What is departure tax when leaving Canada?

How the deemed disposition works

Emigration triggers a deemed disposition: the Income Tax Act treats you as having sold most capital property — foreign real estate, private company shares, portfolio investments — at fair market value on the day residency ends, and immediately reacquired it at that value. The accrued gain lands on your departure-year return.

Excluded assets keep their Canadian tax hooks instead: Canadian real property, Canadian business property, RRSPs/RRIFs and similar deferred plans are not deemed sold, because Canada retains the right to tax them later.

Reporting and the security election

Two forms document the exit: T1161 lists all reportable property over the $25,000 threshold, and T1243 computes the deemed dispositions. Missing the T1161 costs up to $2,500 even when no tax is owing.

You do not have to pay the departure tax immediately: an election with acceptable security defers payment until the property is actually sold. For illiquid assets like private company shares, that election is often the difference between a manageable exit and a forced sale.

Planning the exit properly

The levers are timing and valuation: realizing losses before departure to absorb deemed gains, crystallizing the lifetime capital gains exemption on qualifying shares while still resident, choosing the departure date around vesting and distribution events, and defensible fair-market valuations for anything the CRA might re-price. After arrival, the new country typically gives a fresh cost basis — so the two systems, sequenced correctly, tax each dollar of gain exactly once.