Leaving Canada Permanently: Tax Checklist Before and After You Go

Leaving Canada checklist at a glance

Leaving Canada permanently means four rounds of tax tasks: plan before you go, act in the last weeks, record values on your departure date, then file the departure-year return by April 30 of the next year. After that, Canadian payers generally withhold non-resident tax and you file again only if your situation requires it (CRA: Leaving Canada).

A simple case is a renter with only a bank account, an RRSP and a TFSA. A case is not simple when you own shares of a private company, keep or rent out a home in Canada, own property abroad, have a spouse or children who stay behind, move to the US, hold investments with large unrealized gains, or have already left and missed a deadline. Those cases carry deemed-sale tax, elections with fixed deadlines and two countries' rules.

Gather: proof of your move (lease or purchase abroad, flight, new residency or work permit), statements and cost records for every investment, registered-plan statements, any Home Buyers' Plan balance, and a list of everyone who pays you.

What should I do months before leaving Canada?

Start with the departure date, because every later deadline counts from it. The CRA usually treats you as a non-resident from the latest of the day you leave, the day your spouse or common-law partner and dependants leave, and the day you become resident in the new country (CRA: Leaving Canada). How residential ties decide the date is in Date you become a non-resident.

Then make the decisions that are hard to change after you leave:

• Your home: keeping it, renting it or selling it each has different results. See Keep or sell your home when leaving Canada.
• Your RRSP: a withdrawal before you leave is taxed as income on your Canadian return; after you leave, non-resident withholding applies. See RRSP cash-out before or after leaving.
• Your FHSA: see FHSA when you leave Canada.
• Investments with gains: gather the adjusted cost base for each holding now. Most property, including foreign real estate and shares or funds outside a registered plan, is treated as sold at fair market value just before you leave. Canadian real estate and registered plans are not, though you can elect on Form T2061A to treat Canadian real estate as sold too. If you lived in Canada no more than 60 months in the preceding 120 months before leaving, property you owned when you last arrived, or inherited after that, is generally not treated as sold either (CRA: Dispositions of property). Details are in Deemed disposition form for emigrants.
• Large departure tax: if you may want to defer payment, contact the CRA early about security; see Deferring departure tax.

What do I do in the last weeks before I leave?

Stop new TFSA contributions, plan any Home Buyers' Plan repayment, and tell the CRA, payers and banks. Each of these has a cost if it is missed.

• TFSA: a contribution made while you are a non-resident, other than a qualifying transfer or exempt contribution, is taxed at 1% for each month it stays in the account, until you withdraw it or become resident again (CRA: TFSA and non-residents). Cancel any automatic contributions dated after you leave.
• Home Buyers' Plan: the unpaid balance becomes income on your departure return unless you repay it within 60 days after you become a non-resident and before you file that return (Income Tax Act, section 146.01(5)). An unpaid Lifelong Learning Plan balance follows the same rule (section 146.02(5)). Have the money ready before you go.
• The CRA and benefits: tell the CRA your departure date. A non-resident generally cannot receive the Canada child benefit or the Canada Groceries and Essentials Benefit; if payments keep arriving, contact the CRA right away rather than spending them (CRA: Leaving Canada).
• Payers and banks: you are required to tell Canadian payers and financial institutions that you are a non-resident, so the right tax is withheld (CRA: Leaving Canada). See Bank and brokerage accounts after leaving.
• Address: update it online, by phone, by mail or on your return. The CRA does not pass a new address to other government departments, so tell each one that serves you (CRA: Change your address).

The full notice list is in Telling the CRA you are leaving Canada.

What do I record on my departure date?

Record the fair market value of everything you own on the day you become a non-resident, and keep the cost record beside it. Those values drive both the property list and the deemed-sale gain, and they are hard to rebuild years later.

Form T1161 is required when the total fair market value of the property it covers is more than $25,000. Cash, bank deposits and registered and pension plans do not count toward it. If you lived in Canada no more than 60 months in the preceding 120 months before leaving, property you owned when you last arrived, or inherited after that, is also left off, unless it is taxable Canadian property such as Canadian real estate (CRA: Dispositions of property). Which items go on the list is covered in List of properties form when leaving Canada.

What do I file by April 30 of the year after I leave?

File the departure-year return by April 30 of the next year, with any departure forms that apply. If you or your spouse or common-law partner had self-employment income, the return can be filed by June 15, but any balance is still due by April 30 (CRA: Filing due dates). Use the return package for the province or territory you lived in on your departure date (CRA: Leaving Canada). The return reports your world income up to the departure date and only Canadian-source income after it, and some credits are limited; see Part-year resident return in the year you leave.

If you do not need to file a return, tell the CRA your departure date as soon as possible; T1161 may still be due (CRA: Leaving Canada). The CRA's EFILE list for 2018 to 2025 returns excludes emigrant returns that include T1161, T1243 or T1244; check it for your year, and allow for a paper return and mail time from abroad (CRA: EFILE eligibility). How to file from your new country is in Filing your departure return from abroad.

