- Salary
- Tax Return Preparation
- Investment Planning
- Interest on Student Loans
- Tuition, Education and Textbook Amounts
- Canada Training Credit
- RRSP Withdrawals for Education (Lifelong Learning Plan)
- Resident Loan Interest Relief Program
- Scholarships and Bursaries
- Employment Expenses
- Union Dues and Professional Fees
- Canada Employment Amount
- TD1 Forms
- Residents with Independent Practice Licenses
- Life Insurance
- Sick Leave and Long Term Disability Insurance
- Other Insurance
- First-Time Home Buyers’ Tax Credit
- RRSP Home Buyer’s Plan
- Interactive Tools Related to Mortgages
- Moving Expenses
- Moving Preparation
- Pregnancy & Parental Leave (Top –Up)
- Employment Insurance (EI) benefits for new parents
- Child Care Expenses
- Canada Child Benefit (CCB)
- Adoption Expense
- Canada Caregiver Credit
- Wills, Estates, Trust and Power of Attorney
- Medical Expenses
- Charitable Donations
- Digital News Subscription Tax Credit
- Province of Residence
- Marital Status
PARO FINANCIAL PRIMER 2024
Resident Financial Primer 2024
Now that you are officially a breadwinner, it’s the perfect time to get a handle on your financial future.
With that in mind, PARO has created this primer for medical residents.* It includes useful tools, links and basic information that will demystify the world of personal finance and help you understand options for everything from filing taxes to buying life insurance, to choosing a financial advisor.
This handbook is not meant to replace professional advice; rather, it’s a guide to help you create the financially healthy life you want. Read on to learn how to make that happen.
*Medical residents who are Canadian citizens and permanent residents.
INCOME & SAVING
Salary
Your salary as a resident is pre-determined via a collective agreement negotiated between PARO and the Ontario Teaching Hospitals (OTH). Your local pay centre will issue your salary either bi-weekly or semi-monthly, based on your site.
Pay Frequency by University
University | Paymaster | Pay Frequency |
---|---|---|
McMaster | Hamilton Health Sciences Centre | Bi-weekly |
NOSMU | Northern Ontario School of Medicine | Semi-monthly |
Ottawa | University of Ottawa | Bi-weekly |
Queen’s | Kingston General Hospital | Bi-weekly |
Toronto | Postgraduate Medical Education Office | Semi-monthly |
Western | London Health Sciences | Bi-weekly |
Approximate Bi-weekly Income for a PGY 1 Resident (26 pay periods per year):
Details | Salary as of July 1, 2024 |
---|---|
Annual Salary | $71,473.31 |
Gross Bi-weekly | $2,748.97 |
Income Tax | $475.23 |
Canada Pension Plan | $155.55 |
Employment Insurance | $45.63 |
Long Term Disability | $24.91 |
PARO Dues | $33.81 |
Net Bi-weekly Pay | $2,013.84 |
Approximate Semi-monthly Income for a PGY1 Resident (24 pay periods per year):
Details | Salary as of July 1, 2024 |
---|---|
Annual Salary | $71,473.31 |
Gross Semi-monthly | $2,978.05 |
Income Tax | $514.83 |
Canada Pension Plan | $168.52 |
Employment Insurance | $49.44 |
Long Term Disability | $26.98 |
PARO Dues | $36.63 |
Net Semi-monthly Pay | $2,181.65 |
Your annual salary rate is outlined in the PARO-OTH Collective Agreement Article 22.1 and is based on your PGY level. Here are the current salary scales:
PGY | Current Salary |
---|---|
PGY1 | $71,473.31 |
PGY2 | $77,613.22 |
PGY3 | $83,355.10 |
PGY4 | $90,307.50 |
PGY5 | $96,022.35 |
PGY6 | $101,478.22 |
PGY7 | $106,429.73 |
PGY8 | $112,836.08 |
PGY9 | $116,982.43 |
Call Stipends
A call stipend is the remuneration received on top of your annual salary for working call. Stipends must be paid a minimum of every three months. You may receive it either through payroll or by individual cheque.
Current call stipend amounts are:
Type of Stipend | Effective July 1, 2024 | Effective July 1, 2025 | |
---|---|---|---|
Weekday In-hospital | $176.98 | $180.96 | |
Weekend In-hospital | $236.35 | $246.98 | |
Weekday Home Call/Qualifying Stipend | $88.49 | $90.48 | |
Weekend Home Call/Qualifying Stipend | $118.17 | $123.48 |
*Qualifying shifts only apply to shift-based services and only for shifts where one full hour worked on the shift occurs between midnight and 0600h. Where a resident on this service works a qualifying shift, the resident is entitled to a qualifying stipend.
DON’T MISS THE DEADLINE
Call stipend claims must be submitted to the person(s) designated by the hospitals to receive such claims within 30 days following the end of the month in which the call was worked.
MAKE A COPY
When submitting your call stipends keep a printed record as proof.
- If submitting via fax, print a fax receipt
- If submitting via email, print a copy of the sent email
- If submitting through an online system, grab screen captures as you go
For more information see our information on Call Stipends.
Income Tax Rates
The combined federal and Ontario marginal income tax rates for 2024, allowing for the basic personal amount credit of $15,705, are as follows:
Taxable Income 2024 Tax Rates
Amount | Rate |
---|---|
$15,706 to $51,446 | 20.05% |
$51,447 to $55,867 | 24.15% |
$55,868 to $90,599 | 29.65% |
$90,600 to $102,894 | 31.48% |
$102,895 to $106,732 | 33.89% |
$106,733 to $111,733 | 37.91% |
$111,734 to $150,000 | 43.41% |
$150,001 to $173,205 | 44.97% |
$173,206 to $220,000 | 48.29% |
$220,001 to $246,752 | 49.85% |
Over $246,752 | 53.53% |
CPP and Employment Insurance
CPP and EI are also deducted from each pay with the following maximums:
2024 Maximum Contributions | 2025 Maximum Contributions | |
---|---|---|
CPP | $4,055.50 when employment income is at least $73,200 | $4,430.10 when employment income is at least $81,200 *this includes maximum CPP and the new CPP2 contributions effective January 1, 2024 |
EI | $1,049.12 when employment income is at least $63,200 | $1,077.48 when employment income is at least $65,700 |
For more information visit the CRA website
PARO Dues
PARO dues are deducted from your salary on each pay period at a rate of 1.23%. You can deduct these mandatory dues on your income tax return. The amount should be posted on your T4 slip in box 44.
