Leaving Canada: departure tax and emigration guide (2026)

Last reviewed: 2026-10-30 | Milinchuk CPA Professional Corporation

If you are moving from Canada to the United States, back to Europe, or anywhere else, your last Canadian return is different from every return before it. Canada treats you as having sold most of what you own on the day you leave, and there are special forms and deadlines. This guide explains the rules I review with people leaving Toronto, ON, with links to the CRA and the Income Tax Act so you can check each point. It is general information, not advice for your situation.

1. When you stop being a resident of Canada

• Residency for tax is a question of fact, not citizenship or immigration status. The CRA looks first at your significant residential ties: a home in Canada, a spouse or common-law partner in Canada, and dependants in Canada. Secondary ties, such as a car, bank accounts, credit cards, provincial health coverage, and a driver's licence, are looked at together. (CRA Income Tax Folio S5-F1-C1)
• You usually become a non-resident on the latest of these dates: the day you leave Canada, the day your spouse or common-law partner and dependants leave, or the day you become a resident of your new country. If you are going back to a country you lived in before Canada, it is usually the day you leave. (CRA: Leaving Canada (emigrants))
• If you keep significant ties, such as a home kept available for you, you may still be a factual resident of Canada and taxed on your world income. If you are resident in both countries and a tax treaty's tie-breaker rule makes you a resident of the other country, you are deemed a non-resident of Canada under ITA s. 250(5), and the emigrant rules apply.
• Form NR73, Determination of Residency Status (Leaving Canada), is optional. You file it only if you want the CRA's opinion on your status. The CRA's answer is based on the facts you give and is not binding on the CRA. (CRA: Form NR73; Folio S5-F1-C1, paragraph 1.55)

2. Departure tax: the deemed disposition under ITA s. 128.1(4)

• On the day you stop being a resident, you are treated as having sold most of your property at its fair market value and bought it back at the same amount. Any resulting capital gain is reported on your departure return, even though nothing was sold. This is often called departure tax. (Income Tax Act, s. 128.1; CRA: Dispositions of property for emigrants)
• It usually applies to non-registered investments (shares, ETFs, mutual funds, and cryptocurrency held outside a registered plan), shares of a private corporation, and valuable personal property such as jewellery, paintings, and collections.
• Main exceptions:
  • Canadian real property, such as your home or a rental property in Ontario, and Canadian resource and timber resource property. It stays taxable in Canada when you later sell it.
  • Canadian business property used in a business carried on through a permanent establishment in Canada.
  • Pension plans, RRSPs, RRIFs, TFSAs, FHSAs, RESPs, RDSPs, Canadian employee stock options, and other rights listed as an "excluded right or interest" in ITA s. 128.1(10).
  • If you were resident in Canada for 60 months or less in the 10 years before you leave, property you owned when you last became a resident, or inherited after that, is not deemed sold.
• You can elect under ITA s. 128.1(4)(d), on Form T2061A, to include Canadian real property or business property in the deemed disposition. This can help, for example, to absorb capital losses, but a loss created by the election can only reduce the gains from your other deemed dispositions, not your other income (s. 128.1(4)(d)(ii)-(iii)). Ask before you make this election.

3. Forms for your departure return

• Date of departure: enter it on page 1 of your return. You report world income for the part of the year you were resident, and only certain Canadian-source income for the rest. (CRA: Leaving Canada (emigrants))
• Form T1243, Deemed Disposition of Property by an Emigrant of Canada: calculates the gains or losses from the deemed disposition. The totals go to Schedule 3.
• Form T1161, List of Properties by an Emigrant of Canada: required if the total fair market value of everything you owned when you left was more than $25,000. Do not count cash and bank deposits, registered plans and pensions, personal-use items worth less than $10,000 each, and (for short-term residents) property you brought with you that is not taxable Canadian property. T1161 is due by your filing due date even if you do not have to file a return. The late-filing penalty is $25 a day, with a minimum of $100 and a maximum of $2,500. (CRA: Dispositions of property for emigrants)
• Form T1244, election to defer payment of departure tax: you can elect to pay the tax on the deemed disposition later, without interest, when you actually sell the property. The election is due by April 30 of the year after you leave. If the federal tax on the deemed disposition is more than $16,500, you must give the CRA adequate security, and provincial tax may need security too. Contact the CRA well before April 30 to arrange it. (ITA s. 220(4.5); CRA: deferring the tax owing)
• Form T1135, Foreign Income Verification Statement: if the total cost of your specified foreign property was more than $100,000 at any time in the year you leave, while you were still resident, Form T1135 is still due for that year. The CRA accepts reporting only up to your departure date. (CRA: questions and answers about Form T1135)
• Due dates: for a 2026 departure, the return and any balance owing are due April 30, 2027. If you or your spouse or common-law partner were self-employed, the filing date is June 15, 2027, but the balance is still due April 30. Use the tax package for the province where you lived on the day you left.

