficient income stream for your corporate investments, please see MD Financial Management’s guide to retiring as an incorporated physician.


We hope you’ve found this guide helpful. However, please remember that tax planning is a complex process and that the information in this guide does not replace advice from a professional tax advisor. We suggest that you talk to a tax professional to ensure you’re taking advantage of all the tax benefits available to you.

The tax legislation, tax rates and credit amounts in this guide are based on information available as of January 15, 2023 (except where otherwise noted).

The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.