Departure Tax Planning and Returns for Canadians Leaving Canada
When you stop being a resident of Canada, the CRA treats you as having sold most of what you own on the day you leave. Bestax works out your departure date, calculates the tax, prepares the forms, and helps you decide whether to pay now or post security.
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Who Needs Departure Tax Advice
Departure tax applies to anyone who gives up Canadian residency, not only people with large portfolios. It is best planned before you leave, while there are still choices about what to sell, keep or move.
- Canadians moving abroad for work, retirement or family, with no set date to return.
- Owners of shares in a private corporation who are leaving Canada.
- Investors with non-registered portfolios, cryptocurrency or other assets with unrealized gains.
- Emigrants keeping a Canadian home, rental property, RRSP or pension behind them.
- Newcomers who are leaving again after a few years in Canada.
- Former residents who left without filing a departure-year return.
Leaving Canada does not end your Canadian tax obligations. Rental income, pensions, RRSP withdrawals and sales of Canadian property are still taxed in Canada after you become a non-resident.
Already living abroad? See our Non-Resident Tax Services. For the basics, read our guide to departure tax in Canada.
What Our Departure Tax Service Covers
From the residency question to the last form, we prepare each part of your exit and keep it consistent.
- A residency review to confirm the date you become a non-resident, based on your ties to Canada.
- A list of what you own, and which property is caught by the deemed disposition and which is excluded.
- The deemed gains and departure tax calculated on Form T1243, with values supported for each asset.
- Form T1161 listing your property when its total value exceeds $25,000.
- Form T1244 and security arrangements if you choose to defer paying the tax.
- Your departure-year T1 return, and a plan for the non-resident filings that follow.
How Departure Tax Works
Under section 128.1 of the Income Tax Act, you are deemed to have sold most of your property at its fair market value on the day you emigrate, and to have bought it back at the same value. Any gain is taxed on your departure-year return, even though nothing was actually sold.
Some property is excluded, because Canada can still tax it after you leave. That includes Canadian real property, such as a home or rental property, and registered plans and pensions, such as RRSPs, RRIFs and TFSAs.
Your departure-year return reports worldwide income up to the date you leave, and only certain Canadian income after it.
Form T1243 calculates the deemed disposition of each property caught by the rule.
Form T1161 lists your property if its total value exceeds $25,000, leaving out items such as cash, bank deposits and personal-use property worth under $10,000 each.
A late T1161 carries its own penalty, even when no departure tax is owing.
You do not have to pay departure tax in cash when you leave. With Form T1244 you can elect to defer it, posting acceptable security with the CRA above a set amount, until the property is actually sold.
Departure Tax Forms and When They Are Due
Most emigrants need more than one form. Each is filed with, or by the due date of, the departure-year return.
| Form | What it does | When it is due | Who needs it |
|---|---|---|---|
| T1 departure-year return | Reports income up to departure and the deemed gains | April 30 of the following year, or June 15 if you or your spouse were self-employed | Everyone giving up Canadian residency |
| Form T1243 | Calculates the deemed disposition of each property | With the departure-year return | Emigrants with property caught by the rule |
| Form T1161 | Lists the property you owned when you left | With the departure-year return | Emigrants whose property is worth more than $25,000 in total |
| Form T1244 | Elects to defer paying the departure tax | By the departure-year return’s filing due date | Emigrants choosing to post security instead of paying |
If you return to Canada later and still own the property, an election can unwind the deemed disposition, reducing or eliminating the departure tax on that property.
What We Need to Prepare Your Departure
Departure tax turns on two things: the date you stopped being resident, and what everything you owned was worth on that date.
Plan early if you can. Valuations of private company shares or other hard-to-value assets take time, and some choices are only available before you leave.
- Your departure date, and details of your home, family and ties in Canada and abroad.
- Statements for every investment account, with values on or near your departure date.
- Details of private company shares, partnership interests or other business interests you own.
- Information on real estate in Canada and abroad, with purchase cost.
- Statements for RRSPs, RRIFs, TFSAs, pensions and any other registered plans.
- Your last few years of returns and notices of assessment.
Our Departure Tax Process
Free first call
You tell us your plans and what you own. We explain how departure tax would apply to you.
Confirm residency
We review your ties to Canada and agree the date you become a non-resident.
Value your property
We list your assets, separate excluded property and gather values as of the departure date.
Calculate and plan
We calculate the departure tax and compare paying it with deferring it under Form T1244.
File the return
We prepare and file the departure-year return with Forms T1243, T1161 and T1244 as needed.
After you leave
We set up the non-resident filings for your Canadian income and property going forward.
Why Emigrants Choose Bestax
Planning before you leave
We look at your position early, while there are still choices about timing, sales and deferral.
Every form, consistent
Your return, T1243, T1161 and T1244 are prepared together, so the figures agree.
Cross-border experience
Bestax works with clients across Canada, the USA, the UAE and Panama, wherever you are moving.
Support after departure
The same team handles your non-resident filings once you have left.
Plain explanations
We explain what is taxed, what is excluded and what you owe, without jargon.
Related Bestax Services
Non-Resident Tax Services for your Canadian income, rentals and property sales after you leave.
Cross-Border & International Tax when you will have tax filings in Canada and your new country.
Foreign Tax Credits so income taxed in two countries is not taxed twice in full.
Personal Tax Returns for the years before you leave, and if you return to Canada.
What Our Clients Say
After years of DIY tax filing, I decided to work with professionals, and I’m glad I chose Bestax. Their team corrected years of minor errors and even identified deductions I had missed. The savings more than paid for the service.
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Frequently Asked Questions
It is the tax on the deemed sale of most of your property at fair market value on the day you stop being a resident of Canada. Any gain is reported on your departure-year return. Our guide to departure tax in Canada covers the basics.
No. Canadian real property, such as your home or a rental property, and registered plans such as RRSPs, RRIFs and pensions are excluded from the deemed disposition. Canada can still tax them later: when the property is sold or rented, or when you withdraw from the plan.
Not necessarily. You can elect on Form T1244 to defer payment until the property is actually sold. Above a set amount, the CRA requires acceptable security for the deferred tax.
It is usually the latest of the day you leave Canada, the day your spouse or dependants leave, and the day you become resident in your new country. It depends on your residential ties, so we review your situation before the return is filed.
If you still own property that was taxed on departure, you can generally elect to unwind the deemed disposition when you return, reducing or eliminating the tax on that property.
Canadian rental income, pensions, RRSP withdrawals and sales of Canadian property remain taxable in Canada, often through withholding tax and non-resident returns. See our Non-Resident Tax Services for what comes next.