Eligibility & suitability
Who can qualify
- People whose actual facts support cessation of Canadian tax residence
Restrictions & unsuitable cases
- A paper residence abroad while the factual Canadian-residence test remains met
Application process & timeline
A tax departure is a coordinated change of facts and filings. The dates below are legal or project dependencies, not a government approval promise.
01Establish the intended residence changeBefore fixing the departure date
Map the home, spouse and dependants, travel pattern, employment and intended destination. The evidence must support both ending Canadian residence and establishing any new residence claimed. A new permit alone does not establish either conclusion.
Documents & evidence
- Residence timeline
- Homes and leases
- Family and employment facts
- Counting days while ignoring significant residential ties
02Inventory and value the assetsBefore departure; valuation work is variable
Identify ownership, tax cost, market value, restrictions and the applicable deemed-disposal exception for each asset. Obtain a reasoned private-company valuation where needed and model the tax and liquidity consequences before undertaking transfers.
Documents & evidence
- Asset schedule
- Share registers and accounts
- Cost and valuation records
- Using book value as market value
- Moving assets before checking the tax consequence
03Coordinate corporate and destination changesBefore implementing management or ownership changes
Determine what remains in Canada and which genuine functions move. Align corporate authority, contracts, banking and the receiving country’s tax basis. Corporate migration and the shareholder’s emigration are separate events.
Documents & evidence
- Management map
- Intercompany contracts
- Destination tax analysis
- Assuming the owner’s move changes a company’s residence automatically
04Complete departure-year reportingRelevant annual filing deadline; T1244 by 30 April following emigration
Prepare the departure return, T1243 and any required T1161. If deferring departure tax, arrange the election and security in time. The specific return-year forms and instructions control.
Documents & evidence
- Departure return
- T1243
- T1161 if required
- T1244 and security if elected
- Confusing the CAD 25,000 information threshold with a tax exemption
05Monitor continuing income and later disposalsAfter departure and whenever an asset is sold
Maintain nonresident withholding and any continuing returns. A later disposal can release deferred-tax obligations; notify the responsible preparer before a sale. Retain the original departure values and election records for future-country credits and audits.
Documents & evidence
- Withholding records
- Asset sale documents
- Deferral correspondence
- Losing access to Canadian correspondence or sale records
Document checklist
Track your preparation in this browser. Final requirements depend on the route and filing authority.
Leaving physically and ceasing residence are not identical
CRA places significant weight on a Canadian home, spouse or partner and dependants. Secondary ties and the complete facts also matter. A treaty can change the outcome in a dual-residence case, but a foreign permit alone is not a treaty analysis.
Write down the intended timeline: your move, the family’s move, the availability of each home, the start of residence abroad and changes to daily business management. Inconsistent dates create avoidable uncertainty.
Departure can tax a gain without a sale
Canada treats specified property as disposed of at fair market value on emigration, with exclusions and special rules. Private-company shares and investment portfolios therefore deserve attention before departure. The relevant tax is on the applicable gain, not automatically the entire asset value.
An asset-by-asset schedule should identify cost, value, ownership, exemptions and the destination country’s treatment. A valuation is especially important where the wealth is concentrated in an unlisted business or difficult-to-price assets.
Cash flow and continuing obligations
Some departure-tax liabilities can be deferred by election, with deadlines and security conditions. That is not the same as eliminating the liability. Canadian-source income can remain taxable after departure through returns or withholding.
Notify financial institutions and Canadian payers when status changes. Consider registered accounts, trusts, property, corporate ownership and benefits separately. Tax treatment in the destination may differ from the familiar Canadian treatment.
A sensible implementation sequence
- Confirm the intended residence outcome in both countries.
- Inventory assets and obtain valuations before records become difficult to reconstruct.
- Model departure liability and any permitted deferral.
- Align company decisions, contracts, payroll and banking with the actual operating plan.
- Prepare departure-year reporting and document continuing Canadian income.
- Keep evidence of the move and revisit assumptions if the family or business returns.
Plan around the whole move
A lower future tax bill is only part of the decision. Compare the departure cost, ongoing compliance, home and school costs, and the time needed to build a satisfying life elsewhere. We can help turn that comparison into a coordinated relocation and business implementation plan.
Departure tax: assets, exceptions and valuation
On emigration, Canada generally treats specified property as sold and reacquired at fair market value even though no buyer pays cash. Important exceptions include Canadian real property, certain Canadian business assets and excluded rights such as registered plans. A special exception can apply to qualifying property of a person resident for no more than sixty months in the preceding ten years.
Do not use one value for every purpose without checking it. A private-company share valuation can depend on operating assets, goodwill, shareholder rights and debt. A portfolio needs cost and market-value records; crypto needs a defensible inventory and valuation trail. The departure calculation and the next country’s acquisition basis may differ.
Three filings that answer different questions
Form T1243 calculates deemed-disposal gains and losses. Form T1161 is an information list where the relevant property-value threshold exceeds CAD 25,000, subject to its exclusions; that threshold is not an exemption from departure tax. Form T1244 makes the separate payment-deferral election.
CRA states that T1244 must be elected by 30 April of the following year. Security is generally required when the relevant federal tax exceeds CAD 16,500, with a different Quebec amount and possible provincial security. Deferral postpones payment rather than erasing the gain. An eventual sale can trigger payment of deferred tax.
The owner’s departure does not migrate the company
A Canadian-incorporated company may remain Canadian resident after its shareholder leaves. Equally, moving board functions can affect corporate residence independently of the individual. Review deemed year-end, corporate migration, withholding and shareholder consequences before changing the company’s decision-making or legal domicile.
For a retained Canadian business, identify continuing directors, employees, premises and contracts. For a proposed foreign operation, document its role and intercompany relationship. The client should know which Canadian filings continue and who is responsible for them after the personal departure.
Sources & research notes5 references
Sources supporting this guide. Research draft awaiting editorial review.