As a high-performing physician, transitioning out of your medical practice—whether through retirement, a sale, or succession—demands precision planning. The financial implications are significant, and with shifting tax regulations on the horizon, strategic foresight is your best asset.
At Imperial Lifestyle Management, we specialize in helping medical professionals structure practice transitions that preserve wealth, optimize tax outcomes, and support long-term financial goals. Here’s what Canadian doctors (outside of Quebec) should be preparing for in 2026 and beyond.
- Maximize the Value of Incorporation with the Lifetime Capital Gains Exemption (LCGE)
If your practice is structured as a corporation, the Lifetime Capital Gains Exemption could shelter over $1 million in capital gains from taxation when selling shares in your medical corporation.
To qualify, you must ensure:
- At least 90% of the corporation’s assets are used in active business operations at the time of sale.
- Shares have been owned for at least 24 months.
- The corporation remains a Canadian Controlled Private Corporation (CCPC).
Advanced planning—ideally two or more years before your transition—is essential to meeting these conditions and avoiding unnecessary tax liabilities.
- Structure the Sale Intelligently
There are two primary approaches to selling your practice:
- Share Sale – Typically more tax-efficient for the seller, allowing for LCGE utilization.
- Asset Sale – Often preferred by the buyer, but can result in greater tax exposure for the seller.
A hybrid model may offer a balance, but the right choice depends on your personal goals, buyer preferences, and legal considerations. Early alignment with your advisory team—legal, tax, and financial—is crucial to structuring the deal for optimal results.
- Prepare for the Increased Capital Gains Inclusion Rate
In June 2024, the federal government increased the capital gains inclusion rate to 66.67% on annual gains above $250,000 per individual.
Implications for physicians selling in 2026 or later:
- Gains beyond the LCGE threshold may now be taxed at a higher effective rate.
- Consider strategies like spreading gains across multiple tax years or leveraging a family trust to divide gains among beneficiaries.
Tailoring the transaction timeline and financial structure to these updates can reduce your taxable exposure significantly.
- Optimize Family Transitions with an Estate Freeze
If you intend to pass your practice to a family member, a corporate estate freeze locks in the current share value and shifts future growth to the next generation.
Benefits include:
- Deferral of capital gains
- Simplified succession planning
- Opportunities for income splitting via a family trust
An estate freeze must be custom-designed with your long-term wealth strategy and family dynamics in mind.
- Align Exit Strategy with Retirement and Investment Planning
A successful transition isn’t just about the sale—it’s about securing your financial future.
Key strategies include:
- Deferring personal income within your professional corporation post-sale
- Paying dividends to a spouse or adult children, when applicable
- Maximizing tax-advantaged savings through RRSPs, TFSAs, or Individual Pension Plans (IPPs)
With a coordinated approach, your practice exit can fuel retirement security and lifestyle freedom.
- Begin Early—Build a Comprehensive Exit Timeline
Procrastination is the most costly misstep. A well-planned transition often takes years—not months. Timing is everything.
By working with a specialized team like Imperial Lifestyle Management, who understands both the nuances of the medical profession and the intricacies of wealth planning, you can avoid pitfalls and seize every tax-saving opportunity.
Your Legacy, Your Terms
Exiting your medical practice is not just a transaction—it’s the culmination of a legacy built on years of dedication. Whether you’re envisioning a sale, partial transition, or generational handoff, the right planning today sets the stage for a financially rewarding tomorrow.
Start your transition the smart way—book a consultation with our medical financial strategists at imperiallife.ca.
Stay In Touch