Evidence of meeting #59 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was physicians.
A video is available from Parliament.
5:45 p.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
What I'm interested in is if it's not a teaching group but, say, just a partnership of six doctors practising in a clinic that runs a small business. Are they going to be impacted by this?
5:45 p.m.
Prof. Richard Davies
They'll be impacted in the short term. I've spend a lot of time—more time than I'd like—talking with lawyers and accountants about this.
5:45 p.m.
Conservative
5:45 p.m.
Prof. Richard Davies
I'll answer your question.
Yes, they'll be affected. However, they're likely a cost-sharing arrangement, so they may be using a legal partnership out of convenience in order to share costs. In that case, it will be a pain in the neck for them. They can reconfigure at a lot of expense, and they may get a somewhat less efficient mechanism for doing the same thing. But because those partnerships, in general, bill the provincial government as individuals, they don't have to be a partnership to make money. The purpose of their partnership, really, is to share costs, and it's a way of convenience.
5:45 p.m.
Conservative
5:45 p.m.
Prof. Richard Davies
They would be impacted in that they would have to reconfigure, but unlike us, the reconfiguration would be a whole lot easier.
5:45 p.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Okay, so it's just not teaching partnerships at universities that are being impacted.
5:45 p.m.
Prof. Richard Davies
That's correct. It's just not teaching partnerships.
I would say that teaching partnerships are being selectively and more severely impacted.
5:45 p.m.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Yes, I understand that.
I have a quick question for the Canadian Taxpayers Federation. I happened to be talking to three individuals during our break week. All had very high incomes, and all said to me that if Trump reduces personal income tax rates in the States for the highest earners, they are going to declare U.S. residence for taxation purposes.
Have you heard anything along that line?
5:45 p.m.
Federal Director, Canadian Taxpayers Federation
Not from our supporters specifically. I think you raise an important point; tax competitiveness matters. You can't simply look at your own tax policy. The fact is that we live in a global world, and whether or not we like what happens in the United States, they are our biggest trading partner and our closest neighbour. We have to be cognizant of that with all of our tax policy.
5:45 p.m.
Liberal
5:45 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you very much, Mr. Chair.
Once again, I'd like to thank all the witnesses for being with us today.
I will start with the Canadian Medical Association representative.
Obviously, the bill specifically affects partnerships in the medical professions. Are there any physicians who have been incorporated into small business and would be affected by this provision?
5:45 p.m.
Prof. Richard Davies
I can. Unfortunately, my French is not as good.
As I said, we've incorporated ourselves as, I guess, a small business. We're a group of 35 cardiologists. What will happen with our group is that.... In particular for some of our groups, I have to deal with, as a managing partner, a fourfold difference in earning ability from people whose training is about the same.
5:45 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I don't think I phrased my question well.
In your case, the partnership is among 35 practising physicians.
Take the example of physicians who have established a private clinic. Do they currently have access to the deduction for a small business?
5:45 p.m.
Prof. Richard Davies
Yes.
5:45 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Right.
In your recommendation, you mention that an exemption should be given only to partnerships. Ultimately, what you're saying is that physicians in clinics that are not in a partnerships could no longer benefit from the deduction for small business. Am I wrong about that?
5:45 p.m.
Prof. Richard Davies
I might misunderstand you, but I think yes. As I understand it, somebody who is in private practice by themselves has access to the small business deduction. If he's in a partnership, he will lose it.
5:45 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
But with this bill, would they still have access to the deduction? I'm trying to understand.
5:45 p.m.
Prof. Richard Davies
Yes. If I'm a solo practitioner—
5:45 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
It's only partnerships that will lose it.
5:45 p.m.
Prof. Richard Davies
This is my problem as an academic doctor. Let's say I have a young cardiologist in front of me who's interested in pursuing a career in higher-end medicine. If he just goes and becomes a solo practitioner, and if you like, a jack of all trades, he has access to the small business deduction. If he joins my group, he loses it.
The problem faced by academic centres is that there's a selective impact. As the representative of an academic group, I cannot recruit those doctors on a level playing field with somebody in the community who can allow them to practice as a solo practitioner. Essentially, it makes it much harder for me to get doctors into the kind of practice that we have, and it's very important. It hurts us very badly.
5:50 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I'm trying to understand from your perspective the government's intention of moving in that direction.
Why would physicians practising in a partnership lose the opportunity to benefit from the small business tax rate, but not doctors practising individually in a clinic? If the government's intention is that professionals can't benefit from this rate because it is almost the equivalent of a salary for them, it doesn't make sense to impose this restriction on physicians who are part of a partnership, but not on physicians practising by themselves.
Can you explain why one group is affected, but the other is not?
5:50 p.m.
Vice-President, Member Relevance, Canadian Medical Association
I think you have to recognize that they are all essentially in a small business. Some are solo business practitioners, some are in a group where they are sharing costs, and some have actually set up partnerships because they are pooling their income or revenue to accomplish an academic mission and clinical mission.
The proposal would only impact those who are pooling their income to undertake teaching and research, and the broad specialized service group. The others are not impacted by the proposal in the current bill. That's what we're seeking, an exemption for those who would be negatively impacted.
5:50 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Thank you very much.
I will now move on to Ms. MacEwen.
With regard to employment insurance, the government seems to be reinstating the definition of unsuitable employment, which the Conservatives abolished in 2012. However, some definitions still seem arbitrary to me. For instance, the government can decide that an unsuitable employment becomes suitable after a period of time. In short, if a person refuses to take that job, his or her EI benefits will be lost. I asked some officials how much time had to elapse for an unsuitable employment to become suitable. I was told that it was two to three months, which was also the case before 2012.
How do you see the situation? How can it take so little time for a job that a person isn't qualified for, so an unsuitable one, to become a suitable employment that the person is qualified for?