* Deduct on Line 21200 of your tax return
Tax Return Preparation
The most important part of preparing for your annual income tax return is to ensure that you keep all of your receipts. These may include:
- Tax-slips (T3, T4, T5, T2202A, T2200E )
- Letters confirming membership (e.g. CPSO, CFPC, RCPSC, etc.)
- Exam receipts issued by each institution (MCCQE, Principles of Surgery (POS), CFPC and / or RCPSC certification exam).
Having a folder for each taxation year is a good way to get and stay organized.
There are two options for filing your income tax return: doing it yourself or hiring a professional. As tax season ramps up, you’ll find lots of tax preparation services available. If you haven’t filed taxes before, it may be a good idea to get a tax consultant to help you. If you are interested in doing it yourself, some software packages may simplify the process for you – UFile Online, TurboTax Free Online, H&R Block Online Free, SimpleTax, to name a few.
Once you file your return, you must keep a copy and your receipts for six years in the event that the Canada Revenue Agency (CRA) requests more information or undertakes an audit.
Investment Planning
The purpose of this section is to describe an overall approach to investing. There are plenty of books and Internet resources on how to be a successful investor, and we encourage you to read further on the subject and consult with a financial advisor. We have included a glossary of basic terms at the end of the guide to help you start your foray into the world of investing.
Once you determine how much of your budget you can comfortably set aside for investing there are several ways to make that happen, such as automatic withdrawals in an investment account every payday. Also consider saving salary increases – if you don’t see it, you won’t miss it! In fact, using this method for paying off your debt is a way of practicing for when you start saving. In this way, your retirement plans are covered before you start spending in the present.
In determining the make-up of your investment portfolio, take into account considerations of risk, realistic rate of return, liquidity, and time until retirement. The concept of risk return describes the fact that a higher risk investment has potentially higher return, while a lower risk investment typically has a lower return. Stocks and income trusts generally carry higher risk than mortgage securities, which in turn carry higher risk than corporate or government bonds, but also have the potential for higher rates of return. Investing in real estate requires a significant time commitment along with the added risk of investing a significant portion of your savings in one asset. Remember that if you’re saving for your retirement, you have plenty of time over which to spread your investments and make a respectable rate of return.
Most financial advisors will recommend diversifying into a variety of investment vehicles. Investing in individual stocks is generally not recommended until savings surpass $50,000, and only after careful consideration. Diversifying your investments means that you are taking a lower risk than if you invest in a single asset.
It’s always a good idea to consult with a financial advisor. See the section on financial advisors for more information.
Registered Retirement Savings Plan (RRSP)
Investing in an RRSP is a simple way to contribute towards your future, providing for tax-free growth of your money while reducing your current tax liability. The deadline for 2024 contributions is March 3, 2025. However, it is more beneficial to contribute to your RRSP as early in the year as possible to receive the greatest benefit from tax-free compounding of your money.
If you do not know your RRSP contribution limit you can find out by:
- Logging on to the CRA website: and going to “My Account”. Here you can sign up and receive a password to access your personal tax information including your RRSP contribution limit, account balance, status of your return, history of various tax slips on record with CRA, and it provides an easy means of changing the information that the government has on record. All you need to receive your password is your Social Insurance Number, date of birth, a copy of your prior year tax return, and your current postal code.
- Calling 1-800-267-6999 for CRA’s calculation of your limit.
Essentially, your RRSP contribution limit is the lesser of 18% of your prior year’s earned income and the limit for the year, which is $31,560 for 2024. The 2024 RRSP limit of $31,560 is reached when 2023 earned income reaches $175,331. The maximum RRSP limit will increase in 2025 to $32,490.
Your limit is adjusted for any unused RRSP contribution room from prior years and your pension adjustment for the previous year. Be careful not to over contribute to your RRSP. The penalty for an over contribution is 1% for each month of the over contribution. An over contribution of $2,000 is permitted; however, it cannot be deducted until there is available RRSP contribution room.
One strategy, for some individuals, may be to defer RRSP contributions (or perhaps to make a contribution towards your RRSP but not claim a deduction), until your income increases. For example, the choice between deducting a $2,000 RRSP contribution when your marginal tax rate is 24% versus the following year when it is 34% is the difference between a $480 savings this year and a $680 savings the following year.
The government allows taxpayers to carry forward the unused portion of their RRSP contribution limit indefinitely. As an example:
Year | Contribution limit* | Contribution | Unused contribution limit |
---|---|---|---|
2024 | $12,298 | $7,298 | $5,000 |
2025 | $13,970 + $5,000 = $18,970 | $11,970 | $7,000 |
* The 2024 contribution limit is based on a 2023 PGY1 salary income, and the 2025 contribution limit is based on a 2024 PGY2 salary income plus the unused contribution limit from the previous year.
If you expect your income will increase in the near future, it may make sense to take a larger RRSP deduction later, during a year in which your tax rate is higher. Contact a tax consultant if you need assistance in this area or obtain the RRSPs and Other Registered Plans for Retirement guide (T4040).
With the recent changes to the Home Buyer’s Plan, you can now withdraw up to $60,000 of your RRSP towards the purchase of a new home. Paired with a spouse, the maximum combined is $120,000. Temporary repayment relief has been introduced into the legislation such that for withdrawals made on or after January 1, 2022, the repayment period will being 5 years (instead of just 2 years) after the money was withdrawn. The repayment period remains 15 years.
