Departure Tax on Stocks and ETFs: Your Brokerage Account

Are stocks and ETFs in a brokerage account taxed when you leave Canada?

Yes. When you stop being resident, the Income Tax Act, section 128.1(4) treats you as having sold each property you own at fair market value immediately before you leave, and as having bought it back at that same value. For a non-registered account, that covers Canadian stocks, US and other foreign stocks, ETFs, mutual fund units and bonds. No trade happens and the account stays open; only the tax result is "as if sold". The CRA says the rule "applies to most properties".

For most investors each gain or loss is a capital gain or loss, and 50% of the net gain is taxed on your departure return. Your institution does not issue a slip for a deemed sale, so you build the list yourself.

A case stops being simple when:

• positions were bought long ago, transferred in from another institution, or hold reinvested distributions, so the cost on the statement may be wrong;
• you hold a large amount in US dollars or other foreign currency;
• you are moving to the US or another country that will tax a later sale, so the new country's starting cost matters;
• the tax is large and you want to defer it, which may need security;
• you moved to Canada in the last few years, so some holdings may fall outside the deemed sale.

What to gather: a statement valued at your departure date, purchase history or cost records for every position, fund tax slips showing reinvested distributions and return of capital, and your departure date. The departure-tax overview explains how that date is set.

Which holdings are deemed sold: Canadian stocks, US stocks, ETFs, funds, bonds, GICs, cash?

Almost every holding in a non-registered account is deemed sold, whether listed in Canada or abroad. A US stock does not escape because it is foreign. The few exceptions in section 128.1(4)(b) cover things such as Canadian real estate, business property used in Canada, registered plans like an RRSP, and some property of short-term residents (below). Ordinary brokerage securities are not among them unless the short-term resident exception applies.

One exception can remove holdings from the deemed sale: if you were resident in Canada for no more than 60 months in the preceding 120 months, property you already owned when you last became resident, or inherited after that, is not deemed sold. Investments you bought after you arrived are still caught. See leaving Canada within five years of arriving.

Foreign-currency cash can produce an exchange gain or loss. An individual's net foreign-currency gain or loss for the year is reduced by $200 under section 39(1.1). The Act's wording covers dispositions of foreign currency, and the departure rule deems one; the CRA's departure pages do not address the point, so confirm how the reduction is applied on your return.

Registered accounts follow different rules: see RRSP and TFSA after leaving Canada. Employer shares, options and RSUs are covered in departure tax on stock options and RSUs, and crypto in departure tax on crypto.

Where do you get the departure-date value and the adjusted cost base?

The value is each holding's fair market value just before you became non-resident; for a listed security, the market price at that time, from your account statement or price history. The cost is your adjusted cost base (ACB): what you paid, plus commissions and reinvested distributions, minus return of capital. Keep the source of every price.

Where the cost usually goes wrong:

• Identical shares or units bought at different times: the CRA's capital gains guide requires an average cost per unit, recalculated at each purchase.
• Reinvested distributions: each reinvestment adds units and adds to the cost. Missing them overstates the gain.
• Return of capital: it lowers the ACB. If the ACB would fall below zero, the CRA treats it as zero and the excess as a capital gain.
• Transferred-in or very old positions: the receiving institution may show no cost or a transfer-date value. Rebuild the cost from the original records.
• Foreign securities: the CRA says to report the result in Canadian dollars, generally using the Bank of Canada rate on the day of each transaction.

How do you report the deemed sale on the departure return?

List each deemed sale on Form T1243, then carry the total gains and losses to Schedule 3 of your departure-year return, as the CRA's dispositions page directs. Any real sales you made earlier in the year go on Schedule 3 as usual. For the full calculation with numbers, see the departure tax calculation example; for line-by-line help, see Form T1243 for emigrants.

Do losing positions offset winners, and does the superficial-loss rule apply?

Yes, losses on the deemed sale offset gains on the same return, because all deemed gains and losses land on Schedule 3 for the same year. The superficial-loss rule does not block a deemed loss: the definition in section 54 excepts dispositions deemed by section 128.1.

That exception covers only the deemed sale. If you actually sell a losing position and you or an affiliated person buy the same security within 30 days before or after the sale and still hold it, that real loss can be denied. The CRA says a denied loss is usually added to the cost of the replacement property.

Older net capital losses carried forward can also reduce the departure-year gain; see unused credits and losses when leaving Canada.

Should you sell your stocks before leaving Canada?

