Closing or Leaving a Medical Practice: The Money Questions

The last patient leaves, the door closes, and the bills keep coming: the part of closing a medical practice nobody mentions at the farewell dinner. Charts must be kept for years. A lease may run past your last clinic day. Staff are owed notice. Claims are still being paid, adjusted or refused. If you practise through a corporation, it has its own ending to arrange. Each of those has a cost, a deadline and a document behind it.

Closing a solo office, leaving a clinic for another one, stepping back from a group and retiring altogether are different exits, and they cost different amounts. What they share is timing: the costs arrive after your income has started to fall. A plan made a year ahead can absorb them. A plan made in the last month pays for the delay.

What follows covers the money side of that exit, with a wind-down worksheet you can run on your own figures. I am paid by insurer commissions when a policy is bought. Reading costs you nothing.

One point comes first. If your practice ends within the next few years, a life insurance policy bought now will not pay for the closing. A new policy builds cash value slowly. Anything below about policy loans applies to a policy you already own. The wider picture of a physician's money, from residency to retirement, sits in the collection for physicians.

What exactly are you ending: a practice, a group membership or a career?

You may be ending one of three things: a practice you own and run, your place in a clinic or group that continues without you, or clinical work altogether. Each one leaves different obligations behind: records, a lease, staff, a share of shared debts, a corporation. Name your exit before you set a date.

The words get used loosely: a family doctor with a solo office, a specialist leaving a hospital-based group and an associate who owns nothing in the clinic all "close a practice", with different money questions.

A physician paid by a provincial plan may also have less to sell than a dentist or a pharmacist. Patients choose their own physician; a successor cannot buy them. What a successor or a group may pay for is the space, the equipment, the staff in place, the systems and the chance to start with a full schedule. Plan the exit on what your practice can actually transfer, and treat any price as a bonus to be confirmed in writing.

Joining a group was the subject of joining or buying into a clinic or group practice. This is the other end of the same agreements.

What do your patients' records cost after the last appointment?

Records outlive the practice. In Quebec and in Ontario, the rules require clinical records to be kept for at least ten years after the last entry, and patients must be told, at least 90 days ahead of a planned closure, where their records will go. Someone must hold them, and holding them costs money.

In Quebec, the regulation is the Règlement sur les dossiers cliniques, les lieux d'exercice et la cessation d'exercice d'un médecin, in force since 11 July 2024, which LégisQuébec shows as up to date to 1 June 2026. It replaced the earlier regulation on records and cessation of practice. In our reading, five articles carry the money:

• Article 14: a clinical record is kept at least 10 years after the date of the last entry.
• Article 24: any transfer or provisional custody of records is set out in a written agreement, sent to the secretary of the Collège des médecins du Québec as soon as it is signed.
• Article 28: a physician who ceases to practise permanently transfers the clinical records and registers to a successor (the regulation's word is cessionnaire), and gives patients written notice at least 90 days before the cessation takes effect, or within 5 days if the cessation was unforeseen.
• Article 29: if no transfer can be agreed or carried out, the secretary, or a successor the secretary names, takes possession of the records without delay.
• Article 30: a physician who stops temporarily but stays on the roll can keep custody, unless the Collège considers a transfer necessary to protect the public.

The Collège publishes questions and answers on the transfer of records. It prefers a physician who agrees to take custody, it can help an estate look for one, and where no successor is found it takes custody itself, for fees listed on that page. Read those fees before you decide that no successor is needed.

In Ontario, the College of Physicians and Surgeons of Ontario (CPSO) sets the rules in its policy Closing a Medical Practice, last updated in September 2019. Physicians must give patients at least 90 days' notice of a planned closure, directly: by letter, secure email, telephone or at an appointment. The notice says when the practice closes, whether a successor takes over, and how to obtain the record. Records must be kept for 10 years from the last entry, or 10 years after a minor patient turns 18. Patients keep access to them, and the College is told where they are stored. Other provinces have their own policies; read yours.