* Deduct on Line 20800 of your tax return
Tax Free Savings Account (TFSA)
Starting in 2009, all Canadian residents at least 18 years of age and with a valid SIN can open a Tax Free Savings Account. If you qualify and have not yet contributed, the annual limit and cumulative totals for contribution room since 2009 when the program began are as follows:
Years | TFSA Annual Limit |
---|---|
2009-2012 | $5,000 |
2013-14 | $5,500 |
2015 | $10,000 |
2016-18 | $5,500 |
2019-2022 | $6,000 |
2023 | $6,500 |
2024 | $7,000 |
Any income earned within the account is not taxed. Also you can contribute to the TFSA of your spouse. The funds contributed to a TFSA and any income earned on these funds can be withdrawn at any time in the future. Contribution room for the following year is increased for withdrawals made from the account in the previous year. For more information on TFSA, please visit the CRA website.
Registered Education Savings Plans (RESPs)
If you have a child, RESPs are plans to help you to save for your child’s education after high school. The lifetime contribution limit is $50,000 with no annual restrictions. Contributions can only be made to the plan during the first 31 calendar years of the plan’s existence and the plan cannot exist for more than 35 years. The federal government will pay a 20% Canada Education Savings Grant (CESG) on the first $2,500 of annual contributions made to all eligible RESPs of a qualifying beneficiary, up to and including the year in which your child attains age 17. The maximum total CESG that can be paid in respect of a child is $7,200. Unlike RRSPs, there is no deduction for contributions. However, income earned on plan assets is not taxed until received as education support payments by the student. Eligible investments are the same as those for RRSPs and other deferred income plans. Contact your financial advisor if you need assistance in this area.
First Home Savings Account (FHSA)
Since 2023, first-time home buyers in Canada have been able to contribute to a FHSA to save up for their first home. You can contribute up to $8,000 per year, with a lifetime maximum of $40,000. Unused annual contributions can be carried forward. Contributions can be deducted from your income for the year. Withdrawals are not taxable as long as you are using the money to purchase a home as your principal residence. The FHSA may also be used in conjunction with the RRSP Home Buyer’s Plan so that withdrawals from both can be made for the same home purchase.
Choosing a Financial Advisor
We cannot overstate how important finding a trusted financial advisor is to your financial wellbeing. A good financial advisor will help you with much more than simply choosing appropriate investments for your money. They will help you identify your long-term goals and help define appropriate strategies to achieve these.
Examples include: retirement planning; education savings for your dependents; or saving up to purchase your dream home. A good advisor should be a sounding board for major decisions and be available to answer your financial questions whenever they come up. Your advisor should be someone that you trust and who takes the time to understand your particular financial situation thoroughly. And finally, a good advisor will explain the importance of diversifying your investments and help come up with an investment plan which takes into account your own goals and level of risk tolerance. They will be there to answer your questions, reassure you and keep you focused on your long-term plan when the market turns sour and your investments don’t provide the results you were expecting. Now where do you find someone like this? That’s the tough part and will require some research on your part. First, know that not all financial advisors are created equal. They go by a variety of titles – financial planners, financial consultants or investment advisors – and may have varying credentials – certified financial planner (CFP) or certified financial analyst (CFA). Some MBAs, accountants and lawyers also work in a financial advisory capacity. The bottom line is that there is minimal government oversight of the industry, so credentials are no guarantee of quality or professionalism.
The best way to find a good financial advisor is to ask for referrals from friends, family members or a trusted lawyer or accountant. As a client, you have a right to ask potential advisors to speak with their existing clients for references, so do that. Stay away from advisors who are pushing products that pay commissions or that want to directly manage all your investments so that they can collect a percentage of these on an annual basis (unless that’s what you’re looking for). Advisors who recommend you avoid putting your money into debt repayment or real-estate purchases are probably also hoping to see you a commissioned product. Ultimately, your goal is to build a long and trusting relationship with an advisor. Someone who tries to scare you or make you dependent on them by complicating your situation may not be the best bet.
Incorporation
Self-employed medical professionals have the ability to incorporate. When you are transitioning into practice, you may want to plan in advance and discuss the details with your tax advisor. Whether incorporation is right for you in the future will depend on your specific situation. Here are some incorporation highlights to consider.
Advantages to Incorporation:
Optimizing income and taxes
A tax benefit exists to the extent that money is not required for personal purposes and can be left inside the corporation. An Ontario corporation generally pays 12.2% of tax on the first $500,000 compared to an individual who pays 53.5% tax on taxable income above $246,752. If the earnings stay within the corporation the difference in tax rates – in this example, an additional 41.3%, can be invested. There is no material difference in tax rates on investment income earned inside the corporation versus personally.
For example, if $100,000 of income would be taxed at 12.2% in the corporation or 53.5% personally, the difference is $41,300. If this money is then invested at 6% for 5 years, the additional money earned in the corporation before tax is about $14,000. This represents the deferral benefit of incorporation.
Keep in mind that as soon as the money is used for personal spending, the higher personal rate of tax is paid.
Potential tax deferral
Another benefit of incorporation is potentially paying a lower personal tax rate when money is taken out of the corporation. This benefit is realized if you receive high income in one year followed by low income the next, or if you foresee yourself in a lower tax bracket once you retire. For example, an unincorporated individual from Ontario making $440,000 of taxable income in a year must pay the highest tax rate of 53.5% on income over $246,752. By using a corporation, the individual may be able to take a $246,752 salary in the first year and draw the remaining funds out in the next year so that personal income in each year remains below the highest personal tax rate bracket.
Income sprinkling
Depending on your situation, another potential advantage would be paying your spouse, child, or parent, a reasonable return for the work that they do for your corporation. There have been significant changes in recent years which restrict the ability to pay dividends to family members not actively involved in the operation of a business. These new rules are complex and should be discussed with your tax advisor in order to understand how they would apply to your specific situation.
