GOOD NEWS

  • Home Buyer’s Plan (HBP) – Repayment deferral

Generally, you are required to start making repayments towards your HBP 2 years following the year you withdrew funds from your RRSP to purchase your first home. The government temporarily extended the grace period by 3 additional years for funds withdrawn between January 1, 2022 to December 31, 2025. The government proposes to extend the 5-year grace period for withdrawals made on or before December 31, 2028. As a result, the 15-year repayment period will start the fifth year following the year in which the first withdrawal is made. As a reminder, the maximum amount that you can withdraw under the HBP is currently $60,000.

  • Disability Tax Credit (DTC) – Long-lasting medical conditions

For the 2026 and subsequent taxation years, the application process to qualify for the DTC will be streamlined and simplified for individuals with long-lasting medical conditions (i.e. autism, dementia, Parkinson’s disease, etc.).

  • Small reduction in Canada Pension Plan (CPP) rates

Effective January 1, 2027, the CPP contribution rate will be reduced as follows:

  • Employer/employee, from 4.95% to 4.75%
  • Self-employed, from 9.9% to 9.5%

For individuals earning over about $75,000 per year from employment or self-employment, this will save total CPP of about $300 per year in total for all contributors (i.e. employer and employee combined).

  • No Tax Rate Changes

There were no changes to any personal and corporate income tax rates for all Canadian taxpayers, both individuals and corporations, including all private corporations.  Effective July 1, 2026, the tax rate for small business corporations will still be reduced from 12.2% to 11.2% (combined Federal and Ontario income taxes).  This will apply to all dentistry professional corporations (PCs) and technical/hygiene service corporations (T/HSCs) on the first $500,000 of annual active business income.  All other corporate income tax rates (for business income over $500,000 per year and for investment income) remain unchanged. 

 CORPORATE/BUSINESS:

What will your corporate tax bill be (after June 30, 2026)?

Taxable Income ($) 2026 Combined Federal & Ontario Tax Rate (%)
Up to $500,000 Between 11.2% and 17.2%*
500,000+ 26.50%

*Subject to reduction of small business deduction based on passive income earned by the corporation or any associated corporation.  If annual investment income is under $50,000, the 11.2% rate should apply.

Applies to active business income of a Canadian Controlled Private Corporation (CCPC) i.e., Dentistry Professional Corporation (DPC), Hygiene/Technical Service Corporation (H/TSC).

Different types of corporate investment income are taxed at different rates. A portion of the corporate taxes paid on investment income can be recovered when taxable dividends are paid to shareholders.

Type of Investment Income Tax Rate Recoverable Taxes Paid Net Tax
Interest/rental 50.17% 30.67% 19.50%
Capital gains 25.08% 15.33% 9.75%
Dividends 38.33% 38.33% 0.0%

 

This summary was prepared by DCY Professional Corporation Chartered Professional Accountants who have been advising dentists/doctors for decades. Additional information can be obtained by phone (416) 510-8888, fax (416) 510-2699, or e-mail david@dcy.ca, basil@dcy.ca, louise@dcy.ca, eugene@dcy.ca. Visit our website at: www.dcy.ca. This article is intended to present tax saving and planning ideas and is not intended to replace professional advice.