Now the cost. A successor physician may take the records for nothing, for a fee, or with the practice; a storage provider charges for set-up, storage and requests. The Canadian Medical Protective Association (CMPA) notes that a physician who uses a commercial storage provider remains the custodian and should have a written agreement with it. Whatever the route, you are budgeting for ten years or more, long after the billings have stopped. Put the figure in your wind-down plan, not in a drawer.

How long does money keep arriving after you stop seeing patients?

For weeks to months. Claims for your last services are paid after the service, some are adjusted or refused, and each provincial plan sets a deadline to submit them. Count on a tail of income that shrinks quickly, and on costs that keep running while it does.

Services from your final weeks are billed after the fact and paid on the plan's schedule. Some claims come back for correction; third-party reports may be paid later still.

The deadlines matter more at the end than at any other time, because there is no next month to fix a mistake.

• Ontario. The government's billing brief, updated 17 January 2025, says OHIP claims must be submitted within three months of the date of service, a rule in place since 1 April 2023. A claim submitted later is stale-dated, and the ministry may refuse to pay it unless extenuating circumstances apply.
• Quebec. The Régie de l'assurance maladie du Québec (RAMQ) sets deadlines to bill a service, to modify a claim and to ask for a review. Those deadlines changed recently: a RAMQ notice of 5 December 2025 announced a shorter billing deadline under section 22.1 of the Health Insurance Act, and a later bill moved the effective date of some of the new provisions. Check the current table on RAMQ's page on billing calendars and deadlines before your last day, and plan to have the final claims out well inside it.
• Elsewhere. Each provincial plan has its own submission period and payment schedule. Ask your billing agent or the plan for both, in writing, before you set the date.

Two practical points follow. Keep your billing access, and someone who knows your files, available for the months after closing, so that refused claims can be corrected inside the deadlines. And treat every dollar of that tail as taxable income, in the year it is earned or received depending on how your practice reports, which your accountant confirms. How fee-for-service income moves from month to month is the subject of fee-for-service billing and irregular income.

What does a wind-down cost, month by month?

Add up what keeps running after your last clinical day (lease, staff notice, records, professional fees), subtract the billings still to arrive and any equipment you sell, and follow the running total month by month. In the illustrative example below, the practice runs short in month 6 and needs up to about $23,850 under stress.

Illustrative example. Every figure is an assumption chosen to show the arithmetic. None is a quote from a landlord, a storage provider, a provincial plan or a professional, and none is typical. Income tax on the billings is left out, so your accountant adds it.

The worksheet uses six inputs, in this order:

1. Billings received for services already given: $18,000 in month 1, $9,000 in month 2, $3,000 in month 3, then nothing.
2. Equipment sold: $8,000 received in month 3.
3. Rent under the lease: $4,000 a month until the lease ends after month 6.
4. Staff during their notice period: $4,500 in each of months 1 and 2.
5. Records: $3,000 to set up the transfer or storage in month 1, then $150 a month.
6. Professional fees for the final returns and documents: $5,000 in month 2.

Cash each month equals the first two lines, less the last four. The running total shows what the practice must hold.

On those assumptions the tail billings almost pay for the wind-down, and the practice ends about $4,350 short after nine months. Two stress tests, alone and together, change the picture:

• Billings 25% lower (refused claims, a slower final month): about $11,850 short at month 9.
• The lease runs three more months because the landlord will not end it early or a new tenant takes time: about $16,350 short at month 9.
• Both at once: about $23,850 short at month 9, when the lease finally ends.

Then the long tail: at the assumed $150 a month, records storage alone comes to about $18,000 over ten years.

None of this includes your household. If your own income from other sources starts six months after your last clinical day, and your household spends $9,000 a month, that is another $54,000 to fund. Keep the two figures apart: the practice's wind-down and your household's bridge are different problems with different sources of money.

The lesson sits in the spread between $4,350 and $23,850: a landlord's answer and a few refused claims decide more of your closing cost than any line you control. Run both stress tests with your own figures. A past slow month is a stress test, never a ceiling.

What happens to the lease, the staff and the equipment?