Disadvantages to Incorporation:
Increased cost and paperwork
It’s important to note that a corporation has its own costs and there is paperwork associated with the process of incorporating a company as well as annual corporate filings.
No personal tax credits
Though corporations can claim business expenses similar to those business expenses that can be claimed by a self-employed individual, corporations are not eligible for personal tax credits. However, with proper planning, appropriate remuneration for the owner of the corporation can ensure maximized use of the owner’s available personal tax credits.
Less tax loss flexibility
As a self-employed individual, if your business experiences operating losses, you could use the loss to reduce other types of personal income in the year the losses occur. In a corporation, however, these losses can only be carried forward (currently 20 years) or back (currently 3 years) to reduce the corporation’s income from other years.
Also be mindful that a corporation is not likely useful if you need to use all your earned income for personal or family use, such as paying off school debt, buying a home or paying down a mortgage.
EDUCATION AND EMPLOYMENT
As a resident, with your dual role as a trainee and an employee, there are a number of tax credits and programs that may apply to your situation.
Interest on Student Loans
If your student loans are approved under the Canadian or Provincial student loans programs, you can claim a tax credit for the interest paid on eligible student loans. Your financial institution should issue a receipt showing the interest. The credit must be reported in the year it was paid but may be claimed in the year or the five succeeding taxation years. This credit is not transferable. It is important to note the loan must be received under the Canada Student Loans Act or Student Financial Assistance Act, or provincial or territorial government laws similar to these. If you combine or otherwise renegotiate your student loan, the interest you pay no longer qualifies for this tax credit.
* Claim on line 31900 of your tax return
Tuition, Education and Textbook Amounts
The education and textbook tax credit and the Ontario tuition tax credits have been eliminated. The only remaining tax credit available for 2024 tuition is the Federal Tuition Credit, which is 15% of the tuition amounts as shown on your T2202. Any unused tax credits can be carried forward to be used against future tax amounts payable. Please see the below table for an example of how the federal tuition credit can affect your taxes.
Credit | Federal Credit | Ontario Credit |
---|---|---|
Federal Tuition Credit | $40,000 x 15% = | $6,000 |
Example 2024 Tax Bill before Tuition Credit* | $5,300 | |
Credits Applied to taxes | $6,000-5,300= | $0 with $700 of remaining future tax savings for unused tuition credit |
* Remaining tuition credits are non-refundable and will be applied to reduce taxable income when available, and depending on individual tax circumstances, actual tax savings may be less.
If you are filing prior returns, you may claim the education and tuition credits based on the rules applicable for those years. Any credits carried forward are still available for use to reduce tax in the current year. Tuition fees include:
- University registration fee, which you paid to ensure enrolment into your residency program, listed on your T2202 tax credit slip
- Examination fees (MCCQE, Principles of Surgery (POS), CFPC and / or RCPSC certification exam)
Ask for tax receipts from the bodies administering any such exams.
Please note that CaRMS application fees cannot be claimed as education or tuition amounts. Further information can be found here.
* Claim on line 32300 of your tax return
Canada Training Credit
The Canada training credit is a refundable credit available for eligible tuition and other fees paid for courses taken in 2020 and subsequent taxation years.
Residents who are at least 26 years old, but less than 66, have employment income of more than approximately $11,821, but less than $173,205, are Canadian residents throughout the year, and file their tax return, can accumulate $250 each year towards a Canada Training Credit to a lifetime maximum amount of $5,000.
If the criteria were met for 2020-2023, a limit of $1,000 is available for 2024. If no amount was claimed for 2020 through 2023, that also carries forward so you may have as much as $1,250 available for the 2024 tax year.
To the extent that tuition and fees that would otherwise be eligible for the existing tuition tax credit are incurred, half the incurred amount, up to the maximum credit limit available to you, can be claimed as a refundable credit in the year.
You can still claim the existing tuition tax credit, but your tuition amount will be reduced by the amount of the Canada Training Credit you have claimed. For example: if your tuition amount is $10,000 and you claim $250 for the Canada Training Credit, the final amount of tuition used to calculate the tuition credit will be $9,750 ($10,000-$250).
To learn more about the Canada training credit, please visit the CRA’s website.
RRSP Withdrawals for Education (Lifelong Learning Plan)
A withdrawal of funds from an RRSP in order to finance full-time training or education for the taxpayer and their spouse, may be done free of immediate tax. This program is similar in concept to the RRSP Home Buyers’ Plan. Withdrawals can be made for four successive calendar years to a maximum of $10,000 for a given calendar year. The maximum aggregate RRSP withdrawal for the four years is $20,000. More than one withdrawal may be made in any given year from any number of specific RRSP accounts, provided the annual and maximum limits are not exceeded. RRSP withdrawals under this plan must be repaid without interest to an RRSP in equal instalments over a period of 10 years commencing no later than 60 days after the fifth year following the withdrawal. To qualify, you must enrol as a full-time student in a qualifying educational program of at least three months duration at an eligible educational institution. Where funds are withdrawn before the enrolment, the enrolment must occur in the year of the withdrawal or in January of the following year. Special rules apply where funds are withdrawn and the qualifying program is not completed.
Resident Loan Interest Relief Program
The Resident Loan Interest Relief Program (RLIRP) was negotiated in the Ontario Medical Association (OMA)/Ministry of Health (MOH) Collective Agreement in 2008 on the basis of PARO’s recommendation, and with the support and advocacy by the OMA and Ontario Medical Students’ Association. We have continued to work hard with these stakeholders to achieve improvements to meet the needs of our members.
Under the RLIRP, the MOH, in partnership with the Minister of Training, Colleges and Universities, provides eligible residents with relief from making monthly payments (interest and principal) on Canadian government student loans (provincial and federal) during their residency period.
Successful applicants are issued a Medical Resident Loan (MRL) from Ontario that they use to pay off federal and provincial/territorial government student loans. During the residency, the MOH pays the interest on the participant’s MRL and the participant is not required to make payments on the principal.
