Thinking of leaving Canada for good?
An overview of financial issues to take into account.
May 13th, 2025
According to the Government of Canada, about three million Canadians live in other countries. Most of them are there to go to school, work or spend a few months of the year when retired, while remaining Canadian citizens.
But others have chosen to move for good and become permanent residents – or even citizens – of another country. At that point, they have to take a number of factors into account, especially when it comes to taxes, which is why professional advice is strongly recommended for anyone thinking of making this kind of change.
That said, here is an overview of the ground rules.
What is a Canadian non-resident?
For tax purposes, you would generally be considered a non-resident if you have severed all residential ties with Canada. The principle is quite simple, as shown in the table below, but it’s important to know that the government takes many factors into consideration before determining your status.
These include whether you continue to own or rent a home in Canada, where your spouse and dependents live, the economic and social ties you maintain with Canada (your job, financial accounts, sports and social activities); your personal property in Canada (furniture, clothing, vehicle, etc.); and any other link such as your health insurance or driver’s licence.
In other words, to become a non-resident of Canada, you must really cut your ties. If you don’t, the government might instead consider you to be a dual resident, de facto resident or deemed resident, with each status having different tax implications.
How does that change things?
Being deemed a non-resident of Canada would primarily affect two significant components of your personal finances: your taxes and your estate.
From a taxation standpoint, you would have to pay a departure tax. In effect, the government would proceed as if you had disposed of all your Canadian assets at their fair market value. This is known as a “deemed disposal.” So you would have to pay tax based on realized capital gains. There are exceptions to this rule, notably for registered accounts (registered retirement savings plan, registered retirement income fund, etc.), registered pension plans, annuities and your principal residence if it is sold before you leave. However, if you have a lot of non-registered investments, or perhaps a second home that has appreciated in value, the tax bill could be steep.
After that, your income from Canadian sources would continue to be taxed in Canada every year and would be subject to a withholding tax of 25%, while your income from sources outside Canada would generally be taxed in your country of residence. However, depending on the nature of your investments and the country of residence, there is a risk of double taxation here: it’s important to get good advice to minimize or avoid this. On the other hand, many countries have signed tax agreements with Canada to avoid putting non-residents at a disadvantage. Depending on the country, these agreements might substantially reduce the withholding tax, or even exempt at least part of your income.
At death
Settling an “ordinary” estate is already quite a long and complicated process. Settling a non-resident’s estate can obviously be even more involved. Which laws apply to your estate: those of Canada, those of your country of residence, or both? Will the provisions of your will be recognized in your country of residence? The answer to this question would depend on the country and could definitely have a major impact on your heirs. As well, it’s important to realize that while there is no estate tax in Canada (it’s the person who died who is taxed), estate taxes are in force in many other places. For example, when a tax resident of France dies, the French State could require payment of an estate tax on the person’s worldwide assets before any distributions are made to the heirs.
Something else to consider: the estate itself, which includes all of your assets before distribution according to your wishes, is an entity unto itself that is generally deemed to be a resident of the same country as the executor or liquidator. Imagine, for instance, that you have become a resident of Portugal, your son still lives in Canada, but your daughter, who you have made your executor, lives in the United States: the estate itself could be subject to U.S. legislation.
Complicated? Yes, it can be. So it might be in your interest to have your current will reviewed by a notary who is familiar with this type of situation, or even have a will drawn up in each country – and above all to get reliable advice about estate and tax law.
Other things to consider
Beyond matters of taxation or inheritance, the Canadian government recommends that anyone wishing to become a non-resident think carefully about all the factors associated with this life change: adapting to a new culture, safety, access to services, legislation and enforcement, foreign currency exchange risk, and much more.
It could also be relevant to review the other components of your financial planning, since this choice could significantly affect other areas as well, such as your insurance needs or retirement planning.
In short, enjoy dreaming about your new life, but don’t forget to seek out good advice.
The following sources were used to prepare this article:
Citizen Abroad Tax Advisors, “Frequently asked questions by travelers.”
Conseiller.ca, “Prendre sa retraite à l’étranger : ce qu’il faut savoir.”
Fiduciary Trust Canada, “Cross-Border Executor Challenges.”
Government of Canada, “Living abroad – A Canadian’s guide to working, studying, volunteering or retiring in a foreign country”; “Non-residents of Canada”; “Non-Residents and Income Tax 2024.”
Intuit Turbotax, “The Ultimate Tax Guide For Non-Residents.”
Madan, “L’impôt sur les droits de succession des étrangers au Canada.”
Raymond Chabot Grant Thornton, “Leaving Canada: Avoid Unpleasant Tax Surprises”; “What Are the Tax Obligations Upon the Death of a Non-resident?.”
Servitax, “Selling your property in Canada as a non-resident? Here's what you need to know.”
