Becoming Non-Resident: Leaving Canada
Leaving Canada triggers a deemed disposition, departure tax, and a new withholding regime. Learn how residency is severed, what gets taxed on the way out, and what keeps generating Canadian tax after the move.
What Happens to Your Client's Tax Life the Day They Leave Canada?
Departure triggers a deemed disposition of almost every capital property your client owns, a new withholding tax regime on Canadian income, and a residency determination that Canadian law can't override if a treaty applies. This half-hour session cuts to what matters: how residency is severed, what gets taxed on the way out, and what keeps generating Canadian tax after the move.
- check_circle The residence severance checklist. Which ties to Canada actually matter to CRA — and which ones are safe to keep — including the treaty tie-breaker test that overrides Canadian domestic law under subsection 250(5).
- check_circle Departure tax explained clearly. The deemed disposition rules, available exemptions (including the principal residence and capital gains exemption), how to defer departure tax by posting security with CRA, and the planning opportunities around Canadian corporations before and after departure.
- check_circle Ongoing Canadian exposure after departure. Withholding tax on RRSP/RRIF withdrawals, dividends from Canadian corporations, trust distributions, and taxable Canadian property — the tax file doesn't close on departure day.
What You'll Learn
The session follows the lifecycle of a departure: establishing non-resident status, the tax hit on the way out, and what remains on the Canadian side after the move.
expand_more Establishing Non-Resident Status
- The ties that sever Canadian residence: home, dependants, bank accounts, memberships, provincial health cards — and what CRA looks for
- Why becoming tax resident in the foreign country matters as much as leaving Canada, and how to establish corresponding ties abroad
- The treaty tie-breaker sequence: permanent home test, centre of vital interests, habitual abode, nationality, and competent authority determination
- Deemed non-resident status under subsection 250(5) — non-rebuttable once a treaty puts residency in the foreign country — and the anomalies in specific treaties (UAE, Hong Kong, U.K., U.S.)
expand_more Taxation on Departure
- Deemed disposition of capital property at fair market value immediately before departure — and the key exclusion for Canadian real estate held directly
- Available offsets: the principal residence exemption (including on a foreign residence, often overlooked), the capital gains exemption on qualifying shares, and income attribution rules that do not apply to deemed dispositions on departure
- TOSI implications for capital gains on private corporation shares where there is no active involvement
- Deferring the departure tax: posting acceptable security (letter of credit, government bonds, Canadian real estate mortgage) to avoid paying tax before actual liquidity
- No deemed disposition on interests in Canadian resident trusts — a meaningful planning advantage
expand_more Taxation After Departure
- RRSP and RRIF withdrawals: no deemed disposition on departure, but 25% non-resident withholding tax on withdrawals, reduced to 15% for periodic payments under most treaties
- Taxable Canadian property (TCP) — Canadian real estate, shares of corporations deriving value primarily from Canadian real estate — remains subject to Canadian tax even after departure
- Withholding tax on dividends from Canadian corporations: 25% standard rate, reduced by treaty to 15% for individuals or as low as 5% for qualifying foreign corporations
- The section 119 credit for withholding tax on TCP shares redeemed after departure — can generate a refund of departure tax paid
- Canadian resident trust distributions: 25% withholding on capital gains allocated to non-resident beneficiaries, with treaty reductions often requiring foreign taxation of the income
expand_more Planning Before and After Departure
- Paying out a capital dividend before departure: reduces corporate value tax-free and lowers the deemed disposition gain
- Extracting retained earnings as a dividend after departure: lower overall rate than Canadian personal tax on the same amount
- The Retirement Compensation Arrangement (RCA): deductible corporate contributions to a retirement fund, withdrawable after departure at 25% non-resident withholding rather than top Canadian personal rates
- Foreign country considerations: step-up in cost base on arrival (automatic in France and the Netherlands, elective in the U.S., unavailable in some countries), potential double taxation without proper planning, and the need for coordinated advice in both jurisdictions
Learn Directly from a Tax Expert
Michael Cadesky is the managing partner at Cadesky Tax and a committed contributor to the tax and accounting professions since 1980, earning the title of Fellow from CPA Ontario. He is a past governor of the Canadian Tax Foundation, past chair of STEP Canada and STEP Worldwide, and past chair of the CPA Canada Tax Committee for Small and Medium-Sized Enterprises. Michael is also the co-author of 11 books on tax subjects and the author or co-author of numerous papers and articles on Canadian and international taxation.
Frequently Asked Questions
Quick answers about registering for this course.
Can I start right away? expand_more
Yes. Becoming Non-Resident: Leaving Canada was recorded in December 2018 and is available on demand. Register and begin immediately at your own pace.
Does this course provide CPD? expand_more
Yes. You will receive a verifiable CPD certificate for 0.5 hours of instructional learning upon completion.
What is included with registration? expand_more
Registration includes the full course recording and slides. You have one year of access to the program and materials from your date of registration.
Is there a cost to register? expand_more
Yes. Registration is $50 CAD — a one-time payment with no subscription required.