The lease runs until it ends, is assigned or is released by the landlord. Staff are owed notice or pay in lieu under provincial employment standards and their contracts. Equipment is sold, given away or disposed of, and the sale can change your taxable income. Each one is settled in writing.

Start with the lease, because it can be the largest number: the end date, any early termination right, assignment and subletting, restoration owed when you leave, and any personal guarantee. If a successor physician or the clinic will take over the premises, an assignment with the landlord's release of your guarantee is worth negotiating before you announce the date. A guarantee that survives the assignment keeps you liable for someone else's rent.

Staff come next. Provincial employment standards set a minimum notice, or pay in lieu, that grows with years of service, and a contract or the common law (in Quebec, the Civil Code) can require more. Accrued vacation pay is owed too. An employment lawyer reads the contracts before you announce anything.

Equipment is the third piece. Some is leased, and the lease says what happens when you stop. What you own can be sold to a successor, to colleagues or to a dealer, or disposed of safely; the Quebec records regulation also asks a physician who stops permanently to dispose safely of medications, substances and equipment, with exceptions it describes. Read your own province's rule.

The tax side of the sale needs your accountant. The Canada Revenue Agency explains, on its page for column 7 of Form T2125, that if the undepreciated capital cost of a class becomes negative after a sale, the negative amount is added to your income on line 8230. If you have no property left in a class and an amount remains, you may have a terminal loss that you may be able to deduct. Selling a piece of diagnostic equipment for more than its remaining tax value can raise your income in the year you close; selling it for less can lower it. If your corporation owns the equipment, the same logic applies on the corporation's return.

How do you leave a group or clinic without losing money on the way out?

Read the exit clause before you give notice. It sets the notice period, how your interest is valued, when and how you are paid, what you must keep paying until you leave, which guarantees are released, who keeps the records and whether a restrictive covenant follows you.

Leaving a group that continues is a negotiation under an agreement you signed years ago. Read it before the conversation.

Instalments leave part of your price exposed to the group's fortunes after you are gone. Ask for security, and for what happens if the group dissolves before the last payment.

Guarantees need more. Only the lender's own written release frees you; until you have it, a guarantee you signed for the clinic's lease or equipment loan can follow you into retirement.

The records question may already be settled by the agreement you signed when you joined, if anyone thought to write it down. The CMPA's advice on closing or leaving a practice suggests settling who keeps the records in a written agreement when you join a group; if yours is silent, settle it before you leave.

The group's own buy-sell arrangements are covered in funding a buy-sell agreement. A departure is one of the events those agreements are written for.

What happens to your medical professional corporation when you stop practising?

It stops being a vehicle for practising medicine, but it does not disappear by itself. Your college's rules decide what it may still do and who may own it. You then keep it for a time, reorganise it or wind it up, and each route has its own tax result, which your accountant models first.

Begin with the professional rules. In Quebec, the Règlement sur l'exercice de la profession médicale en société, shown on LégisQuébec as up to date to 1 May 2026, sets the conditions for practising in a company. Three of its articles matter at the end of a career, in our reading. Article 8 gives a physician 15 days, after learning that a condition of the regulation is no longer met, to put things right; after that, the physician is no longer authorised to practise within the company. Article 9 requires written notice to the secretary of the Collège, received within 30 days, of any change to the declared information that could contravene the regulation. And article 12 requires the company's liability coverage to include an undertaking that it extends to claims made during the 5 years after the coverage period in which a physician of the company dies, leaves it or ceases to be on the roll.

In Ontario, a medical professional corporation holds a certificate of authorization from the CPSO, and changes in its physician shareholders are reported to the College. What happens to the certificate and the corporation's permitted activities when you stop practising is set by provincial statutes and the College's rules. Provincial rules on who may own the shares of a medical professional corporation apply; ask the college and a lawyer.

Then the money. A corporation that stops earning practice income can still hold what it accumulated, and some physicians draw it out over years; its investment income is then taxed under the rules in the incorporated physician's corporation.