4. After you leave

• As a non-resident, you pay Canadian tax only on Canadian-source income. Many payments, such as dividends, rent, pension income, and RRSP or RRIF withdrawals, have non-resident tax withheld at source, often at a rate reduced by a tax treaty. In some cases, an election can lower the tax: section 216 for rent from Canadian real property, and section 217 for pensions, RRSP and RRIF payments, and certain other benefits. (ITA ss. 212, 216, 217; CRA: Leaving Canada (emigrants))
• Tell your Canadian bank, brokerage, and other payers that you are no longer a resident, so they withhold correctly.
• You can keep your TFSA and its income stays exempt from Canadian tax, but you cannot contribute while you are a non-resident and you do not earn new room. Contributions made while you are a non-resident are subject to a 1% per month tax (ITA s. 207.03). The other country may tax it.
• Benefits paid through the tax system, such as the Canada child benefit, the Canada Groceries and Essentials Benefit, and the Ontario Trillium Benefit, generally stop. Tell the CRA your departure date so you do not have to repay them later.
• If you later sell Canadian real property, you must notify the CRA (usually Form T2062) no later than 10 days after the sale, and the buyer may have to withhold tax unless the CRA issues a certificate of compliance under section 116. Plan this before the sale. (ITA s. 116(3), (5); IC72-17R6)
• If you come back to Canada and still own property that was deemed sold, you may be able to "unwind" the departure tax under ITA s. 128.1(6). The election is due by your filing due date for the year you return.

5. Moving to the United States

• If you are resident in both countries for part of the year, the tie-breaker rule in Article IV(2) of the Canada-US tax treaty decides which country treats you as resident.
• Under Article XIII(7) of the treaty, you can elect for US tax purposes to be treated as if you sold and bought back your property at fair market value on the day Canada taxed the deemed disposition. This generally means the US taxes only the gain after you leave Canada. The election is made on your timely filed US return for your first tax year ending after you leave Canada, with Form 8833 and proof of the fair market values used for Canada (Revenue Procedure 2010-19, s. 4.01(3)).
• If you are not already a US citizen or green card holder, your first US return is often a dual-status return (nonresident for part of the year, resident for the rest), unless an election to be treated as resident for the full year applies (IRC ss. 6013(g), 7701(b)(4)). The IRS also treats registered plans differently: RRSP and RRIF growth can generally be deferred under Article XVIII(7) of the treaty (Rev. Proc. 2014-55), but TFSA income is not tax-free for US purposes. I prepare US federal individual returns (Form 1040 and 1040-NR), so we can plan both sides before you move.

6. Moving to Europe or another country

• Canada has tax treaties with most European countries. Check the treaty with your new country for the tie-breaker rule and for how it taxes gains on property Canada has already taxed.
• Some countries do not give you a higher cost base for assets Canada taxed on departure, so the same gain could be taxed twice when you sell. Treaty relief for this differs by country. Get advice in your new country as well. I advise on the Canadian side and work with your local adviser.

7. Planning a year-end move

• Your departure date decides which tax year includes the deemed disposition, and when the T1244 election and any payment are due. Leaving on December 30 or on January 2 moves the departure tax, and your final return, by a full year.
• The non-refundable tax credits for the year you leave are limited, and Ontario refundable credits on Form 479 are generally not available unless you were a resident on December 31. Compare both dates before you book the move.
• Get the fair market value of each non-registered investment on your departure date, and keep the statements. You will need them for Form T1243 and Form T1161.
• Decide what to do with your home in Canada. A home kept available for your use can keep you resident. Selling or renting it out at arm's length usually has different results.
• Review RRSP contributions, bonuses, and option exercises before you leave, while you are still taxed as a resident.
• If you have a Home Buyers' Plan or Lifelong Learning Plan balance, it must generally be repaid within 60 days after you become a non-resident, or before you file your departure return if earlier, or the balance is included in income (ITA ss. 146.01(5), 146.02(5)).

Checklist

• Departure date confirmed, and the residential ties you are keeping reviewed
• Fair market values on the departure date collected for non-registered property
• Form T1243 completed and gains carried to Schedule 3
• Form T1161 filed if your property was worth more than $25,000
• Form T1244 filed by April 30 if you want to defer the tax, and security arranged if needed
• Form T1135 filed if your foreign property cost more than $100,000 in the year you leave, while you were still resident
• Canadian banks, brokers, and payers told you are a non-resident
• Form NR73 considered if your status is not clear
• US or other foreign returns planned, including the treaty election if you move to the US

Next step

Book a call before you set your moving date. I prepare your departure return together with your US return, if you are moving to the United States, so both sides match. My Canada-US cross-border service page lists what is included, or contact me with your questions.

Book a free 45-minute call

This guide is general information based on CRA, Department of Justice, and IRS pages available in October 2026. It does not replace advice for your situation. Thresholds, forms, and due dates change; check the linked pages or ask me before you act.