Introduction
The decision to incorporate is one of the most consequential financial decisions an Ontario physician makes — but it is not always the right choice at every income level or stage of career. This article models the tax comparison directly at three income levels, with current 2026 Ontario rates.
The Comparison at $200,000 Net Billings
Unincorporated physician (sole proprietor):
Net professional income: $200,000.
Self-employment CPP: approximately $7,735.
Personal income tax at Ontario marginal rates on $200,000: approximately $68,000.
Total tax + CPP: approximately $75,735.
After-tax income: approximately $124,265.
Incorporated physician drawing $120,000 salary, retaining $80,000:
Corporate tax on $80,000 retained at SBD rate: approximately $9,760.
Personal tax on $120,000 salary: approximately $33,200.
CPP on salary: approximately $7,735.
Total: approximately $50,695.
Personal take-home: approximately $79,065.
Corporate retention after tax: approximately $70,240.
The incorporation advantage at $200,000: Approximately $25,000 in annual combined tax saved — but only if the physician can live on $79,000 personally and leave $70,000 inside the corporation. If the physician needs all $200,000 personally, incorporation provides minimal benefit.
The Comparison at $350,000 Net Billings
Unincorporated: Tax + CPP ≈ $155,000. After-tax: ≈ $195,000.
Incorporated, drawing $150,000 salary, retaining $200,000:
Corporate tax on $200,000 at SBD: ≈ $24,400.
Personal tax on $150,000: ≈ $44,000.
CPP: ≈ $7,735.
Total: ≈ $76,135. Personal take-home: ≈ $98,265. Corporate retention: ≈ $175,600.
Incorporation advantage at $350,000: Approximately $79,000 in combined tax saving, with $175,600 retained inside the corporation annually. The case for incorporation is clear if the physician can live on $98,000 personally.
The Comparison at $500,000 Net Billings
Unincorporated: Tax + CPP ≈ $245,000. After-tax: ≈ $255,000.
Incorporated, drawing $180,000 salary, retaining $320,000:
Corporate tax on $320,000 at SBD (partial): ≈ $37,760.
Personal tax on $180,000: ≈ $57,500.
CPP: ≈ $7,735.
Total: ≈ $102,995. Personal take-home: ≈ $114,765. Corporate retention: ≈ $282,240.
Incorporation advantage at $500,000: Approximately $142,000 in combined tax saving, with $282,000 retained annually. Incorporation is unambiguously the right structure at this income level for a physician who can manage on $114,000 personally.
The Threshold Conclusion
The incorporation advantage scales directly with income and with the fraction of income that can be left inside the corporation. At $200,000 with high personal spending needs, the advantage is modest. At $500,000 with disciplined accumulation, the advantage is transformative over a career.
When to Speak With a CPA
For any physician currently operating as a sole proprietor who earns more than $200,000 of net billings and can defer drawing a significant fraction of income personally, the incorporation decision should be modelled with current numbers. For those already incorporated, the comparison above confirms why the structure is worth maintaining even at significant accounting cost.
Rotaru CPA models incorporation decisions for Ontario physicians at specific income levels. Book a consultation to run the numbers for your practice.