Leaving Canada, departure (emigration) tax — what do I file?

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Answer

Which assets are inside the deemed disposition and which keep their Canadian tax hooks instead is the whole planning question. The filing set follows from the position, so the position is established first and the forms follow.

What actually has to be filed

Which assets are inside the deemed disposition and which keep their Canadian tax hooks instead is the whole planning question. Losses can be realised against it, an election can defer payment against security, and the departure date itself is a variable rather than a fact.

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The exception that catches people

On the day you cease to be a Canadian resident, most capital property is treated as sold at market value — tax on a sale that never happened, in a year you may have had no cash.

Leaving Canada, departure (emigration) tax — what do I file?
ItemAmount
Cost of the propertyC$286,000
Value on the departure dayC$549,120
Accrued gain treated as realisedC$263,120
Amount assumed to enter incomeC$131,560
Tax at an assumed 38%C$49,993

C$49,993 becomes payable in a year with no sale and no cash. That is what makes the departure date a planning variable: losses realised before it, an election to defer payment against security, and defensible valuations for anything private all change this number.

An illustration, not a client file. The sums are chosen for legibility and the thresholds are stated for the example alone — nothing reaches a filing until it has been confirmed at source for your own year.

Where to go from here

The full treatment — who it binds, the deadline, the penalty and the fixed fee — is on Leaving Canada — departure (emigration) tax. Ask before the move rather than after it, because most of the useful options expire on the date.

Reviewed for the 2025 and 2026 filing seasons by Udit Gupta, Cross-Border Tax Expert, Legal Quotient Consultants. Published as general information. For a position on your own file, call the 24-hour helpline.

Tax for leaving Canada, in practice

Most readers of this page are looking for tax for leaving Canada. What follows sets out how it works for leaving Canada: who is caught by it, what has to be filed, and what the work costs, agreed before it begins.

People also search for: emigration tax.

Files that look like this one

Case study 1

Filing a departure return for a listed share portfolio

The client held a single brokerage account and assumed the departure return would be a formality. The account held positions acquired over many years, some transferred in from an earlier employer plan with no cost recorded. We rebuilt the cost base holding by holding, struck the departure-day values from dated market records, and set the deemed disposition out on a schedule that can be read without the underlying statements. The engagement produced a filed departure return and a schedule that stands on its own if the year is ever examined.

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Case study 2

Lodging the deferral election with security in place

The deemed disposition produced a charge the client could not fund without selling the very asset it was computed on. We prepared the election with the return rather than as an afterthought, identified security the revenue authority would accept, and documented the valuation that the deferred amount rests on. The engagement produced a filed election, a deferral running against posted security, and a note recording what will bring the deferred amount into charge and what evidence will be needed then.

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Case study 3

Setting realised losses against the deemed gains

Two holdings were well under water and the client had been keeping them out of sentiment. Because the departure year was still open, the loss could be brought into the same return as the deemed gains. We checked the composition of the deemed disposition first, confirmed the set-off would hold, then reported both sides on one schedule with the sequence of events shown. The engagement produced a departure return in which the gains and the losses are visibly part of a single computation rather than two unrelated entries.

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Case study 4

Reporting an emigration that went unfiled for several years

The client had moved for work, kept filing as though nothing had changed for a while, then stopped filing altogether. We established the date residency ceased from tenancy, employment and travel records of the time, computed the deemed disposition on that day, and filed the departure return late. The earlier returns were corrected to match. The engagement produced one consistent departure date across every filing and a written chronology of the evidence behind it.

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Case study 5

Amending a departure return that swept in too much

A previously filed return had treated every asset the client owned as caught by the deemed disposition, including property that keeps its Canadian tax hooks and would be taxed here on an actual sale. The result was tax reported years early on property still held. We identified which assets belonged on each side, amended the return to report only what was inside the deemed disposition, and set out the treatment of the remainder from the departure date onward. The engagement produced a corrected filing and a clear split between the two streams.