In exchange for these benefits, the participant must first agree to practice medicine for five years in Ontario upon completion of residency. The participant must begin repayment of the MRL upon completion or termination of residency.
Who is eligible for RLIRP?
All residents in all years of training in Ontario postgraduate programs funded by the MOH as of July 1, 2009 are eligible, provided that:
- You are not restricted from receiving financial assistance under the Ontario Student Assistance Program (OSAP)
- Your loans are Canadian government student loan(s), i.e. provincial, territorial and/or federal – Bank lines of credit are not eligible
- Your loans are in good standing and not in arrears
Important note:
- Applications can only be submitted between June and September of each year
- Consolidated loans are not currently eligible under this program
Participants in the RLIRP must enter into a return of service agreement with the MOH under which you agree to provide Ontario with five years of physician services directly after you complete your Ontario medical residency.
For more details or to apply click here.
If you have specific questions please contact the Resident Loan Interest Relief Program – Application Centre:
- Telephone: 1-833-435-4151
- From Monday to Friday, between 9:00 a.m. and 5:00 p.m. EST
- by email: rlirp@accerta.ca
Scholarships and Bursaries
All amounts received for scholarships, fellowships, and bursaries may be excluded from income if they are received in connection with the student’s enrolment at a designated educational institution. The CRA has previously clarified that post-doctoral fellowships would not qualify for this scholarship exemption.
Employment Expenses
As an employee, there are a number of expenses that you may be able to claim on your income tax return. Your employer should provide you with a certified T2200 form at the end of the taxation year so you can claim employment expenses that are incurred or required during your employment. You do not have to send the T2200 with your tax return, but should keep it on file in case the CRA requests a copy. It is also important for you to be aware the CRA only approves the expenses claimed that are incurred or required by the employment as per their tax deduction guideline. If your expense is reimbursed by the employer, you cannot claim it again. Please note that each individual situation is different – you should consult a tax advisor for advice pertaining to your unique situation.
Canadian Medical Protective Association (CMPA) Fees
You can deduct the unreimbursed portion of the membership fee you paid for CMPA fees. Under the PARO-OTH Collective Agreement residents must obtain CMPA coverage as a condition of employment (so that, in the event a resident is involved in a medical-legal issue, CMPA will provide individual representation). Also, as an Ontario doctor, a rebate for a portion of remitted CMPA fees is available. The MOH, theCMPA, and the OMA work together to ensure continued availability of professional liability protection for Ontario physicians.
For specific details on the Medical Liability Protection Reimbursement Program (including deadlines and eligibility requirements) please visit this website.
Vehicle Expenses
You can deduct vehicle expenses if you are ordinarily required to work away from your principal hospital(s)/clinical site(s) and required to drive your own vehicle and do not receive a non-taxable vehicle allowance.
If you meet these criteria and plan to claim the deduction, it is essential to keep proper records. This includes maintaining a detailed mileage log with trip dates, locations, purpose, and total kilometres driven, as well as copies of all receipts for fuel, insurance, registration fees, loan interest, leasing costs, and vehicle purchases.
The per kilometre rate provided by the CRA for 2024 is 70 cents per kilometre on the first 5,000 km and 64 cents per kilometre thereafter. It includes all personal vehicle related costs such as gas, maintenance, insurance, license and registration and interest on your car loan. If you own your vehicle a portion of the capital cost can also be taken as a deduction each year. Please be aware that this deduction is capped at a maximum vehicle price for non-zero emission vehicles of $37,000 plus applicable sales taxes, and $61,000 plus applicable sales taxes for eligible zero emission vehicles. These amounts are for vehicles purchased in, or after 2024. The maximum amount of car loan interest you can deduct is $350 per month. Leasing costs are limited to $1,050 per month, up from $950 in 2023.
Please note, the cost of driving a car to work even when on call cannot be deducted as a vehicle expense. However, you may, for example, use your vehicle for house calls, i.e. traveling to and from the hospital/site to a patient’s home. In this case, the cost of travel should qualify as a valid employment expense.
Travel Expenses
You can deduct taxi and public transit expenses if you are required to travel between locations for work purposes and do not have your own vehicle. You should keep your receipts for these expenses to support your claim.
Parking Expenses
You can deduct a parking expense when you are traveling for work if you are required to pay for parking and do not receive a reimbursement for the amount. Please note, parking for work or the monthly parking pass at your principal hospital(s) / clinical site(s) does not usually qualify as an eligible expense. Parking for house calls (as described above) should qualify as a valid employment expense.
Cell Phone
You can only deduct the portion of the cost for the phone if you are required to use a cell phone for your work. Connection and activation charges should not be deducted. You should receive a T2200 completed by your employer stating the requirement to have a cell phone.
Each payroll centre has a different process to confirm or state the type of employment expenses that are required for work. If you do not receive a T2200 at the end of the year, please request one from them.
Union Dues and Professional Fees
You can deduct PARO dues and fees paid to join professional organizations, which are required during your residency training.
* Claim on line 21200 of your tax return
Canada Employment Amount
The amount of the credit is the lesser of $1,433 and the employment income for the year and is available to anyone with employment income.
* Claim on Line 31260 of your tax return
TD1 Forms
When you start working at a new place of employment, you should receive a TD1 form to complete. The form should also be completed when there is a change to the credits which you will be claiming. The purpose of the form is to reduce the income tax withholdings on your pay for certain deductions, which you will be claiming on your personal tax return for the year. These items include child amount, tuition amount, disability amount, spouse or common law partner amount, and amount for an eligible dependent. Please note that you should only be claiming deductions on one such form if you have multiple jobs.
Residents with Independent Practice Licenses
If you received your Independent Practice License you should obtain a Business and Professional Income Tax Guide and complete form T2125 to report your income and expenses. Sound advice for anyone with mixed income sources is to consult an accountant.
INSURANCE
Insurance will become an ever-increasing part of your life. There is professional liability, home and auto, office, life and long-term disability insurance. Here is some information to consider about life and long term disability insurance.