Winding up is a series of steps. The Canada Revenue Agency's T2 guide, modified 28 May 2026, explains that the final return up to dissolution says so, and that the legal representative must obtain a clearance certificate before distributing the corporation's property, or risk personal liability for unpaid tax, interest and penalties. Form RC145 closes the corporation's program accounts. Under subsection 84(2) of the Income Tax Act, property a Canadian corporation distributes to its shareholders on a winding-up is deemed a dividend to the extent it exceeds the reduction in paid-up capital. In plain terms, what you receive on a wind-up, beyond the paid-up capital it returns, is generally treated as a dividend in your hands. The timing, the order and the amounts are your accountant's work. Quebec corporations and Quebec residents deal with Revenu Québec as well.

A sale of the shares is a different exit. Shares of a medical professional corporation can only go to a buyer the provincial rules allow, and the capital gains exemption depends on share tests your accountant applies to the actual history; an exit in ten years describes those tests. Do not build the closing around an assumed sale.

Does your liability protection end when your practice does?

Not for the work you already did. The CMPA describes its protection as occurrence-based: a physician who ends membership remains eligible for assistance with matters arising from work done while a member, at no additional cost, and that eligibility extends to the estate. Your corporation's own coverage is a separate question.

A complaint or a claim can arrive years after the care it concerns, which is why that rule matters. The CMPA asks two things in return. Keep your contact details current with it, because it must be able to reach you. And tell your college when you end or interrupt your CMPA membership; the CMPA also lists events, such as the expiry of your licence, that you must report to it.

Two more points. The CMPA's page sets a separate rule for a retiring physician who still holds shares in a clinic; read it if you own part of one. And the records you keep for ten years are also your evidence if a complaint arrives.

Depending on your province, part of your CMPA fees may have been reimbursed under a program linked to your medical association or the provincial agreement. Ask your association how that program treats your final year.

What happens to your life insurance when the practice ends?

Each policy needs a fresh look. Coverage a lender required can be released when the loan is repaid, coverage a group held on your life may end or transfer under the agreement, and a corporate-owned policy has to go somewhere if the corporation winds up. A personal policy stays yours.

List every policy on your life and every contract covering the practice, with owner, beneficiary, any assignment and its purpose. Then ask whether each purpose still exists.

• Coverage assigned to a lender. When the loan is repaid, ask the lender to release the assignment in writing. The policy stays the owner's throughout; the release only removes the lender's right to be paid first from it.
• Coverage held by a group or a partner. A buy-sell policy owned by the group or your partners may lapse, be surrendered, or be offered to you, depending on the agreement and the contract. If you want to keep it, ask before you leave, because buying new coverage later means new underwriting at an older age.
• Overhead expense and disability coverage. Tied to practice income. Ask the insurer when it ends, whether premiums stop, and whether a conversion right exists. Disability and the capital plan covers these contracts during the working years.
• A policy your corporation owns. It does not dissolve with the corporation. Moving it to you, to another corporation or to someone else is a disposition with tax consequences that depend on who receives it and on what terms. Whether you, your corporation or a holding company should own a policy stays open here; your accountant and lawyer answer it for your facts, and personal or corporate ownership of the contract sets out what each choice changes. When a private corporation receives a death benefit as beneficiary, its capital dividend account is generally credited with the proceeds less the policy's adjusted cost basis, and paying a capital dividend needs an election under subsection 83(2) of the Income Tax Act; the capital dividend account page sets out the rules.
• A policy you own personally. Closing the practice does not change it. Revisit the beneficiary, the amount your family still needs and how the premiums will be paid once billings stop. Surrendering it can create taxable income to the extent the proceeds of the surrender exceed the adjusted cost basis, and replacing coverage later may not be possible on the same terms.

Can a policy loan bridge the months between closing and your next income?

If you already own a participating whole life policy with enough cash value, the insurer can advance a policy loan against it. The insurer sets the rate, may change it and receives the interest. The loan reduces the death benefit until repaid, can be taxable above the adjusted cost basis, and can end the policy if it grows too large.

