Departure tax isn’t some extra fee tacked on at the airport; it’s essentially Canada’s way of settling up before you go. When you emigrate from Canada and become a non-resident, that is, having sold most of the residential ties such as your house and that of your family, as well as changing your daily routine in a new country, the CRA will consider having sold some of your assets at that very moment. This has the capability of triggering taxes on any unrealized gains, even though you may be holding those stocks or properties.
According to the reports published in the past years, the number of Canadians going out is steadily increasing, with the past year recording more than 100,000 people leaving the country, and a significant number of them are not planning to do so. It not only happens to high-net-worth individuals, but even ordinary investors with a good portfolio can become victims.
The trick here is time: your non-resident status normally begins on the day you move out or when you get away to establish a residence in another country, whichever is later. And, on the event of your permanent departure, you will pay a final tax return on behalf of that part of the year during which you remained a resident, at which you will show world income to that date.
Deemed disposition means the CRA pretends you have sold your taxable assets at fair market value, the day you move out. Contemplate the sale of shares in your brokerage account, collectibles or even jewels, provided they are valuable enough. In case the value has increased since you purchased them, it is a capital gain, half of which (or more, under new regulations) is included in your income.
As of January 2026, the inclusion rate for capital gains jumped to two-thirds for amounts over $250,000 for individuals, up from the previous 50 percent. This change, aimed at ensuring fairer taxation, means bigger gains could hit harder now. An illustration of this is that, suppose your portfolio has improved by 300,000 in total, you would list 175,000 in your taxable revenue under the new rate, after the threshold. However, there is no need to panic because exemptions are allowed on matters such as principal residence, RRSPs, TFSAs and pension plans. In case your total assets are worth more than $25,000, it will be mandatory to fill in Form T1161 to justify them, and you will face a penalty of up to 2500 dollars.
Here’s a quick breakdown in a table to show how the inclusion rate affects a hypothetical $400,000 gain:
Gain Amount | Inclusion Rate (Pre-2026) | Taxable Amount (Pre-2026) | Inclusion Rate (2026+) | Taxable Amount (2026+) |
First $250,000 | 50% | $125,000 | 50% | $125,000 |
Next $150,000 | 50% | $75,000 | 66.67% | $100,000 |
Total | – | $200,000 | – | $225,000 |
Absolutely, but with some caveats. Non-registered investment accounts, like your everyday brokerage, don’t vanish when you leave. You can hold onto them, and any future income from Canadian sources – say, dividends from Canadian stocks – might still face withholding taxes, typically 25 percent for non-residents. However, tax treaties with countries like the UK or the US can reduce that to 15 percent or less.
The catch? Those accounts’ contents are subject to deemed disposition on departure, so you might owe capital gains tax upfront. After that, as a non-resident, you’ll only report Canadian-sourced gains to the CRA, but your new home country will tax your worldwide income. One common pitfall is forgetting to update your address with financial institutions; if you don’t, they might withhold at resident rates, causing mismatches later. And remember, you can’t contribute to TFSAs anymore once you’re out, though existing ones keep growing tax-free in Canada. You only have to watch for taxes in your new country.
After establishing residence in a foreign country, the sale of assets attracts taxation depending on whether you are a resident or not. In the case of Canadian property, such as a rental condo that you retained, you will pay capital gains tax on the gain in value since the date that you left and onwards. The buyer usually retains a quarter of the price of the sale unless you obtain a clearance certificate from the CRA stating that you have paid.
In case it is your previous homeland, you can still have your exemption provided it meets the qualifications, but only for the years you are residing in it. Research on tax compliance has shown that non-residents tend to ignore this, and thus, they will be taxed twice without receiving credits. Conversely, when you sell foreign assets after leaving the country, Canada will not usually tax the gains anymore, but puts the responsibility on your new home. It is good, but the coordination between systems is what is important in preventing overpayment.
The capital gains tax regime in your new country may be different – it may be in the form of a flat rate or with various exemptions – creating overlaps or gaps. An example of this is: When Canada considers that on leaving the country, you sold an asset and taxes the difference, but your new residence does not view that imaginary sale, you will end up taxing the same growth twice when you truly sell.
Tax treaties are helpful; Canada has a treaty with more than 90 countries to avoid double taxation and receive credits for taxes paid in other countries. However, there are cases of mismatch, particularly of time. According to a report by international tax organizations, approximately 20 percent of cross-border relocations have some kind of mismatch, which may incur a five-figure loss in additional charges if handled. This can be smoothed over by planning with elections to defer taxes or step-up cost bases, but it involves pre-planning.
Cross-border tax mistakes can cost five figures, even years later.