Life Insurance
There are a number of options to consider when looking at life insurance. Before going into detail, keep in mind that the current PARO-OTH collective agreement provides you with life insurance equal to two times your salary. You should note that this benefit ceases upon completion of your residency.
How Much Life Insurance Do I Need?
Life insurance should provide for the finalizing of debts and last expenses in the event of a premature death and also provide a replacement income for those dependants left behind. Discussions of these issues can seem morbid, for sure, but planning for such events is essential to establishing a secure financial future for your dependents. These are a couple of scenarios to consider. If you have no dependents or debts and do not have to arrange for an ongoing income for survivors, then, at the very least, consider leaving something to cover the cost of a funeral and other final expenses. On the other hand, if you’re in a relationship, are a parent, have a mortgage or line of credit then you should be considering a larger amount of coverage in the event of premature death. The planning should consider which debts to pay off, and should provide a nest egg to cover expenses associated with single parenting. Each partner in the relationship might need a different amount of insurance depending on individual income as well as the future plan in the event that their partner dies.
Insurance needs change throughout your lifetime, so a re-evaluation every few years is prudent. It is conceivable to reach a point where your life savings reach a level where life insurance is unnecessary. This is what the insurance industry refers to as self-insured.
To determine how much life insurance you need, consult a financial planner or one of the many financial planning guides available on the market.
You should also keep in mind that you can normally only purchase life insurance when you are healthy so incorporate this into your plans.
What Type of Life Insurance Do I Need?
There are essentially three types of life insurance available: term, permanent and universal life.
Term Life Insurance
Term life insurance provides the most coverage for the least premium. Term insurance covers you in the event you die within a specific term, i.e. Term to Age 65. If the insured dies prior to age 65, the face amount of coverage is payable. If the insured dies on or after age 65, no payments are payable as the coverage expires at 65.
Premiums for term insurance can be level or can increase on certain policy anniversaries. Five and ten year term life policies renewable to age 65, 70, or 75 are common. Finally, term insurance does not normally have any residual or cash value. If you lapse or cancel your coverage, there is nothing payable to you.
This type of coverage is popular with younger individuals as they require the most coverage for the lowest cost. It can be reduced throughout the life of the policy as assets replace obligations. It can be used to cover specific needs such as the period of a mortgage or the dependency period of children. Once the goals have been met, the insurance is no longer necessary.
Permanent Life Insurance
Permanent life insurance means just that. You cannot outlive it. The benefit will be payable when you die, not if you die within a certain time frame.
Permanent life insurance premiums are usually level for the premium paying period. They can be payable for life or paid up in a limited period of time. Permanent life insurance policies can have cash surrender values if you decide to cancel them or they may not. There are many different versions of permanent life insurance but the important thing to remember is that you cannot outlive the benefit.
Why buy permanent life insurance? Individuals may accumulate sizeable estates, which upon death, generate large taxation problems that may need to be paid by selling estate assets. Rather than dispose of the assets, people will use permanent life insurance to handle the tax bill.
Many people choose to buy a “foundation” of permanent life insurance and then top it up with term insurance to cover those obligations that will eventually disappear.
Universal Life Insurance
Universal life insurance is a product that combines a death benefit with an investment component. It is usually only looked to after one has eliminated debt and maximized RRSP contributions. It is primarily used as a method to defer taxes on additional investment income and should only be entered into after consulting with a professional.
Final Thoughts about Life Insurance
Many financial institutions automatically offer to add life, and sometimes disability insurance to debts such as loans, credit lines, mortgages, etc. The insurance purchased is, in many cases, far more expensive than that available in the marketplace. It also only provides enough coverage to pay off the debt in the event of your death, even if the balance of the debt is diminishing.
And while a lender may require life insurance as part of the security for the loan, it does not have to be their insurance. Some life insurance policies can be assigned for collateral purposes to the bank. In such a case, in the event of your death, the bank gets their outstanding balance out of the proceeds of your insurance, but your beneficiary gets anything left over.
Sick Leave and Long Term Disability Insurance
As a resident, your income protection is provided in two parts, salary and benefit continuation, as highlighted in the terms of your Collective Agreement and LTD.
Should you become unable to perform the duties of your regular occupation, your salary will be continued via salary and benefit continuation, until the earlier of:
- The end of your contract year in most cases, (the contract year runs from July 1 to June 30 of the following year); or
- 6 months
Before salary continuation ends, you will need to complete an application for the LTD plan that pays 70% of your basic salary, subject to certain reductions, up to age 65 so long as you remain totally disabled.
It is part of the Collective Agreement that all residents be covered under this plan and no medical evidence is required to obtain the coverage. Benefits are tax-free and there is also a Cost of Living Benefit, which will increase your monthly benefits by the lesser of 4% or the change in the Consumer Price Index on an annual basis in the event you are disabled for more than a year. If you also carry OMA Disability Insurance coverage, it will be payable in addition to any benefits received under your group plan.
During the salary continuation period and the first 12 months of disability, you will be considered to be totally disabled if you are unable to perform all of the duties of your regular occupation. Thereafter, you will be considered to be totally disabled if you cannot perform the duties of any occupation for which you may become suitably fitted by training, education or experience.
Other Insurance
As mentioned earlier, there are many other types of insurance to consider, such as home and auto. Rates vary by company and many alumni and medical associations provide benefits to their members at very competitive rates. Shop around.
FAMILY AND LIFE EVENTS
Thinking about purchasing your first home or moving for work? Have you decided it’s time to start a family? Are you currently raising young children? Here are some resources and tax tips to help you manage various family and life events.
First-Time Home Buyers’ Tax Credit
This is a non-refundable tax credit for first time home buyers. This credit has a potential savings of $1,500 ($10,000 x $15%) in taxes.
