Tax Implications of Leaving Canada

In the year that you depart Canada, you must update your address, report your departure date on your final tax return, and potentially file Form T1161 for assets exceeding $25,000. 

Key Requirements When Leaving Canada:

1. Notify CRA: You must inform the CRA of your departure date on your final tax return.
2. Determine Residency: If unsure, you can fill out Form NR73 - Determination of Residency Status to ask the CRA for an opinion.
3. Final Tax Return: File a return for the year you leave, noting your date of departure.
4. Departure Tax (Deemed Disposition): You may be deemed to have sold certain types of property at fair market value, potentially resulting in capital gains taxes.
5. Property Reporting: If the total value of your property (with exceptions) is over $25,000, you must file Form T1161, List of Properties by an Emigrant of Canada.
6. Notify Payers: Advise Canadian financial institutions of your non-resident status to ensure proper tax withholding on interest or dividends.
7. Repay Home Buyers' Plan: Any remaining balance under the Home Buyers' Plan must be repaid, or it will be taxable

Departure Tax Canada charges a "departure tax" when you stop being a Canadian tax resident, which treats your worldwide assets as if you sold them at fair market value on the day you leave.

You do not pay a physical fee to cross the border. Instead, the Canada Revenue Agency triggers a capital gains tax on the increase in value of your property while you lived in Canada. You owe this tax even if you do not actually sell your belongings.

Assets Subject to Departure Tax

• Stocks and shares: Public and private company shares.
• Foreign property: Real estate located outside Canada or foreign investments.
• Valuables: Art, jewelry, and collections with a high value.

General rule: Any property worth more than $25,000 total must be reported on your departure form, or you face penalties.

Exempt Assets (Not Taxed on Exit)

• Canadian real estate: Houses or land in Canada remain taxable only when you sell them later.
• Registered accounts: RRSPs, RRIFs, TFSAs, RESPs, and FHSAs are exempt from the exit tax. (Note: Your new country may still tax these accounts).
• Personal-use items: Cars, clothing, and household goods worth less than $10,000.

Deadlines and Deferrals Filing date: You must file your final tax return and pay the departure tax by April 30 of the year after you leave (or June 15 if self-employed). Use Form T1243 to report the deemed sale.

Payment delay: If you cannot pay the tax because you did not actually sell your assets, you can apply to defer the payment by filing Form T1244 and providing security or collateral to the government

You have the option to file a NR 73 Leaving Canada to obtain an official opinion on your residency status (factual resident, non-resident, or deemed resident) for tax purposes. It is best used when your situation is complex and you are unsure of your status

Key Considerations Regarding Form NR73: Purpose: It helps you get a formal opinion, but the CRA can still make a final determination based on facts, regardless of the form. Voluntary: The CRA encourages its use, but it is not legally mandatory to file it. Drawbacks: Some tax professionals suggest avoiding it if your situation is straightforward, as it can prompt a review from the CRA Alternative: Simply indicate your date of departure and address on your final T1 Income Tax Return to properly declare your status. 

When to consider filing (but still not required): You are unsure of your status (e.g., leaving temporarily but keeping a home). You have high-value assets and want a formal determination

To determine if you should complete this form, please accesss the following CRA link:

Ways to send your form Online: You or your representative can scan this form and supporting documents, and submit them online, using My Account or Represent a Client at canada.ca/taxes, by selecting: • the "Submit documents" service and following the instructions • the topic "Contact Centre and International Correspondance" and uploading your documents By mail: Send your completed form to the Sudbury Tax Centre, PO Box 20000, Station A, Sudbury ON P3A 5C1. By fax: Fax your completed form to 705-671-0794.