Spouses Leaving Canada Months Apart: Each One's Departure Date

Spouse leaves Canada first: when does each of you become a non-resident?

The first spouse to leave usually stays a Canadian resident until the other spouse and any dependants leave. The CRA generally sets the non-resident date at 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; Folio S5-F1-C1, paragraph 1.22). So a couple who move months apart often end up with the same date: the day the second spouse leaves.

The exception: a spouse who is going back to re-establish residence in a country they lived in before Canada generally becomes a non-resident on the day they leave, even if the other spouse stays behind to sell the home or let the children finish the school year (Folio S5-F1-C1, paragraph 1.23). The general rule and the proof the CRA expects are in the date you become a non-resident.

A case stops being simple when:

• The two of you split up before or during the move. A spouse living separate and apart because the relationship broke down is not usually a significant tie (Folio S5-F1-C1, paragraph 1.13).
• The new country also treats the first spouse as its resident. A tax treaty tie-breaker can then deem that spouse a non-resident of Canada for all purposes from that point, whatever the latest-of rule says (Folio S5-F1-C1, paragraphs 1.37 and 1.38).
• You own investments or a home together.
• The second spouse's move keeps being pushed back. Each month of delay can keep the first spouse a Canadian resident, taxed on the salary earned abroad.

Gather for each spouse: the flight date, the date each child left, the date the new home abroad became available, the start date of any job or residence permit abroad, the closing or lease-start date for the Canadian home, and the value of every jointly owned account on each possible departure date.

Can each spouse have a different departure date, and who decides?

Yes. Residence is a question of each person's own facts, so each spouse has a departure date of their own, and they can differ. Neither spouse picks it. The residence rules decide it from each spouse's own facts. You each state your own date on your own return, and the CRA can review it and disagree.

Where the facts are close, each spouse can file Form NR73 to ask the CRA for its view of their status (CRA: Form NR73; CRA: Determining your residency status).

Two part-year returns: what does each spouse report, and for which months?

Each spouse files their own return for the year of departure, split at their own date. Before that date each reports world income in Canadian dollars; after it, only certain Canadian-source income, such as Canadian employment income; other Canadian income, such as dividends and pension payments, is taxed by withholding at source instead, and interest from an arm's-length Canadian payer is generally not taxed (CRA: Leaving Canada; Income Tax Act, section 212).

Under the latest-of rule, a spouse who started a job abroad in spring but stays resident until the family leaves in summer reports the foreign salary for those months as resident-period income. The new country may tax the same salary, so a foreign tax credit claim usually follows. Which credits apply in full or prorated on each return is covered in the part-year resident return. How each spouse shows the other's income and status on the return is in a non-resident spouse on a Canadian return.

Departure tax on jointly owned investments: whose share, and on which date?

Each spouse is treated as selling their own share of jointly owned investments at fair market value immediately before their own departure date (Income Tax Act, section 128.1). If your dates differ, the same account is valued twice, once for each share, and the two gains differ.

• Each spouse reports the deemed sale of their share on their own return and lists their own property on Form T1161 if its total value was more than $25,000. That total leaves out cash, registered plans such as RRSPs and TFSAs, and personal items worth under $10,000 each, but counts the Canadian home (CRA: Dispositions of property for emigrants; CRA: Leaving Canada). The forms are covered in the list of properties form.
• Each spouse can elect on Form T1244 to defer paying the tax on their own deemed gains until the property is actually sold, by the April 30 balance-due day after the departure year. The CRA needs security only if that spouse's federal tax on those gains exceeds $16,500 (Income Tax Act, section 220; CRA: Dispositions of property for emigrants).
• Canadian real estate is excluded from the deemed sale, so the family home is not taxed at departure (section 128.1).
• A spouse who was resident in Canada for 60 months or less in the 10 years before leaving has no deemed sale of property they owned when they last became resident, or inherited after. Each spouse counts their own months (section 128.1).
• Joint names do not settle whose gain it is. If one spouse paid for property the other holds (alone or jointly), the gain on the other spouse's part can be taxed to the spouse who paid, but only on sales while the paying spouse is a Canadian resident and you are still a couple. The rule skips the departure deemed sale unless you both elect it to apply, and that joint election goes on your returns for the year the property is later actually sold (Income Tax Act, section 74.2). If one of you funded the accounts, get this reviewed before either return is filed.

Save statements showing each account's value on each spouse's date, and the cost base of each holding.

Selling the family home while one spouse is still in Canada: who sells as a non-resident?

The home is outside the departure deemed sale, but each owner's share of a later sale is taxed under the rules that apply to that owner on the sale date. A spouse who is still resident sells as a resident. A spouse who is already a non-resident on the closing date sells their share as a non-resident, which brings its own notice and withholding steps. Unless the CRA issues a clearance certificate, the buyer is liable for 25% of that share's price and usually holds it back (Income Tax Act, section 116); see non-residents selling Canadian property.

