If you’re a doctor, dentist, or other incorporated professional, the last two weeks brought news worth pausing on. On July 15, the Bank of Canada held its policy rate at 2.25% for a sixth straight decision, and on July 20, Statistics Canada reported that annual inflation cooled to 2.8% in June, down from May’s 3.2%. Grocery prices are still running hot at 3.9% year-over-year, but core inflation measures eased across the board.
For professionals running a practice through a corporation, this combination — steady borrowing costs and moderating inflation — has practical implications worth reviewing with your advisor.
Cash flow and financing
A held rate means the cost of practice loans, lines of credit, and variable-rate debt is staying flat for now, with the next Bank of Canada decision not until September 2. If you’ve been sitting on a decision about buying into a practice, refinancing equipment, or timing a buy-sell agreement, this window of rate stability is a reasonable time to model your numbers with confidence, rather than guessing at where rates go next.
Corporate tax planning is shifting too
Separately, the small business deduction thresholds changed as of July 1, 2026: the federal limit remains at $500,000 of active business income, but several provinces have moved their limit to $600,000. That gap between federal and provincial thresholds affects how much of your corporation’s income is taxed at the roughly 9% small business rate versus the higher general corporate rate. If your practice corporation is earning above $500,000 in active income, this is worth a conversation about how it changes your integration math between salary, dividends, and retained earnings.
Estate freezes and IPPs remain relevant
With inflation easing but still above target, and rates holding rather than falling quickly, strategies like estate freezes, Individual Pension Plans (IPPs), and corporately held insurance continue to be tools worth reviewing annually rather than “set and forget.” An estate freeze locks in today’s value of your corporation for succession purposes while future growth accrues to the next generation or a family trust — a strategy that becomes more attractive as your practice matures in value.
What this means for you
None of this is a signal to make snap decisions. It’s a signal to revisit your plan. Whether that’s your RRSP and TFSA contribution strategy, your corporate-owned disability and critical illness coverage, or how you’re structured for an eventual practice sale, a mid-year check-in against current rates and tax rules helps make sure your plan still fits.
If you’d like to talk through how the current rate environment and small business deduction changes affect your specific situation, reach out and we can set up a time to review your plan together.
This article is educational in nature and does not constitute personalized financial, tax, or legal advice. Please consult with a qualified advisor about your specific circumstances.
#CanadianTax #IncorporatedProfessionals #DoctorsOfCanada #DentistsOfCanada #EstatePlanning #BankOfCanada #SmallBusinessDeduction #FinancialPlanningCanada #TFSA #RRSP
Leave A Comment