Updated: Oct 5, 2022
Moving or working abroad does not necessarily mean you are considered a non-resident for tax purposes. Depending on your ties to Canada, number of days in Canada, and other factors, the Canada Revenue Agency (CRA) may consider you a factual resident, deemed resident, non-resident, or deemed non-resident.
If you are a non-resident, properly exiting the Canadian tax system is crucial; otherwise, there is potential for double taxation on your worldwide income, application of incorrect tax rates, and penalties and/or interest accruing. In order to terminate your Canadian residence status in the tax system, you will need to file a “departure tax return” indicating your date of departure. This date of departure varies if you have a spouse or dependents or if you are becoming a deemed resident of a new country. Furthermore, on your final departure tax return, you may need to include a “deemed disposition.”
If leaving the country, the CRA treats any property you own as if it was sold at the current fair market value when you become a non-resident. Depending on whether there is a capital gain or capital loss, tax may be applicable or a loss could be claimed on your return.
Leaving Canada behind can be a daunting process, so be sure to surround yourself with experts who can provide you with helpful advice for a worry-free transition.