Incorporating your dental practice is a big milestone. It offers you more control over your income, greater tax flexibility, and a stronger foundation for long-term wealth building. But incorporation isn’t the finish line, it’s the beginning of a smarter financial journey.

If you’re wondering what comes next, here’s a breakdown of what every incorporated dentist should be thinking about.

1. Tax Deferral = More to Invest

The biggest immediate benefit of incorporation is tax deferral. When you operate through a professional corporation, income left inside the company is taxed at the small business rate, around 11–12% in Nova Scotia on the first $500,000 of active income.

Compare that to the top personal tax rate in Nova Scotia (over 50%), and the benefit becomes obvious: by leaving surplus funds in your corporation, you can grow your savings faster and decide when to withdraw later—often in a lower tax bracket.

2. Use a Holding Company to Protect & Grow Wealth

Many dentists take it one step further by creating a holding company (Holdco) to sit above their dental professional corporation.

Here’s why that’s smart:

• Your active practice can pay tax-free intercorporate dividends to your Holdco.
• You can invest those funds outside the practice, keeping personal income low and building long-term wealth.
• You reduce risk. If your practice faces legal claims or financial problems, your investments in the Holdco are insulated.

Holdcos are a great tool for dentists who want to separate their clinical business from their personal and investment assets.

3. Rethinking Income Splitting

Prior to 2018, dentists could split income easily with spouses or adult children by naming them shareholders. However, the Tax on Split Income (TOSI) rules have made this harder.

That said, income splitting is still possible when:

• A spouse or adult child works actively in the practice (e.g. bookkeeping, admin, management),
• Or if the spouse owns shares that were acquired under certain exemptions (e.g., in the event of death or retirement).

A good tax advisor can structure this properly using different share classes or a family trust, especially if you're planning long-term wealth transfers.

4. Pay Yourself Smart: Salary, Dividends, or Both?

Incorporated dentists have flexibility in how they pay themselves. You can:

• Take a salary: this creates RRSP contribution room and provides CPP benefits.
• Take dividends: this avoids CPP costs and is simpler but doesn’t create RRSP room.

Many dentists use a blended strategy, balancing tax efficiency with retirement savings.

5. Planning for Retirement: Beyond RRSPs

RRSPs are great, but as an incorporated dentist, you have access to even more powerful tools:

• Individual Pension Plans (IPPs) allow your corporation to contribute significantly more than an RRSP as you age.
• Retirement Compensation Arrangements (RCAs) are useful for high-income earners looking for flexible deferrals.

These plans can help you convert your practice income into a predictable retirement income—while reducing your corporate tax burden over time.

6. Watch Out for Passive Income Rules

If your corporation (or your Holdco) earns more than $50,000 in passive investment income (like interest or dividends), it could reduce your small business deduction. This means higher tax rates on active income in your practice.

To avoid this:

• Move investments into a Holdco,
• Use corporate-owned life insurance as a tax-sheltered growth tool,
• Or work with a professional to design a strategy that keeps your corporate structure efficient.

7. Insurance & Liability Protection

Incorporation doesn’t fully protect you from malpractice or negligence claims—you’ll still need professional liability insurance.

But you should also consider:

• Corporate-owned life and disability insurance, to protect your family and your practice,
• Critical illness coverage, to cover overhead if you can’t work,
• And buy-sell insurance if you’re in a group practice with partners.

Many dentists fund these policies through their corporation, which is generally more tax-efficient than paying premiums personally.

Final Thoughts

Incorporation is a powerful tool—but it’s what you do next that really counts.

Whether you’re early in your career or planning for retirement, making the most of your corporate structure can help you:

• Lower your overall tax bill,
• Build wealth in a protected environment,
• Plan for succession or sale,
• And secure your financial future.

Next step? Sit down with your accountant and financial planner to build a strategy that works for your life, your practice, and your goals.