A participating whole life policy is life insurance first: cash values guaranteed by the contract while premiums are paid, and dividends the insurer declares each year that are not guaranteed. The Autorité des marchés financiers (AMF) describes a policy loan as borrowing with the insurance and its cash surrender value as security, repaid with interest. If the person insured dies before it is repaid, the insurer subtracts the amounts owed, with accrued interest, from the insurance payable. A policy can also secure a loan from another financial institution.

The mechanics, plainly. The insurer is the lender. It advances its own funds, with the cash value as security, at a rate it sets and may change, and the interest is owed to and paid to the insurer. Depending on the contract, interest you do not pay is added to the loan and then bears interest itself. For tax, a policy loan is a disposition under s. 148(9) of the Income Tax Act: the part of the loan above the policy's adjusted cost basis just before the loan is income in that year, and the loan lowers the basis. If part of a loan was taxed, repaying it can give a deduction under paragraph 60(s) in the year you repay, up to the amount previously included. If the loan and interest overtake the value securing them, the policy can end after the notice the contract provides, and that ending can create taxable income to the extent the proceeds exceed the adjusted cost basis. The details are in how a policy loan works and when a policy loan becomes taxable.

Illustrative example. Assume a policy you own personally, an insurer willing to advance $50,000, an adjusted cost basis of $30,000 just before the loan, and a loan rate of 6% a year that the insurer charges once a year and adds to the loan if unpaid. None of these is a quote or a typical figure.

Two lessons come out of the table. The $20,000 of income lands in the year of the loan, possibly the same year as your final billings. And unpaid interest compounds: the death benefit your family would receive falls by the whole balance, about $59,551 after three years in this example, not by the $50,000 you received. If you repay the loan later, the $20,000 previously included can support a deduction in the year of repayment, within the limits of the Act.

If your corporation owns the policy, the loan is an advance from the insurer to the corporation. Getting that money to you is a second transaction, such as salary, a dividend or the repayment of a shareholder loan, with its own tax.

Canadian Wealth Creation Centre Inc., which publishes this educational website, calls the long-term aim behind this kind of planning Infinite Financial Sovereignty®, a registered trademark of Jose Salloum: building, over a career, a source of capital you can draw on for its large expenses, and repaying it on a schedule you hold yourself to. It is a goal, not a promised result. The idea draws on the financing approach known as The Infinite Banking Concept®, described by R. Nelson Nash. A policy bought in the last years of a practice has little loan value to offer, and buying one to fund a closing is the wrong use of it.

What happens if death or illness closes the practice for you?

Then someone else does the closing, under the same rules and deadlines, without your knowledge of the files. Name a designate now, write down where everything is, and make sure the agreements, the corporation and your insurance say who acts and with what money.

Some practices close the week a physician becomes ill or dies, and the obligations do not wait: notice, records, test results, staff pay and rent.

The CPSO's policy asks physicians to plan for an unexpected closure, for example by naming a designate. In Quebec, article 28 of the records regulation allows notice within 5 days when the cessation is unforeseen, and the Collège's questions and answers say it can help an estate find a successor physician for the records. In Quebec, the person who settles the estate is the liquidator; elsewhere it is the executor. That person may know nothing about medicine, billing or records rules.

A short file makes their work possible:

1. Where the records are, who has access, and the name of a physician willing to take them.
2. The billing agent's contact, your billing numbers and the deadlines that apply.
3. The lease, the staff contracts, the equipment leases and every guarantee you signed.
4. The corporation's minute book, its accountant and its lawyer.
5. Every insurance contract, with owner, beneficiary and any assignment.

The corporation needs its own answer. In Quebec, article 8 of the regulation on practising in a company gives 15 days to remedy a condition that is no longer met; ask your lawyer or notary how that applies to shares held by your estate. The shareholder agreement and your will should say who holds those shares and how they leave the corporation. If the corporation receives life insurance proceeds, the capital dividend account rules described above apply, and paying a capital dividend after a death sets out the steps.

Illness is harder than death in one respect: nobody may have the authority to act. A power of attorney and a mandate in case of incapacity (in Quebec, a protection mandate) that cover the practice and the corporation, prepared by your lawyer or notary, fill that gap.

