What happens if Form T1243 is filed late?
The departure-year return it belongs to is late, and the general late-filing penalty applies to that return. For the 2025 tax year it is five per cent of the balance owing plus one per cent of that balance for each full month the return is outstanding, capped at twelve months. Interest is separate and compounds daily on an unpaid balance; the penalty itself does not compound. There is a practical cost as well, and it is often the larger one: a departure computation prepared late has to be supported by values as at a day that may be years in the past.
Is there a penalty if the deemed sale produced no gain?
The general late-filing penalty is a percentage of the balance owing, so where the departure computation produces nothing to pay, that penalty produces nothing either. What you still have is an open year and no established figures. The deemed disposition also sets the cost position you carry forward, so a year left unfiled leaves the assets without a documented starting point for everything that happens to them afterwards. The work of filing a nil departure year is the same work as filing a taxable one, and the evidence for it only gets harder to obtain.
How much is the late filing penalty on a 2025 return?
Five per cent of the balance owing, plus one per cent of that balance for each full month the return is late, to a maximum of twelve months, for the 2025 tax year. A higher rate of ten per cent plus two per cent a month, to a maximum of twenty months, applies where the CRA has issued a demand to file and has charged a late-filing penalty in any of the three preceding tax years. Neither penalty compounds. Interest, charged on an unpaid balance, does compound daily, which is why settling the balance and finishing the paperwork are separate decisions.
Does the higher repeat penalty rate apply to my departure year?
Only if both parts of the condition are met: the CRA issued a demand to file, and it charged a late-filing penalty in any of the three preceding tax years. Having filed late before is not enough on its own, and the step up is not a doubling of the exposure. The way to answer it is to read the assessment history rather than to assume, because the record shows what was demanded and what was actually charged. On a departure year that has sat unfiled for a long time, that history is usually the first thing we ask for.
Does interest build up on unpaid departure tax?
Yes, and it compounds daily on the unpaid balance, which makes it the part of the exposure that keeps growing while a computation is being assembled. The penalty for late filing does not behave that way; it is fixed by the length of the delay and capped. That difference sets the order of work on an old departure year. Where a balance is likely, dealing with it on a conservative estimate stops interest accumulating during the months the valuation evidence is being collected, and the computation is then finalised and filed without the cost of the delay compounding underneath it.
Can I still file a departure tax calculation years later?
It can be done, and the obstacle is evidence rather than permission. The computation has to be built on values as at the day residency ended, so a filing prepared years afterwards means establishing what a holding was worth on a date long past. For listed securities that is recoverable. For a private company or an unusual asset it means financial statements from that period, transactions around that date, and sometimes a retrospective appraisal that has to be defensible. We assemble that material first, because a figure filed without support behind it is the part of a late departure year most likely to be examined.
What is the US exit tax and who actually pays it?
How much it is depends on your unrealised gains rather than on a rate, because it is the expatriation regime rather than a fee. A citizen who gives up citizenship, or a long-term permanent resident whose status ends, is tested against three conditions; meet any one and you are a covered expatriate, treated as having sold your worldwide assets the day before you left, with an exclusion for a slice of the resulting net gain — $890,000 for 2025. Deferred compensation, retirement accounts and interests in trusts are handled under separate rules rather than the deemed sale. Form 8854 reports it. See Form 8854.
What is a "dual-status alien spouse", and why is my software asking?
The question comes from the filing-status screens, and it is asking whether your spouse was a non-resident or part-year resident for the year — because if they were, a joint return is not available by default. An election exists to treat a non-resident spouse as a resident for the whole year, which unlocks joint filing at the price of bringing their worldwide income into the US return and their accounts into its reporting. See a US person with a non-resident spouse.
