Financial tips for Optometrists
As an incorporated optometrist in British Columbia, you have the advantage of tax deferral by keeping earnings inside your professional corporation (you will probably know this as your operating company or OPCO). However, at some point, you’ll need to move money from your corporation to your personal side efficiently to fund your lifestyle, retirement, or legacy goals. The key is to do this strategically while minimizing taxes.
At Portfolio Planning Inc. We specialize in helping optometrists navigate these decisions with a flat-fee approach, ensuring you get unbiased financial advice tailored to your needs.
Let’s jump right into the tools you can use to extract corporate earnings tax-efficiently, including Individual Pension Plans (IPPs), RRSPs, Insured Retirement Plans, Capital Dividend Accounts (CDAs), the Lifetime Capital Gains Exemption (LCGE), and charitable giving. Don’t be scared if you haven’t heard of these before. Just like the patients that come into your clinic, its always scary until it isn’t (besides when that air blows into your eye!)
1. Using an Individual Pension Plan (IPP) Usually After Age 40
An IPP is a powerful retirement savings tool designed for business owners over the age of 40. It allows you to make significant tax-deductible contributions directly from your corporation, reducing corporate taxable income while building retirement wealth by moving it into a pension plan for you to use personally. Unlike an RRSP, contribution limits increase with age, meaning older optometrists can contribute more than they would in an RRSP. There is a cost to set these up so you want to weight the pro’s and cons. Also very important to plan for this early because you have to align how you pay yourself during your working career to maximize this option. Too many retiring OD’s wait too long to do this and they lose huge benefits of an IPP!
Example: If you’re 50 years old, your IPP contribution room could be over $40,000 per year, compared to the RRSP limit of about $32,490. This gap will only increase with age. These contributions reduce your corporation’s taxable income while creating a pension plan funded with tax-deferred dollars. Additionally, if the IPP underperforms, your corporation may be able to make additional deductible contributions to cover the shortfall which means more deductions corporately! There are a lot of factors in here so be sure to talk to your financial planner.
2. RRSP Contributions Before 40
Before turning 40, maximizing your RRSP is a simple way to move money from your corporation to your personal name while reducing your personal tax burden. Your corporation can pay you a salary (creating RRSP contribution room), and you can use that room to contribute to an RRSP, reducing your personal taxes.
Example: Suppose you earn a $150,000 salary from your PC. Your RRSP contribution room would be 18% of that, or $27,000. Contributing this full amount could result in tax savings of about $10,712 depending on your tax bracket.
3. Insured Retirement Plans (IRPs) Using Permanent Life Insurance
If you’ve maximized your Registered accounts, many people may look for another tool to build wealth tax deferred. Permanent life insurance can be another tax-efficient way to maximize corporate earnings. Your corporation can purchase a participating whole life or universal life insurance policy, and as the cash value grows, you can borrow against it tax-free to supplement retirement income or invest into other areas.
Example: If your corporation funds a whole life policy with $25,000 annually for 20 years, you could potentially borrow against the policy’s cash value to receive $75,000 per year in retirement without triggering additional tax while just paying interest on that amount or let the interest compound and pay out at death.
At death, the policy’s proceeds are paid to your corporation tax-free and can be distributed to heirs through the Capital Dividend Account (CDA), further minimizing taxes.
4. Lifetime Capital Gains Exemption (LCGE) & Capital Dividend Account (CDA)
The LCGE allows business owners to sell shares of their practice and shelter up to $1.25 million (as of 2025) in capital gains from tax. If you plan to sell your practice in the future, proper structuring can ensure you qualify for this exemption.
The Capital Dividend Account (CDA) is another powerful tool. It allows your corporation to pay tax-free dividends to shareholders using non-taxable portions of capital gains or life insurance proceeds. If you are incorporated you probably have CDA room. Check with your accountant to find out how much!
Example: If your practice is sold for $1 million and qualifies for the LCGE, you pay zero tax on that gain. If your corporation receives a $500,000 life insurance payout, it can be credited to the CDA and withdrawn as a tax-free dividend.
5. Charitable Giving
Incorporated optometrists can also use charitable giving strategies to reduce corporate taxes while supporting causes they care about. Your corporation can donate directly to charities and receive a tax deduction, or you can establish a donor-advised fund for structured giving. We covered this in our last BCDO webinar!
Next Steps
Understanding how to draw down your corporate earnings efficiently is critical to your long-term financial success. If you want to explore these strategies in more detail, Portfolio Planning Inc. puts on workshops in partnership with the BC Doctors of Optometry (BCDO), where we break down these topics further.
If you have questions or want to create a personalized plan, reach out to us. We specialize in working with optometrists to make their money work smarter, not harder.
Vishal Gill, CFP
Founding Partner
