How to Declare Non-Resident Status in Canada: Departure Tax

To declare non-resident status in Canada, you cut your residential ties to the country, enter a departure date on a final T1 return for the year you leave, and settle the “departure tax” the Canada Revenue Agency charges on the unrealized gains in most of your property. It is a tax step, not an immigration one, and the CRA decides whether you have actually left based on the ties you keep, not on where your passport says you live.

Cut the Residential Ties the CRA Looks At

There is no form that turns you into a non-resident. The CRA looks at the picture of your connections to Canada and decides. What matters most are the three “significant residential ties,” and keeping any one of them is usually enough to keep you classified as a resident:

A home in Canada available for your use, whether you own it, rent it, or have access to it through a family member
A spouse or common-law partner who stays in Canada
Dependants who stay in Canada

Leave with a home available and a spouse still living in it and the CRA will almost certainly treat you as a continuing resident regardless of where you actually sleep.¹

Secondary ties are weighed together rather than one at a time: a car or furniture stored in Canada, memberships in Canadian clubs or religious organizations, Canadian bank accounts and credit cards, a provincial driver’s licence, and provincial health coverage.² Any single one is fine. Enough of them stacked together and the CRA may conclude you never really left.

The practical checklist for someone actually leaving looks like this: dispose of or rent out your Canadian home on arm’s-length terms, take your spouse and dependants with you, close or hand back your provincial health card and driver’s licence, cancel memberships that tie you to a Canadian location, and tell your Canadian banks and brokerages that you are no longer a resident so they apply the right withholding on your accounts.

The 183-Day Trap and Treaty Tie-Breakers

Two things can undo a clean departure. First, even if you have cut your ties, physically staying in Canada for 183 days or more in a tax year makes you a deemed resident. Every day or partial day counts, whether you spent it at a Canadian university, working, or on vacation. Cross-border commuters who live in the United States and work in Canada are the one exception.³

Second, if you keep significant ties in Canada but also become a tax resident of a country Canada has a tax treaty with, the treaty’s tie-breaker rules decide which country gets you. If the treaty assigns you to the other country, you are a “deemed non-resident” of Canada and taxed like any other non-resident even though your Canadian ties are still intact.⁴

File a Departure Return

The formal notification is a T1 return for the year you leave. On page one, in the Residence Information area, you write in the date you departed Canada. That splits your tax year into two periods: while you were a resident, Canada taxes your worldwide income; after your departure date, only your Canadian-source income.⁵

The deadline is the usual one, typically April 30 of the following year. If you owe no tax, filing is not strictly mandatory, but you should still tell the CRA the date you left. Silence often means the CRA keeps treating you as a resident and keeps expecting worldwide-income returns.

If you want the CRA’s opinion in writing before you go, file Form NR73, Determination of Residency Status (Leaving Canada). It asks detailed questions about family, housing, employment, and Canadian accounts. Filing is optional and the opinion is not legally binding in a dispute, but it tells you how the agency sees your situation.⁶

Pay the Departure Tax

This is the part that catches people off guard. On the day you leave, the CRA treats you as if you sold most of your property at fair market value, even though nothing has actually been sold. Any unrealized capital gains become taxable on your final return. The CRA calls it a “deemed disposition”; in effect it is a departure tax on gains that built up while you lived here.⁷

As of January 1, 2026, the capital gains inclusion rate is one-half on the first $250,000 of capital gains realized annually by an individual, and two-thirds on amounts above that threshold.⁸ For someone leaving with a large non-registered portfolio sitting on years of growth, the departure-day bill can be substantial.

What Is Not Caught

Not everything triggers the deemed disposition. The main exclusions are Canadian real property such as a house or cottage in Canada, property used in a Canadian business that operates through a permanent establishment, and registered accounts like RRSPs and RRIFs. These stay inside Canada’s tax system after you leave, so the CRA does not need to tax them on the way out.⁷

The Forms and the Penalties

You report the deemed-disposition gains and losses on Form T1243 and carry those amounts to Schedule 3 on your departure return. If the total fair market value of everything you owned when you left was more than $25,000, you also have to file Form T1161, List of Properties by an Emigrant of Canada. Missing the T1161 deadline costs $25 per day, with a minimum of $100 and a maximum of $2,500.⁷

