Leaving Canada: departure tax, residential ties and TFSA

Canada is polite about almost everything, including your departure. There’s no exit interview, no stamp, no form you must file before you board. The bill comes later, with your tax return: a departure tax on gains you haven’t made yet, and a 25% withholding tax on much of what you keep in Canada.

This guide covers how Canadian residency ends, how the departure tax works, what stays taxable as a non-resident, and what happens to your RRSP, TFSA, OAS, CPP and bank. It’s general information as of September 2026, not tax advice. All amounts are in Canadian dollars.

Who this guide is for#

Canadians moving abroad for work, retirement or lower taxes, founders with shares in a Canadian corporation, investors with a large non-registered portfolio, and newcomers who arrived a few years ago and are moving on. Moving from the US instead? Read leaving the USA.

How Canadian residency ends#

Factual residence: it’s about ties#

The Income Tax Act doesn’t define “resident”. The CRA and the courts look at your residential ties, and Income Tax Folio S5-F1-C1 sets out how:

• Significant residential ties. A dwelling place, a spouse or common-law partner, and dependants in Canada. Keep one of these and you’re very likely still resident.
• Secondary residential ties. Personal property (car, furniture), social ties (club memberships), economic ties (Canadian bank accounts, credit cards), a provincial health card, a driver’s licence, vehicle registration, a seasonal home, a Canadian passport and union memberships. They’re weighed together, not one by one.

Your residency usually ends on the latest of three dates: the day you leave, the day your spouse or dependants leave, or the day you become a resident of your new country.

Keeping your house available to you is the classic mistake. Renting it out at arm’s length on a long-term lease is a very different signal from leaving it empty for your next visit.

The 183-day rule#

Section 250(1)(a) deems you resident for the whole year if you sojourn in Canada for 183 days or more in a calendar year. It targets people who aren’t otherwise resident, so it matters most to emigrants who spend long stretches back home. Any part of a day counts as a day. Track your visits with our day tracker.

Treaty tie-breaker and deemed non-residence#

If Canada and your new country both claim you, the tax treaty decides using the tie-breaker: permanent home, centre of vital interests, habitual abode, nationality. If the treaty makes you a resident of the other country, section 250(5) deems you a non-resident of Canada for all Canadian tax purposes. No treaty, no tie-breaker. More on the tests in tax residency explained.

Form NR73: optional#

You don’t have to ask the CRA for its opinion. If you want one, Form NR73 (Determination of Residency Status, leaving Canada) gets it. Many advisers only recommend it in borderline cases, because the answer depends on how complete your story is.

The departure tax: a sale that never happened#

How it works#

Under section 128.1(4), when you stop being resident you’re deemed to have sold most of your property at fair market value (FMV) and reacquired it at the same value. The gain goes on your departure return. As of September 2026, half of a capital gain is taxable: the government cancelled the planned increase to two-thirds on 21 March 2025.

Deemed sold on departure:

• shares, ETFs, mutual funds and bonds in non-registered accounts,
• shares of your own Canadian private corporation,
• crypto, foreign real estate and most other capital property.

Not deemed sold:

Deferring the tax: T1244 and security#

You don’t have to pay the departure tax right away. With Form T1244 you elect to defer it until you actually sell the property, without interest. You must file the election by 30 April of the year after you leave.

If the federal tax on the deemed dispositions is more than C$16,500 (C$13,777.50 for former Quebec residents), you must provide adequate security to the CRA, for example a bank letter of credit or a charge on property. Up to that amount, no security is needed.

The paperwork: T1243 and T1161#

• T1243, Deemed Disposition of Property by an Emigrant of Canada, calculates the gain and goes with your departure return.
• T1161, List of Properties by an Emigrant of Canada, is due if the FMV of all property you own when you leave is more than C$25,000. Cash and bank deposits, registered plans and personal-use items worth less than C$10,000 each don’t count. File it late and the penalty is C$25 a day, minimum C$100, maximum C$2,500. It’s required even if you owe no departure tax.

The departure return#

For the year you leave, you file one return: worldwide income as a resident up to your departure date, only Canadian-source income afterwards. The usual deadline of 30 April of the following year applies. Tell the CRA your departure date and new address, and stop benefits like the Canada Child Benefit and GST/HST credit, which end when you leave.

What stays taxable after you leave#

Part XIII: 25% at source#

Most passive Canadian income paid to non-residents gets a flat Part XIII withholding tax of 25%, reduced by a tax treaty where one applies. It covers dividends, pensions, RRSP and RRIF payments, annuities, rent, and OAS and CPP benefits. Canadian payers report it on an NR4 slip. Part XIII tax is final: you can’t get it back by filing a normal return, only through special elections or refund claims.

• Rental income. Rent from Canadian property is hit with 25% on the gross amount. With a section 216 election you can instead file a return and pay tax on net rent after expenses.
• Pensions and RRSP/RRIF payments. A section 217 election lets you file a return on certain pension income and can lower the tax, typically when your total income is modest.
• Interest. Arm’s-length interest to non-residents is generally exempt from Part XIII.

