For Canadians

How tax residency works

Canada taxes residents on worldwide income and non residents only on certain Canadian income. Residence is a question of fact, explained by the CRA (Canada Revenue Agency, the federal tax authority) in Income Tax Folio S5 F1 C1, Determining an Individual’s Residence Status. There is no simple day count that makes you non resident.

The CRA looks first at three significant residential ties: a home in Canada, a spouse or common law partner in Canada, and dependants in Canada. Keeping any one of them usually keeps you resident. Secondary ties are weighed together, and one alone is rarely decisive.

Two further rules matter. If you are not factually resident but spend 183 days or more in Canada in a calendar year, you are deemed resident for the whole year (the sojourning rule). If you end up resident in two countries, a tax treaty’s tie breaker rules can make you a deemed non resident, but only where a treaty exists; Canada has none with Paraguay, for example.

• Significant ties: a home available to you, a spouse or common law partner, dependants.
• Secondary ties: a car, furniture and other personal property, bank accounts and credit cards, provincial health coverage, a provincial driver’s licence, and social and professional memberships.
• Minor ties: a Canadian mailing address, phone number or subscriptions, which count mainly alongside other ties.

Leaving properly

You usually become non resident on the latest of three dates: the day you leave, the day your spouse or partner and dependants leave, and the day you become resident in your new country. Your final Canadian return covers worldwide income up to that date and Canadian income after it.

1. 01

   Cut the significant ties

   Sell your home, or lease it to an unrelated tenant on arm’s length terms, and move your family with you. A home kept empty and available to you is a strong tie.

2. 02

   Wind down secondary ties

   End provincial health coverage, replace your provincial driver’s licence, and reduce accounts, cards and memberships to what you genuinely need.

3. 03

   Value your assets on departure day

   Record market values for shares, funds, crypto and other property at your departure date. They set your departure tax and your new cost base.

4. 04

   File the emigrant return

   File by 30 April of the following year (15 June if self employed, with any balance still due 30 April), showing your departure date, Form T1243 for the deemed disposition and Form T1161 if your property is worth more than C$25,000.

5. 05

   Tell payers you are non resident

   Banks, brokers, pension plans and tenants then apply non resident withholding, and benefits such as the Canada Child Benefit and the Canada Groceries and Essentials Benefit stop.

6. 06

   Decide on Form NR73

   This optional form asks the CRA for its opinion on your status. The opinion is not binding, and your accountant advises whether filing it helps in your case.

Departure tax, property and investments

On the day you emigrate, you are treated as selling most of your property at fair market value and buying it back at the same value. This is the departure tax, and the resulting gain is taxed on your final return. The proposed increase in the capital gains inclusion rate was cancelled in 2025, so gains are still included at one half.

Several assets are excluded: Canadian real estate, property of a business you carry on in Canada through a permanent establishment, and registered plans such as RRSPs (registered retirement savings plans), TFSAs (tax free savings accounts) and pension plans. If you were resident for 60 months or less in the 10 years before leaving, property you owned when you arrived is excluded too. On Form T1244 you can defer paying the tax, without interest, until you actually sell; if the deferred federal tax exceeds C$16,500, the CRA requires security.

Your home is not deemed sold, but the principal residence exemption generally covers only the years you were resident, plus one extra year under the formula. Rent paid to a non resident carries 25% tax on the gross amount unless you elect to pay on net rent (Form NR6 and a section 216 return). When you sell as a non resident, you need a clearance certificate under section 116, and the buyer holds back part of the price until it is issued.

Shares in your private company are deemed sold when you leave. Once control sits outside Canada, the company can lose its status as a CCPC (Canadian controlled private corporation), which raises its tax rate on active business income. Plan the structure before your departure date.

Pensions and social security

You can keep your RRSP and RRIF (registered retirement income fund) after leaving, and growth stays sheltered in Canada. Withdrawals carry non resident withholding, generally 25% on lump sums, which a treaty can reduce for periodic pension payments. Your new country may tax withdrawals as well, so check its rules before you draw down.

Your TFSA can stay open and its growth remains tax free in Canada. You cannot contribute while non resident, contributions are taxed at 1% a month, and no new room accrues. Other countries may not recognise the TFSA’s tax free status.

CPP (Canada Pension Plan) retirement pensions are paid anywhere in the world. OAS (Old Age Security) continues abroad indefinitely only if you lived in Canada for at least 20 years after age 18, or reach 20 years by combining time in a country with a social security agreement with Canada; otherwise it stops after six months abroad. The Guaranteed Income Supplement stops after six months abroad in every case, and both pensions face non resident tax depending on where you live.

Provincial health coverage ends once you leave permanently, so arrange private international health insurance before you go.

Dual citizenship

Canada allows dual citizenship, and taking another nationality has no effect on your Canadian citizenship. Leaving Canada does not end it either; only a formal renunciation does, and Canada does not tax on the basis of citizenship.

If you plan to have children abroad, the rules changed on 15 December 2025 when Bill C 3 came into force. A Canadian born abroad can pass citizenship to a child born abroad if they spent at least 1,095 days in Canada before the birth or adoption.