* Claim on line 31270 of your tax return
RRSP Home Buyer’s Plan
If you are buying a home in the next year, you can withdraw $60,000 from your RRSP to use towards your down payment. If you are married or have a common-law partner, each individual can withdraw up to $60,000 from their own RRSP. Therefore, a total of $120,000 can be withdrawn. The money you borrow must be returned to the RRSP in annual instalments over a 15-year period, starting with the fifth year after the withdrawal for withdrawals made after January 1, 2022 and prior to December 31, 2025. The RRSP repayments made can be designated from either contributions you made during the year or from contributions you made during the first 60 days of the following year. For example, if you withdrew funds in 2024 you must begin repayment by March 1, 2030. Generally, first time buyers and their spouses or common-law partners are eligible to make this withdrawal. If you have owned a house in the past you may also qualify but there are very strict criteria that you must meet. Please consult a professional tax advisor to help you determine if you qualify.
Please note, only contributions that have been in your RRSP for more than 90 days can be withdrawn from your RRSP and still taken as a deduction on your tax return. As an example, on January 4, 2024 your RRSP balance was $17,000 and you made a contribution on April 1, 2024 of $5,000. On May 3, 2024 you are only eligible to withdraw $17,000 from your RRSP under the home buyer’s plan as the $5,000 contribution was contributed less than 90 days prior to May 3, 2024. There are no immediate tax consequences if the Home Buyer’s Rules are followed.
If you want to determine whether or not you will qualify for a home mortgage based on income and expenses, you can click here to find tools to help you calculate mortgage payments.
Moving Expenses
If you move at least 40 kilometers closer to your new place of work and / or study (full-time post-secondary education in Canada), certain moving expenses incurred to move are tax deductible. The eligible moving expenses must be deducted from income earned at the new location. Any excess deductible expenses can be carried forward and are available to deduct in the following year. A T1-M form (Claim for Moving Expenses) is available on the CRA website.
* Deduct on line 21900 of your tax return
Moving Preparation
Before moving, don’t forget to complete change of address forms:
- Memberships (including PARO), insurance
- Drivers’ license, Health cards
- Employer, Doctor, Dentist
- Magazine subscriptions and other mailings
- Bank accounts, credit cards, and tax office (CRA)
If you are completing your residency, ensure that your University and Payroll Centre have your updated contact information in case they need to contact you in the future.
Pregnancy & Parental Leave (Top –Up)
Did you know the PARO–OTH Agreement provides a supplemental income top-up to residents who are on either pregnancy or parental leave and are in receipt of EI? The benefit is equivalent to the difference between eighty-four percent (84%) of your regular weekly earnings and the sum of the resident’s weekly EI benefits and any other earnings. Click here for detailed information.
Employment Insurance (EI) benefits for new parents
EI benefits vary based on the number of days you worked and how much you made in the relevant period leading up to the leave. For most of residents, the basic rate for calculating EI benefits is 55% of your average insurable weekly earnings, up to a maximum amount. As of January 1, 2025, the maximum yearly insurable earnings amount is $65,700. This means that you can receive a maximum amount of $695 per week. Extended parental leave is also available. Under this option, you get paid the same total benefit, however over a longer period of time(so less per week). You can find out more information about Employment Insurance maternity and parental benefits by accessing the Government of Canada’s website.
Child Care Expenses
If you and your spouse or common-law partner both work, you can deduct the cost of caring for your child(ren) from your income tax. Generally, the deduction for childcare expenses is to be taken by the spouse with the lower income. Maximum yearly deductions are the lesser of two-thirds of earned income and the total of $8,000 per child aged 6 or less at the end of the tax year and $5,000 per child aged 7 to 16. The overriding limitation is the actual amount paid for childcare in the year. There is a maximum deduction of $11,000 available for children who are eligible for the disability credit.
This deduction is also available in the following cases:
- to individuals whose spouse is a full-time or part-time student,
- to single parents who are studying full-time or part-time, and
- to two-parent families where both parents are attending school at the same time on a full-time or part-time basis.
Full-time and part-time educational programs have to meet certain specific criteria, defined by CRA as “A full–time educational program is one that lasts at least three consecutive weeks and requires that each student in the program spend at least 10 hours per week on courses or work in the program. A part‑time educational program is one that lasts at least three consecutive weeks and requires that each student in the program spend at least 12 hours per month on courses.” Residents should consult with their accountant as to whether this would apply to their situation.
There are some other situations, which may arise that will allow the higher income spouse to claim the childcare expenses. Please consult your accountant for further information. A claim for child care expenses should be made on form T778, which is included in the “Child Care Expenses Guide”, published by CRA and found on their website.
* Deduct on line 21400 of your tax return
Canada Child Benefit (CCB)
The CCB is not taxable, and the amount received is based on family income reported on your tax returns. The maximum benefit is $7,787 per child under age 6 and to $6,570 per child age 6 through 17 (indexed for inflation), and is received in full when family income is below $36,504. The benefit is reduced based on income. With a single child under age 6, there is no benefit where income exceeds approximately $250,000. The level of income at which the benefit phases out will depend on the number of children under age 6 and aged 6-17.
Adoption Expense
A credit is available for up to $18,210 of expenses. Eligible expenses include: adoption agency fees, court and legal costs, and travel expenses.
* Claim on line 31300 of your tax return
Canada Caregiver Credit
The Canada Caregiver Credit provides a $8,375 credit for each infirm dependant, defined as an eligible relative with impaired physical or mental functions who is dependent on the caregiver. The dependant is not required to live with the caregiver to claim this credit. The credit is reduced, dollar-for-dollar, for a dependant’s 2024 net income in excess of $19,666 and cannot be combined where the caregiver claims spouse or common-law partner or eligible dependant credits on Lines 30300 or 30500. However, a lower Canada Caregiver Credit can be claimed amounting to $2,616 in instances where credits have been claimed for the spouse or common-law partner or eligible dependant. Eligible relatives include you or your spouse’s or common-law partner’s child or grandchild, parent, grandparent, sibling, uncle or aunt, niece or nephew.