Section 116: selling Canadian real estate later#

Canadian real estate and certain shares that derive their value from it are taxable Canadian property. When you sell as a non-resident, you notify the CRA within 10 days and request a certificate of compliance (Form T2062). Without it, the buyer must withhold part of the price, usually 25% for capital property, and remit it to the CRA. Late notice costs C$25 a day, minimum C$100, maximum C$2,500. The years you spent as a non-resident generally don’t qualify for the principal residence exemption.

RRSP, RRIF and TFSA as a non-resident#

RRSP and RRIF#

Your RRSP isn’t deemed sold and keeps growing tax-deferred in Canada. Withdrawals are subject to 25% Part XIII tax, reduced by the treaty for some periodic pension payments. Your new country may tax the withdrawal too, usually with a credit for the Canadian tax. Converting to a RRIF and taking regular payments is often cheaper than a lump sum, depending on the treaty.

TFSA#

You can keep your TFSA, and Canada doesn’t tax its income or withdrawals while you’re a non-resident. But:

• No new room. You don’t earn TFSA contribution room for a year in which you’re non-resident for the whole year.
• No contributions. Any contribution as a non-resident is taxed at 1% for each month it stays in the account, on top of any over-contribution penalty.
• Your new country may not care about “tax-free”. For it, the TFSA is usually just an investment account.

Switch off automatic TFSA contributions before you leave. That’s the cheapest fix in this whole guide.

OAS, CPP and health coverage#

• OAS. You can keep receiving Old Age Security abroad if you lived in Canada for at least 20 years after age 18, or reach 20 years together with periods in a country that has a social security agreement with Canada. Otherwise payments stop after six months abroad. Non-resident recipients also file an annual OAS return of income.
• CPP. The Canada Pension Plan is paid wherever you live. Non-resident tax is withheld from both OAS and CPP: 25% unless a treaty reduces or removes it. Social security agreements can help you qualify for Canadian and foreign benefits.
• Provincial health coverage. Health insurance is provincial and tied to living in the province. When you move away for good it ends, after a grace period that varies by province. Ontario, for example, explains its rules for leaving on ontario.ca. Arrange private or local cover before your provincial plan runs out.

Banks, brokers and accounts#

• Tell your bank and broker. Update your address and tax residency. Canadian payers then withhold Part XIII tax, and under CRS your accounts are reported to your new country.
• Expect restrictions. Many Canadian brokers can’t serve clients living outside Canada, because securities rules are provincial. Some will freeze trading or ask you to transfer out. Ask before you move, and open a brokerage account in your new country early. More in banking abroad.
• Keep one account. A basic Canadian chequing account helps with CPP, OAS, rent and refunds. On its own it’s a minor secondary tie.

Worked example: an investor moves to Portugal#

Illustrative numbers only. Maya lives in Ontario and moves to Portugal in 2026 with her family. She has a non-registered portfolio, an RRSP, a TFSA and a Toronto condo she rents out long-term.

The federal part alone is well above C$16,500, so if Maya wants to defer with T1244, she must post security. The rest of her Canadian life:

Portugal, Cyprus, Malta or the UAE each tax the later gains, withdrawals and rent differently, and each has its own treaty situation with Canada. Model all three pots before you choose.

FAQ#

The fine print#

Everything here is general information, not tax or legal advice. Residential ties, treaty rules and deferral elections depend on your facts, and the security negotiation alone is worth a professional. Want your exit plan checked before you go? Book a strategy session.

Sources#

• Income Tax Act, section 128.1 – changes in residence, deemed disposition (Justice Laws)
• Income Tax Act, section 250 – deemed residence and deemed non-residence (Justice Laws)
• Income Tax Act, section 220 – election to defer payment and security (Justice Laws)
• Income Tax Act, section 116 – disposition by non-residents (Justice Laws)
• Income Tax Act, section 212 – Part XIII tax (Justice Laws)
• Income Tax Act, section 207.03 – tax on non-resident TFSA contributions (Justice Laws)
• CRA – Income Tax Folio S5-F1-C1, determining an individual’s residence status
• CRA – Leaving Canada (emigrants)
• CRA – Dispositions of property for emigrants of Canada
• CRA – Form T1243, Deemed Disposition of Property by an Emigrant of Canada
• CRA – Non-residents of Canada, Part XIII and sections 216/217
• CRA – Rates for Part XIII tax
• CRA – IC72-17R6, disposition of taxable Canadian property by non-residents (section 116)
• CRA – How non-residency affects your TFSA
• CRA – Tax rates on RRSP withdrawals
• CRA – Current year tax rates and income brackets (2026)
• Prime Minister of Canada – proposed capital gains tax increase cancelled (21 March 2025)
• Government of Canada – receiving OAS while living abroad
• Government of Canada – CPP and OAS if you lived or live outside Canada
• Government of Ontario – OHIP coverage outside Ontario
• OECD Model Tax Convention on Income and on Capital (2017)