How do Quebec's rules shape a closing?

In Quebec, the Collège des médecins du Québec's regulations govern the records and the company, the RAMQ's deadlines govern the last claims, the federations' agreements govern remuneration, and Revenu Québec joins the Canada Revenue Agency for every tax return. Read each one before you choose the date.

Here are the Quebec rules together:

If your plan predates 11 July 2024, read it against the new records regulation.

What are the drawbacks and risks of closing or leaving?

Costs continue after income stops, deadlines expire without warning, guarantees can outlive your role, and a wind-up can produce more tax than expected. If a policy loan is part of the bridge, an unpaid loan grows, reduces the death benefit and can end the policy with a tax bill.

• The fixed costs. Rent for premises you no longer use, a guarantee that survives an assignment, and ten years of records custody.
• Lost income. A claim refused after the deadline to correct it, or a buyout instalment the group cannot pay.
• The policy loan. Interest is owed to the insurer at a rate it can change; unpaid interest is added to the balance; the death benefit falls by what is owed; and if the loan overtakes the value securing it, the policy can end and create taxable income. Dividends are not guaranteed, so a repayment plan that counts on them is fragile.
• The insurer. A policy depends on the insurer that issued it. Supervision depends on its charter: the federal Office of the Superintendent of Financial Institutions for a federally incorporated insurer, the home province (the AMF in Quebec) for a provincially incorporated one. Assuris, which every life insurer authorized in Canada must belong to, protects a whole life policy up to $1,000,000 or 90% of the death benefit and up to $100,000 or 90% of the cash value, whichever is higher, calculated after policy loans.

What should you ask before you set a closing date?

Ask your college and your plan for the rules and deadlines, your landlord and your group for the exit terms, your accountant for the tax of the final year and the wind-up, your lawyer for the agreements and guarantees, and the insurer for each policy's figures, all in writing.

For your college, your provincial plan and your association:

1. Which records rules apply, how much notice must patients receive, and what must I send the college?
2. What are the current deadlines to submit, correct and contest claims?
3. What happens to my liability protection and any fee reimbursement in my final year?

For your landlord and your group:

1. When can the lease end, can it be assigned, and will you release my guarantee?
2. What does the exit clause pay me, when, and on what security?

For your accountant and your lawyer (in Quebec, a lawyer or notary):

1. What is my taxable income in the year I close, including the tail billings and the equipment sale?
2. Should the corporation continue, be reorganised or be wound up, and in what order?
3. Who will own each insurance policy afterwards, and what does moving one cost in tax?

For the insurer, through a licensed representative:

1. What is the cash value, the adjusted cost basis and any loan balance today?
2. How much would you advance, at what rate, and how is interest charged?
3. What income would you report on a loan of that size?
4. How is the representative paid on this policy, and by whom?

How should you read the figures above?

Every dollar amount and rate in the two examples is an assumption chosen to show the arithmetic. The ten-year retention, the 90-day notice, the Quebec deadlines and the Assuris limits come from the pages named in the sources, read on 2 October 2026. Replace each assumption with a figure from a written document.

No real rent, wage, storage fee, loan rate or cash value appears. Keep the worksheet's order and run both stress tests with your own inputs. The policy loan example leaves out the dividends the insurer may declare, because they are not guaranteed, and it leaves out your marginal tax rate, which your accountant applies.

The rules quoted are Quebec's and Ontario's; the rule that matters is the one where you practise.

Who this does not suit

A policy loan as a bridge after closing does not suit you if you do not already own a policy with enough loan value, if you would not repay a loan that no one schedules for you, or if your family needs every dollar of the death benefit. Closing on a fixed date does not suit you if you have not yet read your lease and your exit clause, or if nobody has agreed to take your records. A slower exit, with reduced hours and a successor in place, is a sound choice too. The wider section on business owners covers the questions every owner faces at the end, and retirement planning for a physician covers the income that follows. When you want to talk it through with your own figures, start with the self-check on the Becoming a Client page.