You do not have to sell. Selling first and letting the deemed sale happen both put the gain on the same Canadian return. What differs is practical:

The largest difference is often the new country's view of cost. Some countries start your cost at the value on arrival; others use the original purchase price, which can tax the same growth twice. Selling and buying again leaves an actual purchase price on record, which the new country may use as your cost; check its rules. This page does not decide them; country pages do, for example moving from Canada to the US, Hong Kong, the UK and moving back to China. For the US, also see deferring departure tax when you move to the US; Canadian ETFs and mutual funds you keep raise a separate US question, covered in Canadian ETFs and mutual funds after moving to the US.

If you return to Canada still holding the same investments, see moving back to Canada after paying departure tax.

Do you still file Form T1135 for the part of the year you were resident?

Yes, if you meet the test while resident. Under section 233.3, a taxpayer resident in Canada in the year files Form T1135 if the total cost of specified foreign property exceeded $100,000 at any time in the year other than a time when the taxpayer was non-resident. US and other foreign stocks count even when held at a Canadian institution. Canadian-listed ETFs and Canadian mutual funds holding foreign shares are a different question; see which holdings count on T1135.

Does the brokerage account go on Form T1161?

Usually yes. Under section 128.1(9), you file Form T1161 by your filing-due date for the departure year if the total fair market value of your reportable property when you leave is more than $25,000. Stocks, ETFs, funds and bonds are reportable property, except holdings left out of the deemed sale by the short-term resident exception that are not taxable Canadian property. Canadian-dollar money and deposits are not reportable, nor is personal-use property worth less than $10,000. Form T1161 says not to list "cash (including bank deposits)", but the Act excludes only money that is legal tender in Canada and deposits of it; following the Act, US-dollar and other foreign-currency cash is listed. What goes on the form and late penalties: Form T1161.

Can you defer the departure tax on the account instead of selling?

Yes. You can elect on Form T1244, filed by April 30 of the year after departure, to postpone paying the tax on deemed sales until you actually sell, without interest. If the federal tax being deferred is more than $16,500 ($13,777.50 for former Quebec residents), the CRA requires adequate security (CRA). See deferring departure tax for what the CRA accepts. Former Quebec residents also elect separately with Revenu Québec on Form TP-1033.2-V, which requires its own security when Quebec tax on the deemed sale exceeds $12,875.

What happens to dividends and sales in the account after you leave?

After you leave, Canadian dividends paid to you generally face Canadian non-resident tax of 25%, which a tax treaty may reduce; arm's-length interest is generally exempt (T4058). A later sale of listed shares is generally not taxed by Canada unless the shares are taxable Canadian property, a test that turns on owning 25% or more of a class and on value from Canadian real property. The CRA requires you to tell payers and financial institutions you are no longer resident. For Form NR301 and withholding, see Canadian bank and brokerage accounts after leaving. If prices fall after you leave, see shares fell after you left Canada.

Example

All figures are illustrative and in Canadian dollars.

Mixed account kept through departure

An account worth C$250,000 holds a Canadian ETF up C$40,000, a US tech stock up C$25,000, a bond fund down C$5,000 and C$20,000 of Canadian-dollar cash. The deemed sale gives a net capital gain of C$60,000 (40,000 + 25,000 − 5,000), of which half, C$30,000, is taxable at the general inclusion rate. The cash adds nothing. The C$230,000 of securities is well over the T1161 threshold, so the account goes on Form T1161.

Same account sold a week before leaving

The same person sells everything a week before departure at the same prices. The Canadian gain is the same C$60,000, now reduced by the commissions paid. The C$250,000 is cash and free to move. Anything bought afterward has an actual purchase price on record; how the new country sets its cost is for that country's rules.

Retiree with US stocks

A retiree holds C$120,000 of US stocks, at cost, in a Canadian account and leaves in July. The cost exceeded the T1135 threshold while resident, so Form T1135 is filed for the departure year, covering the months of residence. The US stocks are also deemed sold on departure.

Different for you?

• You are moving to the US, or your portfolio is large: the new country's cost, a possible treaty election and deferral need to be decided together; get individual tax help and read deferring departure tax when you move to the US.
• Your cost records are missing or positions were transferred in: rebuilding the adjusted cost base decides the gain; gather every statement and transfer record and get individual tax help.
• You arrived in Canada less than five years ago: some holdings may be outside the deemed sale; see leaving Canada within five years of arriving.
• The account is joint, or your spouse leaves on a different date or stays: each owner's share is dealt with on that owner's own departure; see spouses leaving Canada on different dates and giving assets to family before leaving Canada.
• You hold RRSP, RRIF or TFSA accounts: see RRSP and TFSA after leaving Canada.
• You hold employer shares, options or RSUs: see departure tax on stock options and RSUs.
• You hold crypto: see departure tax on crypto.
• You want the full calculation: see the departure tax calculation example.
• Prices fell after you left: see shares fell after you left Canada.
• You missed T1135 or T1161, or the departure return itself: penalties can apply; see late departure forms and get individual tax help.