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Case study 6

Valuing private company shares for the departure schedule

The largest item in the deemed disposition was a minority stake in a private company with no market price. The figure reported would be the figure defended if the year were ever examined, so it could not be an estimate. We assembled the financial information available at the departure date, obtained a valuation on that basis, and filed the schedule with the reasoning attached. The engagement produced a supported figure in the departure return and a valuation file kept alongside it.

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Case study 7

Leaving Canada — the Bill You Get for Assets You Still Own

Emigrating triggers a deemed disposition of most holdings, which produces tax on gains never realised in cash. The file values the property, identifies what is excluded, and looks at whether security can be posted rather than the tax paid outright.

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Case study 8

Putting a Foreign Hire on a Canadian Payroll

The obligation sits on the payer, and the payer is liable for what it failed to withhold. Registration, the residence question and any treaty exemption are settled before the first pay run rather than after.

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Leaving Canada — departure (emigration) tax: further questions

What do I actually file in the year I leave Canada?

A part-year return for the year of departure, showing the date you ceased to be resident and reporting the deemed disposition that the date triggers. Around it sit the schedules that support the figures: what was inside the deemed disposition, what it cost, and what it was worth on the departure day. If the tax is to be deferred, the election goes in with the return rather than afterwards. The order matters. The position on residency and on which assets are caught is settled first, and the filing set is then assembled to match it.

Do I have to list everything I own on the departure return?

No. The return reports the property that falls inside the deemed disposition, and that is not the same as everything you own. Some assets keep their Canadian tax hooks instead and stay taxable here on an actual sale later, which means they are dealt with under the non-resident rules in the year they are sold rather than in the departure return. Working out which side each asset falls on is the substance of the job, and it is what makes two departure returns with similar asset lists look nothing alike.

How can I defer the departure tax if nothing was sold?

An election filed with the departure return can defer the tax against security acceptable to the revenue authority, so the charge does not have to be funded in a year when no sale happened. It is a deferral rather than a forgiveness: the amount stays attached to the property and falls due on an actual disposition. What usually decides whether this is workable is the security itself, meaning what you are able to post and whether posting it suits you better than selling something to raise the tax.

Can I use my losses against the departure tax?

Losses can be realised against the deemed gains, but whether they are usable in the same return depends on how the deemed disposition is composed and on what was disposed of when. This is why the asset split is settled before the filing rather than after it: once the year has closed, the room to arrange a loss against a gain has closed with it. Where the loss is already there, the return has to show both sides clearly enough that the set-off is not queried on assessment.

What happens to my Canadian rental property when I emigrate?

Property that keeps its Canadian tax hooks is generally outside the deemed disposition, because Canada does not need to tax it on the way out: it remains within reach when it is actually sold. So it is not reported as a deemed sale in the departure return, and instead falls under the non-resident regime from the departure date onward. Two filing streams therefore start on the same date, and getting the split wrong in the departure return tends to surface years later, when the property is finally sold.

What if I left years ago and never reported my departure?

It is filed late rather than not at all. The first task is the date: establishing when residency actually ceased, from the documents of the time rather than from what is remembered now. The deemed disposition is then computed on that day's values, which is harder retrospectively but rarely impossible for anything with a market price. The return is filed on that basis and the intervening years are brought into line with it. What the work produces is a settled departure date and a filing history that no longer contradicts itself.

When does my Canadian tax residency actually end?

On the day your residential ties are severed, which is a question of fact rather than of the date on the boarding pass. The CRA weighs the significant ties first — a dwelling available to you, a spouse or common-law partner, and dependants in Canada — then secondary ties such as licences, memberships, accounts and provincial coverage. Keeping a home available while your family stays is the pattern that most often means residency never ended at all. See departure tax on leaving Canada.

Do I pay Canadian tax if I live abroad?

Only if you remain a Canadian tax resident. Residency follows your ties rather than your address, so leaving while your home and family stay usually does not end it. Non-residents remain taxable on Canadian-source income — employment or business income earned in Canada, dispositions of taxable Canadian property, and passive amounts subject to withholding. The year you leave is its own exercise, with a deemed disposition and its own schedules. See leaving Canada.

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