Because the first spouse usually stays resident until the family leaves, they are often still resident when the home sells. A spouse who returned to a country they lived in before Canada is usually already a non-resident at closing. Whether to sell before leaving and how much of the gain the principal residence exemption still covers are in keep or sell your home when leaving Canada and selling your home after leaving Canada.

Does the child benefit or GST/HST credit stop when one spouse leaves first?

The Canada child benefit can continue while the parent who receives it, and who mainly cares for the children, is still a Canadian resident. It generally stops once that parent becomes a non-resident (CRA: Canada child benefit, before you apply; CRA: Leaving Canada).

• If the spouse who left first is a non-resident for part of the year while the receiving parent stays, the receiving parent files Form CTB9 with the absent spouse's income from all sources, inside and outside Canada, for the months that spouse was a non-resident. That income counts in family net income for the year, which sets the benefit paid from the following July (CRA: T4114; Form CTB9).
• Because the first spouse usually stays resident until the family leaves, no CTB9 is needed for those months, but the foreign salary still counts in family income.
• If the parent who receives the benefit leaves first and the children stay with the other parent, payments to the departed parent stop; the parent now caring for the children applies in their own name (CRA: T4114).
• If the receiving parent leaves first with the children, the spouse who stays cannot take over the benefit, because the recipient must live with the child. It can continue while the parent abroad is still a Canadian resident, and stops once that parent becomes a non-resident (Income Tax Act, section 122.6).
• The GST/HST credit is now called the Canada Groceries and Essentials Benefit. A recipient must be resident in the month before a payment and at the start of the payment month (CRA: Who is eligible). Only one of a couple receives it, so if the recipient leaves first, the spouse who stays and is still resident may receive it instead; tell the CRA which of you has left (Income Tax Act, section 122.5).

Stopping payments and repaying any that arrive late are covered in benefits after leaving Canada.

What each spouse tells the CRA and payers, and when

Each spouse tells the CRA their own departure date, and each tells their own Canadian payers and financial institutions that they are no longer resident, from their own date (CRA: Leaving Canada). One spouse's notice does not change the other's status.

The child benefit change has its own timing: tell the CRA before the end of the month after the month eligibility ends. On a joint account, tell the institution each holder's status as it changes. How and where to notify is in telling the CRA you are leaving Canada.

What if one spouse never follows?

If one spouse stays in Canada, the spouse who left usually keeps a significant residential tie (a spouse, children or a home left in Canada, the ties the CRA weighs most) and may remain a Canadian resident, taxed on world income, for as long as that lasts (Folio S5-F1-C1, paragraph 1.13; CRA: Factual residents temporarily outside Canada). The answer changes if the relationship breaks down and you live separate and apart, if a treaty tie-breaker places the absent spouse abroad, or in the former-home-country case. Filing and the child benefit for a family that stays are covered in family stays in Canada while you work abroad.

Example

These examples are illustrative and use Canadian dollars.

Job abroad first, family follows after school

A Toronto couple moves to a new country. He starts a job there on March 1; she and the children follow on June 30. His departure date is generally June 30, not March 1. His March-to-June foreign salary of C$40,000 goes on his return as resident-period income, and he checks whether a foreign tax credit applies for tax the new country takes on it. Both returns show June 30.

Returning to a former home country

A couple who came from the United Kingdom are going back. He leaves on February 1; she stays until their home sale closes on May 28 and leaves on May 31. Because he is re-establishing residence where he lived before Canada, he is usually a non-resident from February 1. She is a non-resident from May 31. He sells his half of the home as a non-resident; she sells hers as a resident, three days before she leaves.

Their joint brokerage account

The same couple owns a joint brokerage account with a cost of C$120,000 (C$60,000 each). It is worth C$200,000 on February 1 and C$210,000 on May 31. They opened it in Canada, so the short-stay exception for property brought to Canada does not apply.

Each reports their own gain on their own return. If one of them funded the whole account, the attribution rule and the later joint election would need a review.

Different for you?

• You own investments or a home jointly and your dates differ: each share needs its own value and reporting; get individual tax help before filing either return.
• One of you paid for most of what you own jointly: whose gain it is at departure and on a later sale depends on who funded it and on a joint election; get individual tax help before filing either return.
• The home sells between your two dates: the sale is split between a resident and a non-resident seller; see non-residents selling Canadian property and get individual tax help.
• The new country also says you are its resident: see the treaty tie-breaker for dual residents and get individual tax help.
• You are unsure of your own date: start with the date you become a non-resident.
• You hold shares, crypto or stock options: see the departure tax calculation example.
• One spouse stays for years: see family stays in Canada while you work abroad.