In short: An incorporated physician funds maternity or parental leave three ways: optional EI special benefits for the self-employed, which must be registered for at least 12 months in advance; the provincial medical association's parental leave program, which rarely covers overhead and household costs on its own; and a corporate parental reserve built in the years before leave, taxed at the 9% to 12% small business rate and paid out as steady monthly salary or dividends during the leave. ZAI Wealth Management explains how to keep RRSP room, CPP credits and the child care deduction intact through the leave.
What's available to self-employed physicians
- EI special benefits: self-employed people, including physicians who own their MPC, aren't covered for regular EI but can opt in to EI special benefits, which include maternity and parental benefits. You must register at least 12 months before you claim.
- Association programs: many provincial medical associations offer parental leave benefits. They help, but rarely cover clinic overhead and your full household costs.
Build a corporate parental reserve
In the years before your leave, leave extra surplus in your MPC, where it's taxed at the small business rate of roughly 9% to 12% instead of your top personal rate. That means more money set aside for the same effort.
Smooth your income during leave
During the leave your corporation keeps existing even if billings pause. It can pay you a steady monthly salary or dividends from its savings, keeping your household cash flow regular and your personal tax bracket low.
- Salary keeps building RRSP room and CPP, and counts as earned income for child care deductions later.
- Dividends are simpler, but don't do either.
Related: child care deductions for incorporated physicians.
Run your own numbers with our Physician Tax Savings Calculator.
For illustration and general information only. Tax rules change and every situation is different, so speak with your advisor and accountant before acting on anything here.
Common questions
How does an incorporated physician fund maternity or parental leave?
Three ways: optional EI special benefits for the self-employed, which must be registered for at least 12 months before claiming; the provincial medical association's parental leave program, which rarely covers overhead and household costs alone; and a corporate parental reserve built in the years before leave at the 9% to 12% small business rate, then paid out as steady monthly salary or dividends. ZAI Wealth Management builds the reserve into the physician's plan early.