Tax tips if you are leaving Canada 

If you’re planning to move away from Canada, it’s crucial to reassess your assets, income, and tax responsibilities. Emigration can split your tax year into two segments: before and after you become a non-resident for tax purposes. It’s essential to differentiate between your immigration residency status and your tax residency status, as they are not the same. Failing to sever residential ties with Canada may inadvertently result in you being considered a factual resident for tax purposes. 

Here are some key points to consider: 

• Residency Status: Determine the exact date when you become a non-resident of Canada for tax purposes. This date is critical for your tax returns and will influence how you’re taxed on worldwide and Canadian-sourced income. 

• Departure Tax: You may be subject to a departure tax, which is a capital gain tax on the deemed disposition of certain properties at the time of your departure. 

• Employment Income: Distinguish between Canadian-sourced and foreign-sourced income, especially if you continue to earn Canadian income after leaving. 

• Stock Options: If you exercise stock options related to Canadian employment after leaving, you must file a Canadian tax return for that year. 

• Principal Residence Exemption: This exemption does not apply to non-residents. If you convert your principal residence in Canada to a rental property, you must file a change of use. 

• Rental Income: Non-residents earning rental income from Canadian property are subject to a 25% withholding tax on gross rental income, but there is an option to elect to be taxed on net income at marginal rates. 

• Bank and Investment Accounts: Inform your financial institutions of your change in residency status to ensure proper withholding taxes are applied. 

• RRSP Contributions: Maximize your RRSP contributions before leaving and inform your financial institutions about your change in residency status. 

• TFSA Accounts: You can contribute to your TFSA before leaving, but not after you become a non-resident. 

• RESP Contributions: You can continue making RESP contributions if the beneficiary remains a resident in Canada. 
• Business Ownership: If you own a Canadian corporation, your emigration could affect its status and your ability to claim certain tax benefits.