By: Dr. Amanda Wang
It’s that time of year—taxes!
The often-dreaded time is upon us—gathering dusty receipts, questioning your sanity as you plug things into spreadsheets, and general hair pulling as you get organized. Get going now so you don’t feel as taxed (literally) come filing time in April!
There are many opportunities to reduce tax payables, stay compliant with the Canada Revenue Agency (CRA), and set up long-term financial habits that matter. Below are some foundational tips that new to practice physicians may find useful.
It may be prudent to insert a disclaimer here that the information in this blog (written by someone who is most definitely NOT a tax professional) is not meant to replace the expertise of a tax expert and we recommend consulting an expert as needed for your specific needs.
Here are some essentials every early-career physician should understand:
1. Know what you can deduct
You can deduct expenses that are reasonable and directly related to earning professional income. Keep meticulous records—receipts, invoices, mileage logs, and dates matter.
Common deductible expenses:
- Professional dues and licensing (College of Physicians & Surgeons of Alberta, Canadian Medical Protective Association , Alberta Medical Association, Canadian Medical Association, College of Family Physicians of Canada)
- Continuing Professional Development or CPD (anything with Continuing Medical Education (CME), like courses/conferences)
- Supplies/equipment (medical supplies, computers including laptops if you use it for work – larger items will require a capital cost allowance which deducts the total over a few years)
- Clinic overhead, billing service fees, Electronic Medical Record (EMR)
- Accounting costs
- Staff wages
- Office expenses (office rent, office utilities, phone, internet)
- Some may argue that you should only deduct the proportion of phone/internet you use for work, some may say you can deduct the whole amount…we recommend finding an accountant that has a similar risk tolerance profile to you so you can be on the same page about deductions
- Home office expenses* (a % proportion of home utilities, insurance, property tax and maintenance/minor repair costs)
- Vehicle expenses**
*Home office expenses are deductible only if you use the space regularly and exclusively for work. For hospital-based physicians, this may be less common.
** Only travel between multiple sites of work are eligible – travel to/from your home and primary place of work is not eligible. Vehicle expenses more often apply to locum physicians. CRA scrutiny increases when travel and home-office deductions are poorly documented.
2. Personal credits
Personal tax credits help reduce tax payable (not taxable income). These are non-refundable credits, as they reduce the amount of tax you owe but don’t generate refunds on their own.
Common credits:
- Tuition tax credits – often available if you have residency tuition that has been carried forward if it has not been previously used
- First-time home buyer’s credit (if you bought your first home in 2025)
- Child care expenses
- Medical expense tax credit (for out-of-pocket medical costs not reimbursed by insurance; there is an eligible list as per the CRA)
3. Plan ahead – Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA)
These registered accounts are important and don’t let anyone tell you otherwise! The RRSP helps reduce tax upfront, and they both allow saving growth and deferred taxation. If you are incorporated, there are lots of smart people out there who have modeled RRSP/TFSA/corporation growth (I have neglected to cite sources). The conclusion is likely two-fold – it is important to use these accounts to diversify your assets for protection against legislative changes, and that RRSP and TFSA are likely superior (certainly not inferior) to wealth accumulation in a corporation.
- RRSP
- Contributions reduce taxable income for the year
- Your limit is roughly 18% of prior year’s income up to the CRA cap
- For 2026 the cap is $33,810
- Your total and annual available limit should be updated by April in your CRA account but track your own limits and contributions. If you contribute earlier to maximize time in the market, but make a mistake in contributing because you followed what the CRA wrote on your account (which hadn’t yet been updated correctly), you are still liable for that mistake and will pay penalties.
- TFSA
- Contributions are not deductible, but investment earnings and withdrawals are tax-free
- The contribution is set annually by the federal government
- For 2026 it is $7000
- Your total available contribution limit will most likely be updated in April on the CRA website. What is updated on Jan 1 is the annual TFSA dollar limit, so beware that you do not overcontribute. Track your own contributions to know how much you can put it, because penalties suck.
Lastly, stay on top of filing and paying instalments when they are required.
Deadlines:
- April 30, 2026 – personal tax due (even if you get a refund).
- June 15, 2026 – self-employed/sole proprietors can file later, but any tax owing is still due April 30.
Quarterly instalments: Physicians with self-employment or irregular income may need to prepay taxes via quarterly instalments to avoid interest charges.
- If the CRA wants you to pay instalments, they will tell you. And when they tell you, pay on time. The interest is killer. Until then, you do not need to pay instalments. But be prepared. After two years of more than $3000 in tax owing at the end of the year, the CRA will start asking for instalments, which means you need to be prepared to spread payments into four large chunks a year.
If you do not already pay instalments, hopefully you have been saving up some funds in an account somewhere to pay for a large tax bill in April. If you do not have money on hand, it is important to have access to a line of credit (LOC) to be able to pay on time (the interest on an LOC will be lower than interest on taxes owing that are unpaid), and then plan in the future to have cash on hand come tax time.
It is helpful to set aside money regularly for tax purposes if you are not on a payroll with a withholding plan.
Taxes don’t have to be overwhelming. Start with these fundamentals:
- Track all business and professional expenses.
- Maximize deductions where allowable.
- Use credits and registered accounts to reduce tax payable.
- If you are not confident in a plan, seek professional guidance early.
If you are still in residency, it is still important to start good habits early. It is never a bad thing to understand your taxes. Some places will offer you free tax filing but you will still need to track the following information:
- Tuition and education credits
- Union/professional dues
- Moving expenses (if you moved for residency)
Early planning pays off—both at tax time and across your career.
Happy tax time to all!
