Transfer money out of Canada: tax and reporting when you move

Is there tax on transferring money out of Canada?

No. Canada has no tax on moving your own money abroad and no cap on the amount. A wire of savings from a Canadian chequing account is not income and not a sale, so it creates no Canadian tax by itself.

Tax comes from leaving with investments and from cashing out plans, not from moving cash, so keep three things apart:

A case stops being simple when the amounts are large or the money comes from a sale: an RRSP worth six figures, a home sale, shares of your own corporation, or investments with large gains. Those carry departure tax, withholding or a filing that is hard to fix later.

Giving cash to family abroad is not taxed in Canada either. Giving investments is treated as selling them at fair market value, so any gain is yours to report (Income Tax Act, paragraph 69(1)(b)).

Gather before you move money: recent statements for every account (bank, non-registered, RRSP, RRIF, TFSA, FHSA, RESP), records showing where large sums came from (a sale agreement, pay slips, a matured deposit), your departure date, purchase costs for investments, and any foreign-currency balances.

Is there a limit on how much money I can take out of Canada?

No legal limit applies. Large amounts only trigger reports: one by your bank for a wire, and one by you for cash or monetary instruments you carry. Neither report is a tax.

Who reports a large international transfer, and do I file anything?

Your bank or money services business files the report; you file nothing for a wire. Financial entities and money services businesses must report to FINTRAC each international electronic funds transfer of $10,000 or more that they initiate or finally receive (FINTRAC guidance). FINTRAC lists these as reports from businesses, not from individuals (FINTRAC).

The one report that can fall on you is on your own return: Form T1135, for years you were resident, if your foreign property cost more than $100,000 in total. See which holdings count on T1135.

Splitting a transfer does not avoid the report. Two or more international transfers that total $10,000 or more within a 24-hour window are reported together when the business knows they share the same requester or beneficiary. A foreign-currency amount is converted at the Bank of Canada rate to test the threshold (FINTRAC guidance).

Your bank may ask where the money came from and why you are sending it. Keep statements showing the source, such as a sale, a salary or a matured deposit.

I am carrying cash or bank drafts across the border: what must I declare?

Report to the CBSA before you leave if you carry currency or monetary instruments worth $10,000 or more. Carrying that amount is legal once declared. Monetary instruments include cheques, bank drafts, money orders, traveller's cheques, stocks and bonds (CBSA).

• Flying: visit the CBSA office, which is on the arrivals level, before you go through security on the departures level. At a small airport with no office, visit the nearest CBSA office before the flight.
• Land, sea or rail: go to a CBSA office and report before leaving.
• Form: E677 for your own money; E667 for money you carry for someone else.

If the full amount is not reported, the CBSA can seize it. Seized funds may be returned after a penalty of 5% to 50% of the amount; funds suspected to be crime proceeds are not returned (CBSA).

Which accounts cost tax to empty before or after I leave?

Canadian-dollar bank deposits and TFSA withdrawals generally cost no Canadian tax; non-registered investments, foreign-currency balances and an RRSP or RRIF usually do. On departure, Canada treats you as selling most property at fair market value. Left out: Canadian real estate, registered plans, property of a business you carry on through a permanent establishment in Canada, and, if you lived in Canada for 60 months or less in the 10 years before leaving, property you already owned when you arrived or inherited after. Canadian-dollar cash has no gain to tax (CRA; Income Tax Act, section 128.1).

For the RRSP or RRIF, Canada's non-resident withholding is generally your final Canadian tax on that payment, unless you choose to file a section 217 return (CRA T4058).

A TFSA can stay open after you leave, and growth inside it is not taxed in Canada. New contributions while non-resident are taxed at 1% a month, and your new country may tax the account's income (CRA).

If you own more than $25,000 of property when you leave, you may also need Form T1161; see the list-of-properties form when leaving Canada.

Wiring home-sale proceeds is not taxed; whether the sale itself is taxed depends on the principal residence exemption. Money in your own corporation is not yours to wire until the company pays it to you, and how and when it is paid sets the Canadian tax; see paying yourself from your corporation after moving abroad.

Should I sell investments before leaving or move them in kind?

For most non-registered investments, selling before you leave and keeping them tax the gain up to the same point: departure tax treats them as sold at fair market value on your departure date either way. Your cost then resets to that value, so a later sale while non-resident adds Canadian tax only if the holding is taxable Canadian property (Income Tax Act, section 128.1). Exception: if you lived in Canada 60 months or less in the last 10 years, investments you brought with you are not deemed sold on departure, so selling them before you leave can create Canadian tax that keeping them would not.

