Medical residents: taxes, student debt and when to incorporate

By the JeanKali Santé CPA team · Published October 24, 2026 · 4-min read · Resources

Residency is often when money is tightest: a first real salary, student debt, sometimes a move, and the end of training approaching with a complete change in tax status. With some preparation, the move to independent practice avoids a big April tax bill and rushed decisions.

1. During residency, you are an employee

In Quebec, medical residents are paid under the FMRQ–MSSS 2021-2028 collective agreement: the institution pays your salary and makes source deductions. Most of your tax is therefore withheld from each pay. Because it's employment income, it generally can't be paid to a corporation: incorporating during residency usually brings no tax benefit.

2. Deductions and credits not to miss

Interest on student loans

Interest paid on a student loan granted under Quebec's Act respecting financial assistance for education expenses (or an equivalent federal or provincial law) qualifies for a non-refundable Quebec tax credit of 20% of the interest paid (line 385, Schedule M) and for a federal credit on line 31900. Unused interest can be carried forward. Note that interest on a bank's professional or student line of credit doesn't qualify, nor does interest on a student loan combined with another loan.

Professional dues

Annual dues required to keep your professional status, related to your employment, are deductible federally on line 21200. In Quebec, they give a 10% tax credit on line 397. Keep your receipts and check the amounts on your slips.

Moving expenses

If you move to start a job (a residency rotation in another city, or your first position), your moving expenses may be deductible when your new home is at least 40 km closer to your new work location (line 21900).

3. Your student debt

For Aide financière aux études loans, your financial institution sends you a notice 6 months after you finish your studies. During those 6 months, you can start repaying, pay interest only or wait for the notice, in which case the accrued interest is added to the loan. The rate is prime plus 0.50%, and a 15% debt remission may apply under certain conditions (Québec.ca, in French). Check when your student status ends in the eyes of Aide financière aux études.

For your professional line of credit, the main question is the pace of repayment: paying down debt whose interest gives no tax credit is often a good use of money, but compare it with your RRSP and FHSA contributions.

4. RRSP, TFSA and FHSA

Your resident salary creates RRSP room the following year (18% of earned income, up to the annual limit of $33,810 for 2026, according to the CRA). It's often better to save that room for your first years of practice, when your tax rate will be higher. The TFSA annual limit is $7,000 for 2026. If you don't own a home yet, the FHSA lets you contribute up to $8,000 a year, up to $40,000 over your lifetime, with a deduction and a tax-free withdrawal to buy a first home.

5. Your first year of independent practice

This is where most surprises happen. In independent practice, there is no tax withheld from your fees. You need to plan for:

• federal and Quebec income tax on your fees;
• QPP contributions as a self-employed person (both the employee and employer shares);
• tax instalments: in Quebec, they become required when your net tax owing is more than $1,800 for the year and for one of the two previous years (CRA). In the first year you often don't owe any, but the full balance comes due the following spring, and instalments start after that.

Our simplest advice: set aside part of every payment in a separate account from the first month, and run a tax projection in the fall.

6. When to incorporate

Incorporating pays off when you earn clearly more than you need to live on and can leave part of your income in the corporation. For many new physicians, that isn't day one: high-interest debt, buying a home or getting settled come first. Others, with little debt and high income from the start, benefit from doing it quickly.

If incorporating makes sense, plan for the timing: incorporation, the Collège des médecins authorization (about 14 business days) and the RAMQ collective administrative account (4 to 6 weeks, according to RAMQ). Starting a few months before you begin practising avoids having your first fees paid in your own name by default. Our article on physician incorporation in Quebec covers the rules and rates.

The mistakes we see most often

• Using RRSP room during residency, while your tax rate is still low.
• Not claiming interest on eligible student loans, or claiming interest on a line of credit that doesn't qualify.
• Spending all of your first RAMQ payments without setting tax aside.
• Incorporating too early, before income justifies it, or too late, missing the Collège and RAMQ lead times.

Changing accountants as you start practising

The end of residency is a natural time to choose an accountant who works with physicians every day. We are accepting new clients and the first step usually happens in about one week; if you already have an accountant, the switch is simple (see our FAQ).

A checklist for your last year of residency

• Gather your student loan statements and dues receipts.
• Review your debts and your repayment plan.
• Estimate your first-year income and the tax to set aside.
• Decide, with numbers, whether and when to incorporate.
• Plan the steps with the Collège and RAMQ.

General information only, not advice. This content is not tax, legal or accounting advice; your situation needs an individual review. Free incorporation, start-up fees included, plus a business plan for your bank if you're opening your practice or clinic, in return for a 12-month engagement to the annual package. Full terms