What is a dental corporation, and who can own one in BC?

Many BC dentists practise through a professional corporation. A dental corporation can offer tax and planning advantages, but it is subject to professional rules that limit who may have an ownership interest in it, who may control it, and what activities the corporation may engage in.

Who can incorporate a dental practice?

In British Columbia, only a licensed dentist (either alone or with others) in good standing with the BC College of Oral Health Professionals (BCCOHP) may practise through a professional corporation, and only with BCCOHP's permission.

What is a dental corporation, and what can it do?

A dental corporation is a separate legal entity from the dentist, used to carry on the practice of dentistry. As a separate legal entity, it can enter into leases, contracts and other agreements.

The corporation bills patients and insurers, and the dentist provides dental services through the corporation. How the dentist is paid is a planning choice: by salary, by dividends, by a shareholder loan (which generally must be repaid within a limited time to avoid being taxed as income), or by a combination of the three.

In British Columbia, dental corporations are limited in scope. Under s. 66(2)(c) of the Health Professions and Occupations Act (the Act), they must not carry on any activities that would give rise to income from business for the purposes of the Income Tax Act, except providing dental services and services directly associated with them.

Income from business is different from income from property (such as interest and dividends) and from capital gains. CRA applies interpretive guidelines to decide whether income is business income. If its investment activity is frequent or extensive enough, a dental corporation risks being found to have earned business income from its investments, and therefore to be in breach of the Act. For that reason, significant investment assets are often better held outside the dental corporation, for example in a separate holding company, and can often be moved there on a tax-free basis with proper planning.

Does a corporation protect the dentist from liability?

Only in part.

A dental corporation can limit certain business liabilities, such as business debts and financial obligations unrelated to professional negligence. Under s. 80(1) of the Act, a dentist’s liability to patients for professional negligence is not affected by incorporation.

However, incorporation can provide a dentist with creditor-proofing tools, so that even if the dentist is found liable for professional negligence to a patient, the patient’s access to the dentist’s assets is limited. Consistent with this, the BCCOHP Bylaws[1] require a dentist to disclose in marketing material that they practise through a dental corporation, so the public knows that their remedies against the dentist may be limited.

We find that many dentists are unaware of these creditor-proofing tools, which require the dental corporation to be set up and maintained in a specific manner.

In addition, incorporation can shield or limit a dentist’s liability against claims from non-patients, such as those from a landlord, a creditor, or a worker.

Who are the shareholders, directors and officers?

Every BC corporation has shareholders and directors, and it may also appoint officers. In a dental corporation, the Act[2] limits who can fill these roles.

Shareholders own the corporation. The value of their ownership interest depends on the type and number of shares they hold. Shares can carry different rights that can be mutually exclusive. For example, a corporation may be set up such that one class of shares only carries voting rights and has no rights to dividends, whereas another class of shares only carries dividend rights and no voting rights. Proper governance and tax planning usually require multiple classes of shares with separate rights and restrictions.

Voting shares may be held only by licensed dentists, or by companies whose voting shares are all held by licensed dentists and whose non-voting shares are all held by dentists or their family members. Non-voting shares may be issued to:

• a dentist;

• the dentist’s family members;

• a company (including a non-dental corporation) all the non-voting shares of which are owned by the dentist or the dentist’s family members; or

• a family trust governed by Canadian law, with a Canadian-resident trustee approved by the BCCOHP board, whose beneficiaries are all dentists or members of the dentist's family.

The Act defines a family member[3] as a:

• spouse;

• child;

• parent;

• sibling;

and any other person prescribed under the Regulation, which adds[4]:

• persons who reside with the dentist; and

• relatives of the dentist who have a close personal relationship with the dentist.

Directors govern the corporation at board level. They approve budgets and guide strategy and growth, but in dental corporations, they are usually the same individuals who run the day-to-day operations. Directors are elected by the voting shareholders. Only licensed dentists may act as directors of a dental corporation.

Directors owe a fiduciary duty to the corporation: they must act honestly and in good faith with a view to the best interests of the corporation. As long as directors have acted accordingly, they are generally not liable for the corporation’s actions, with certain exceptions. For example, directors can be held personally liable for unremitted payroll deductions and, for staff covered by the Employment Standards Act, up to two months’ unpaid wages.

Officers are appointed by the directors and manage the corporation's day-to-day activities. Common offices include president and secretary. An appointment of an officer is not required.

Should a dentist incorporate, and if so, when?

Incorporating makes sense for most dentists, except those who practise solely as employees.

Typically, a dentist who withdraws all earnings out of the dental corporation may not see any particular tax or estate-planning benefit of incorporating at first, but over time, dentists’ revenues tend to increase, leaving a surplus that can be left in the corporation to defer tax until it is withdrawn. In the meantime, it can earn passive investment income in the corporation, subject to the limit on business income discussed above.

It may be simpler to incorporate earlier, rather than waiting until there is surplus income, because a later incorporation may have adverse tax consequences without proper planning, and that planning adds cost.

A dentist who incorporates later in their practice will generally transfer the practice, including its goodwill, to the corporation. Without planning, that transfer is a taxable disposition. To avoid that, the dentist may use a rollover provision under the Income Tax Act, such as s. 85. Without proper tax planning, the dentist risks the cost of audits and tax reassessments, with the corresponding interest and penalties, as well as the frustration of dealing with them.

Notes

1. Section 9.11 of the Bylaws of the British Columbia College of Oral Health Professionals, dated April 1, 2026.

2. Section 59 of the Health Professions and Occupations Act, SBC 2022, c 43.

3. Definition of “family member” under section 1 of the Health Professions and Occupations Act, SBC 2022, c 43.

4. Section 2 of the Health Professions and Occupations Regulation, BC Reg 126/2025.