Taxable Canadian property includes Canadian real estate and shares that draw most of their value from it. Listed shares and fund units count only if, at any time in the past 60 months, you and people not dealing at arm's length with you owned 25% or more of a class and, at that time, more than half its value came from Canadian real estate or resource property (Income Tax Act, section 248). Shares of your own private corporation need a closer look.

What differs is practical: whether your broker can keep a non-resident's account, and whether you elect on Form T1244, by April 30 of the year after departure, to defer paying the departure tax; security is required if the deferred federal tax is more than $16,500 ($13,777.50 for former Quebec residents). The investment account guide covers both.

Is my currency exchange gain taxed?

Converting Canadian dollars to another currency is not taxed: buying a currency is not a sale. A gain arises only when you spend or convert foreign currency you already held, such as a US-dollar savings account, and it is worth more in Canadian dollars than when you got it. For an individual, the year's net gain or loss from foreign currency dispositions is ignored up to $200, and only the excess is a capital gain or loss (Income Tax Act, subsection 39(1.1)).

So a large US-dollar or euro balance held for years can produce a reportable gain, whether you convert it while still resident or keep it past departure: foreign currency is not on the list of property left out of the deemed sale (Income Tax Act, section 128.1). Record the date and rate of each conversion.

Should I keep a Canadian account, and what will the bank need?

Canadian tax law does not make you close Canadian accounts, though a bank or broker may limit what a non-resident can hold. Tell each one you are now non-resident so they withhold correctly. Interest from an arm's length payer is generally exempt from non-resident withholding; dividends are withheld at 25% unless a treaty lowers the rate (CRA T4058). Payers use a declaration such as Form NR301 to apply a treaty rate (CRA).

Account restrictions, the NR301 and refunds of over-withholding are covered in Canadian bank and brokerage accounts after leaving.

Does my new country tax or require reporting of the money I bring?

Canada's side ends at the border; your new country sets its own rules on money you bring in, accounts you keep in Canada and registered plans. Check the destination: mainland China, Hong Kong, Taiwan, India, the UAE, Australia, Portugal, South Korea, the UK or the US.

Example

These examples are illustrative; figures are in Canadian dollars.

A couple wires their savings to Australia

A couple sends $250,000 from a chequing account. There is no Canadian tax on the transfer, and their bank files its own FINTRAC report. Their $80,000 non-registered ETF account was deemed sold on their departure date, so any gain up to that date goes on the departure return. Selling the ETFs later generally adds no Canadian tax, as long as the units are not taxable Canadian property, which ordinary listed ETF units in a small stake usually are not.

A retiree with an RRSP moves to Portugal

A retiree has a $300,000 RRSP. Cashing it out after becoming non-resident means non-resident withholding, generally final. A one-time cash-out is not a "periodic pension payment", so the lower rate many treaties give pensions often does not apply (Income Tax Conventions Interpretation Act, section 5). Cashing it out while still resident means resident withholding, then the full amount taxed at her marginal rates on her Canadian return. The RRSP cash-out guide compares the two.

A student flies to Seoul with cash and a bank draft

A student carries $4,000 in cash and an $8,000 bank draft. Together they total $12,000, so the student reports both to the CBSA at the airport before security, on Form E677. Unreported, the full amount could be seized.

Different for you?

• Your RRSP or RRIF is large, or you are unsure whether to cash out before or after leaving: compare the options in the RRSP cash-out guide and get individual tax help before the withdrawal, since your residence on the payment date decides which tax applies.
• You hold investments with large gains or shares of a private corporation: departure tax and the T1244 deferral are in the investment account guide; get individual tax help before you leave.
• Your savings sit inside your own corporation: see paying yourself from your corporation after moving abroad and close or keep your corporation, and get individual tax help before the first payment, since the order of salary, dividends and departure changes the tax.
• You are selling your Canadian home: before you leave, see keep or sell your home when leaving Canada; after you leave, see non-residents selling Canadian property and, if part of the price was kept back, when the buyer held back your sale proceeds.
• You are moving to the US: your Canadian accounts may need US reporting; see your first FBAR after moving from Canada.
• You owe the CRA, or your departure return will show a balance: see CRA tax debt while living abroad before the money leaves.
• You left without filing a departure return, or years are missing: see non-resident Canadian returns and catch-up and get individual tax help.
• Your departure return and its forms are still ahead: start with leaving Canada.