* Claim on line 30400, 30450, 30500 of your tax return
Wills, Estates, Trust and Power of Attorney
If you have not already done so, you should think about making a will as well as assigning a power of attorney – both can be done at the same time. If you become incapacitated, a power of attorney will be able to make health or financial decisions on your behalf. Click here to find information about things to consider.
Medical Expenses
A medical tax credit can be claimed on qualifying medical expenses paid for you, your spouse, or your dependants. You can only deduct medical expenses over a particular threshold. The threshold is the lower of 3% of your net income or $2,759. Total eligible medical expenses paid within any 12-month period ending in 2024 can be claimed, as long as they were not claimed in 2023. As a result, it may be optimal to choose a 12-month period in which the greatest amount of eligible medical expenses is incurred. In addition, it is generally more advantageous to have the lower income spouse claim the medical tax credit. Note that cosmetic surgeries do not qualify as medical expenses unless the procedure is required for medical or reconstructive purposes, and medical services with respect to reproductive technologies for individuals who need medical intervention to conceive a child, even if you do not have a medical condition, are considered eligible expenses for this tax credit. Amounts paid for medical services with respect to reproductive technologies for surrogates will be considered eligible expenses for this tax credit.
* Claim on line 33099 of your tax return
Charitable Donations
Donations made to registered Canadian charities by you or your spouse are eligible for a tax credit. The credit has a combined federal and provincial effect of approximately 22% on the first $200 and 46% on the remainder of eligible donations up to 75% of the taxpayer’s net income for the year. To the extent the individual has taxable income over $246,752, the donation credit is increased to match the federal tax rate at this highest bracket, but only to the lesser of the donations made, or income taxed at that level. Unused donations can be carried forward up to 5 years.
Publicly-listed securities that are donated to a registered charity or other qualified donee (other than a private foundation) do not result in paying tax on any gain on the securities donated. For example, if you own shares of a publicly-listed security which cost $5,000 but are now worth $10,000, you can donate the securities to a registered charity and receive a donation receipt for $10,000 and not pay any tax on the increased value of the shares.
* Claim on line 34900 of your tax return
Digital News Subscription Tax Credit
You may claim a non-refundable tax credit worth up to $75 related to digital news subscriptions paid in 2024 to qualified Canadian journalism organizations. The amounts paid, up to the maximum of $500 are reported on line 31350 of your return. You can review whether the subscription was paid to a qualified Canadian journalism organization by checking the list here.
*Claim on line 31350 of your tax return
Province of Residence
You must file a tax return for the province in which you resided at December 31, 2024. Your province of residence is determined by the strength of your residential ties to a particular location. If you are a resident in one province but are receiving self-employment income from a permanent establishment in another province, multiple returns may need to be filed. Contact a tax consultant for more information.
Marital Status
If you were married (or living common-law) at any time during the taxation year, and either you or your spouse earned less than $15,705, claiming a “spousal amount” could result in a federal tax savings of up to $2,356.
Additionally, if your spouse has little or no taxable income, you could possibly use some of their tax credits (disability amount, tuition and education, etc.) that would otherwise be unused on their return. Refer to Schedule 2 of your Income Tax Return for information on which non-refundable credits may be transferred from one spouse (or common-law partner) to the other.
GLOSSARY
Any Occupation – disability insurance payments are discontinued if it is determined the insured person can perform any work for which s/he is quali ed by reason of training, education or experience, regardless of his/ her occupation before becoming disabled
Average Tax Rate – the total tax paid as a percentage of gross income
Bond – an investment certificate that pays a guaranteed interest return after a specified period of time
Canada Student Loan (CSL) – a federal program that makes up a portion of student loans
Cost of living Adjustment (COLA) – periodically increases monthly disability insurance payments according to an agreed upon rate, usually the year over year increase in the Consumer Price Index up to a pre- determined maximum rate
CPP – Canada Pension Plan
Dividend – a per share pay out determined by the corporation
EI – Employment Insurance
Gross Income – your total taxable income from all sources before deductions
Income Tax – calculated tax based on taxable income; see Tax Planning section for more information
Income Trust – an investment with a defined payout over the term of the trust
Liquidity – the ease with which an investment can be converted into cash. For example, a high-interest savings account with no withdrawal penalties is 100% liquid, while a house is fairly non-liquid
Load – a fee charged for investing in a particular mutual fund, which can be at the outset (front-end load), when selling (back-end load), or no cost at all (no-load)
LTD – long-term disability; a group plan given to all PARO members is 0.684% plus PST of gross income starting from December 1st, 2024
Marginal Tax Rate – the tax rate on an increment of your income
Mutual Fund – a basket of stocks and/or bonds administered by an investment rm, which determines its share value based on its total assets
Provincial Student Loan (PSL) – refers to the provincial portion of student loans, with a primary focus on Ontario Student Loans (OSL) within Ontario. Similar principles typically apply to equivalent programs offered by other provinces.
Prime Rate – the prime rate, or prime lending rate, is the interest rate a financial institution uses as a base to determine interest rates for loan products. Each financial institution sets its own prime rate, as a function of its cost of funding, which in turn, is influenced by the target for the overnight rate set by the Bank of Canada.
Personal Line of Credit (PLC) – a type of bank loan where the individual taking the loan can withdraw up to a maximum amount of money on an as-needed basis; (sometimes but not always based on prime rate)
Regular Occupation – a term used in disability insurance where you may receive benefits if you are unable to do the primary tasks required for your regular job. This benefit may continue to age 65 in individual and association group contracts and can be limited in True Group contacts
Stock – a representation of investment in a corporation, usually divided into shares; all stocks are a form of equity
Tax Credits – amounts that are refunded after tax is levied; in practice, generally this means that tax savings equal the lowest federal and provincial tax brackets
Tax Deductions – amounts that are subtracted from total income before tax; in practice, this means that tax savings equal the marginal tax rate
True Group policy – insurance provided to all individuals in an organization, such as the PARO LTD policy plan