July 19, 2024
Emigrants are those who leave Canada, establish a permanent home abroad and have severed Canadian ties. On the date of departure, they are deemed to have disposed of applicable assets at fair market value. This is referred to as the departure tax, though it is really triggering a tax on unrealized capital gains.

Thinking about leaving Canada? Here are the financial considerations you need to know

Leaving Canada without prudent planning could see assets taxed at rates of more than 50 per cent

“The grass always looks greener …” goes the trope. With the tax changes in the 2024 federal budget, many successful Canadians seem to be considering whether greener pastures exist abroad. Perhaps it’s the United States for a more accommodating business climate, Saudi Arabia because it has no income tax or Australia for the better weather.

For those considering a departure, there are many financial considerations. From our perspective as financial planners, the biggest one is tax. Leaving Canada without prudent planning could see assets taxed at rates of more than 50 per cent. If planned ahead, this could be substantially reduced.

But emigration is complex. Everyone considering it should seek advice from a financial team that includes an experienced tax lawyer. Understanding that, here is some helpful general information.

Determining residency

Where one lives matters, but it isn’t the whole story. Someone can become a non-resident without becoming an emigrant. This is called a factual tax resident of Canada.

Fundamentally, a factual tax resident is a Canadian living abroad. Their global income is subject to Canadian tax.


See Also:

Newcomers considering relocating provinces, leaving Canada due to housing costs: survey


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