What keeps going after I've left Canada?

Canadian payers generally withhold non-resident tax of 25% from pensions, RRSP and RRIF payments, dividends and rent, unless a tax treaty lowers the rate. For many of these payments, that withholding is your final Canadian tax and no return is needed (CRA: Non-residents and income tax). The payer reports the amounts on an NR4 slip. How to claim a treaty rate from a bank or broker is in Bank and brokerage accounts after leaving.

Some income works differently. Rent from a Canadian property, Canadian work, or a sale of Canadian real estate can require a return or an election; see Non-resident landlords and Do you file every year after leaving Canada?. How the RRSP and TFSA behave once you are abroad is in RRSP and TFSA after leaving Canada.

If you sell property whose departure tax you deferred, send the CRA the property description from your T1243, the number of shares sold and the sale date; the deferred tax on that property is due by April 30 of the year after the sale (CRA: Dispositions of property).

Which deadlines carry penalties, and which are hard to fix later?

Four items carry a set cost or a deadline. Put them in your calendar before you leave. The CRA can sometimes waive the TFSA tax or cancel the T1161 penalty, but only on request (Income Tax Act, sections 207.06 and 220(3.1)).

Two choices are hard to reverse: a deferral not elected by the deadline, and a Home Buyers' Plan balance not repaid in the window. The deemed sale itself can be unwound only if you become resident again (see below). Benefits paid after you leave are generally not yours to keep, and the CRA can ask for them back. The departure date itself is a judgment call that sets every other answer, so settle it with evidence before you file.

Which documents should I keep, and for how long?

Keep tax records for at least six years from the end of the last tax year they relate to; if a return is filed late, six years from the day it is filed. Records of the cost of investments and other capital property are kept until six years after the last year they could affect a tax calculation (CRA: IC78-10).

For someone who left Canada, that means keeping the departure-date valuations, T1161, T1243 and T1244, proof of any security, and the cost records of property you still own, until six years after you sell that property or return and unwind the deemed sale. Keep the proof of your move too; it supports your departure date if the CRA asks.

What if I plan to come back to Canada?

If you return while still owning property that faced departure tax, you can ask to unwind the deemed sale on that property. Send a written request with a list of the property and each item's fair market value by your filing due date for the year you become resident again (CRA: Dispositions of property). This is why the departure-date records matter even if you think the move is permanent. The rules and limits are in Moving back to Canada after paying departure tax.

A plan to come back can also affect whether you become a non-resident at all. If you keep a home available or your family stays, check Date you become a non-resident before you file as an emigrant.

Example

These examples are illustrative; all amounts are in Canadian dollars.

A renter with a TFSA and RRSP

A single renter leaves with a C$20,000 TFSA, a C$60,000 RRSP and C$5,000 of furniture. She cancels her monthly TFSA contribution, tells her bank and RRSP issuer she is a non-resident, updates her address and tells the CRA her departure date. Her registered plans and cash do not count toward the T1161 threshold, and her furniture is personal-use property worth less than C$10,000 an item, so she has no T1161 and no deemed-sale gain. She files a departure return by April 30 of the next year, reporting her world income up to the departure date.

A homeowner couple with investments and an HBP balance

A couple leaves owning a home worth C$700,000 and a joint brokerage account worth C$300,000 with a cost of C$200,000. One spouse has a C$12,000 Home Buyers' Plan balance.

• Within 60 days: that spouse repays the C$12,000 before filing, or it is added to income on the departure return.
• Departure date: they save a brokerage statement and a home value estimate.
• By April 30 next year: each files a T1161 listing the home and their share of the account, and a T1243 reporting their share of the C$100,000 deemed gain. The home is listed but not treated as sold, so it adds nothing to the gain.

A business owner with private company shares

An owner holds shares of his own Canadian corporation worth C$1,000,000 with a nominal cost. On top of the steps above, he needs a supported valuation at the departure date, a T1243 for the shares, and, if he defers the tax, a T1244 and security arranged with the CRA before April 30. Leaving can also change the corporation's own tax status; see Departure tax on private company shares.

Different for you?

• You own shares of a private corporation: valuation, deferral and the company's status all change. See Departure tax on private company shares, Close or keep your corporation when leaving and individual tax help.
• You keep a home in Canada: renting it or selling it later brings withholding and certificate rules. See Keep or sell your home when leaving Canada and individual tax help.
• Your spouse or children stay, or leave on a different date: your departure date may move. See Spouses leaving Canada on different dates and individual tax help.
• You are moving to the US: both countries' rules and the treaty apply in the same year. See Moving from Canada to the US and Deferring departure tax, and cross-border tax help.
• You lived in Québec: a second set of departure forms applies. See Leaving Québec and individual tax help.
• You hold investments with large gains, own property abroad, or came to Canada recently: the deemed sale, T1243 and any deferral need numbers that match your cost records, and property you brought may be exempt. See Deemed disposition form for emigrants and individual tax help.
• You have already left and missed a deadline: file what is missing and gather your departure-date values; see Filing your departure return from abroad and individual tax help.