Deferring the Bill

You do not have to pay the departure tax right away. Filing Form T1244 by April 30 of the year after you emigrate lets you elect to defer it. If the federal tax owing on the deemed disposition is more than $16,500 ($13,777.50 for former Quebec residents), you have to post acceptable security with the CRA. Provincial or territorial tax may require additional security.⁷

What Happens to Your Registered Accounts

Your RRSP or RRIF can stay open after you leave, and the money inside keeps growing tax-sheltered. When you withdraw as a non-resident, the standard withholding rate is 25%, though a tax treaty with your new country may bring that down.⁹ You cannot make new RRSP contributions while a non-resident because you stop building contribution room without Canadian earned income.

TFSAs are where emigrants get hurt. You can leave an existing TFSA open and its growth remains tax-free in Canada, but do not contribute to it while you are a non-resident. The CRA charges 1% per month on any non-resident contribution for as long as it stays in the account, and if that contribution also puts you over your available room, a second 1% monthly penalty stacks on top.¹⁰

Canadian Income After You Leave

Once you are a non-resident, Canada taxes only your Canadian-source income: employment income for work done in Canada, rental income from Canadian property, business income from a permanent establishment here, and certain pension payments.¹¹

Most of that income is caught by Part XIII withholding tax. The standard rate is 25%, and the payer — your bank, pension administrator, tenant — withholds it before the money reaches you. Common categories include dividends, rental payments, pension payments, CPP and OAS benefits, RRSP withdrawals, and royalties.¹² Regular arm’s-length bank interest is generally exempt; interest from a related party or participating debt interest is not.¹³

If Canada has a tax treaty with your new country, the withholding rate on many types of income drops, often to 15% or less on pensions and dividends. The reduced rate can be applied at source, but confirming your treaty entitlement is on you.

Selling Canadian Real Property Later

Canadian real property escapes the departure tax, but selling it as a non-resident has its own compliance step. Before or shortly after closing, you have to notify the CRA and request a certificate of compliance on Form T2062. The CRA recommends filing at least 30 days before the sale. Closing without notifying the CRA within 10 days costs $25 per day, up to $2,500.¹⁴

The buyer carries the real risk: without a certificate, they are personally liable to remit 25% of the purchase price to the CRA on your behalf. Buyers’ lawyers know this, so they routinely hold back a portion of the sale proceeds in trust until the certificate arrives, which can take months.¹⁵

Benefits You Lose on Departure

Non-residents are not eligible for the GST/HST credit, which requires Canadian residency during the month before and the month of each payment.¹⁶ The Canada Child Benefit also requires Canadian residency as a basic condition.¹⁷ Keep collecting either after you leave and the CRA will claw back the overpayment.

1
Canada Revenue Agency (CRA). Income Tax Folio S5-F1-C1, Determining an Individual’s Residence Status
2
Canada Revenue Agency. Determining Your Residency Status
3
Canada Revenue Agency. Deemed Residents of Canada
4
Canada Revenue Agency (CRA). Factual Residents – Temporarily Outside of Canada
5
Canada Revenue Agency. Leaving Canada (Emigrants)
6
Canada Revenue Agency (CRA). NR73 Determination of Residency Status (Leaving Canada)
7
Canada.ca. Dispositions of Property for Emigrants of Canada
8
Government of Canada. Government of Canada Announces Deferral in Implementation of Change to Capital Gains Inclusion Rate
9
Canada.ca. Tax Rates on Withdrawals
10
Government of Canada. If You Owe Tax on Non-Resident TFSA Contributions
11
Canada Revenue Agency (CRA). Non-Residents of Canada
12
Canada Revenue Agency. Applicable Rate of Part XIII Tax on Amounts Paid or Credited to Persons in Countries With Which Canada Has a Tax Convention
13
Canada Revenue Agency (CRA). T4058 Non-Residents and Income Tax 2024
14
Canada Revenue Agency. Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents of Canada – Section 116
15
Department of Justice Canada. Income Tax Act – Section 116
16
Canada Revenue Agency (CRA). GST/HST Credit – Who Is Eligible
17
Canada Revenue Agency. Who Can Apply – Canada Child Benefit (CCB)