Canadian Departure Tax Guide
When you leave Canada permanently, the CRA treats most of your assets as if you sold them the day you left. Here's what that means, what's exempt, and how to minimize the hit.
Published by CanIRetireCanada.ca
Educational information. Sources and correction policy.
This guide is for Canadians permanently leaving Canada
If you're a snowbird spending winters abroad while keeping Canadian residency, departure tax does not apply. See our Canadian Snowbird Guide instead.
Day 1
Departure Tax Trigger
Of becoming non-resident
Yes
RRSP/RRIF Exempt?
Not subject to departure tax
Yes
TFSA Exempt?
Not subject to departure tax
Taxable
Non-Reg. Assets
Deemed sold at FMV on departure
What Is Departure Tax?
Departure tax isn't a separate tax — it's the Canadian capital gains tax triggered when you cease to be a Canadian resident. Under the Income Tax Act, you are deemed to have disposed of (sold) most of your property at fair market value (FMV) on the day you emigrate. Any capital gains from the deemed sale are taxable in your final Canadian tax return.
This means if you hold a stock portfolio worth $500,000 with an original cost of $200,000, you'd report a $300,000 capital gain — and owe capital gains tax on 50% of that ($150,000) in your departure year. This can be a significant tax hit.
What Is and Isn't Subject to Departure Tax
✅ Exempt from Departure Tax
⚠️ Subject to Departure Tax (Deemed Disposition)
How to File: The Departure Return
File T1 Return for Your Departure Year
Your final Canadian tax return covers January 1 to your departure date. Mark it as a departure return. You report worldwide income earned up to departure date, and include Schedule T1161 (List of Properties by an Emigrant of Canada) listing all properties subject to departure tax.
CRA Official LinkComplete T1161 — List of Properties
All property subject to deemed disposition must be listed: shares, ETF units, foreign property, etc. Include cost base (ACB), fair market value on departure date, and the resulting gain or loss. This is due by the T1 filing deadline (April 30 or June 15 if self-employed).
CRA Official LinkConsider Electing to Defer the Tax
If you can't pay the departure tax, you can apply for a deferral by posting security with the CRA (such as a lien on Canadian real estate). This delays payment until you actually sell the assets. Interest accrues on the deferred amount.
CRA Official LinkFile NR73 if You Want CRA to Determine Your Residency Status
Form NR73 (Determination of Residency Status — Leaving Canada) asks the CRA to formally assess whether you've become a non-resident. It's optional but provides certainty. Useful if your residency status is unclear (e.g., you still own a house in Canada).
CRA Official LinkStrategies to Minimize Departure Tax
Crystallize losses before departure
If you have non-registered investments sitting at a loss, sell them before you leave to offset capital gains from the deemed disposition. Harvesting losses reduces your taxable gain.
Use your lifetime capital gains exemption (LCGE)
If you own qualifying small business shares or farm/fishing property, your LCGE (~$1,016,602 in 2024) can shelter gains from departure tax. Plan this with a tax advisor.
Time your departure date
Departure date affects which year the gain falls in. If January vs. December affects which marginal rate applies, plan accordingly. Also affects provincial tax for the year.
Melt down non-registered accounts before leaving
Consider selling down non-registered investments gradually in the years before departure — especially in lower-income years — to realize gains at lower rates while still a Canadian resident.
Convert RRSP to RRIF before departure
You can start RRIF withdrawals before departure to draw down RRSP while at Canadian marginal rates, rather than face the 25% non-resident withholding later. This requires careful modeling.
Related Resources
OAS While Living Abroad
How OAS changes after you leave
CPP While Living Abroad
Withholding rates as a non-resident
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