Canada sits 215th out of 217 in our world ranking, with a FiScore of 2.9 out of 10. It is one of the two most heavily taxed countries we cover.
It also does something the United Kingdom does not: Canada taxes you for leaving.
The deemed disposition
Under section 128.1 of the Income Tax Act, when you cease to be a Canadian tax resident you are treated as having sold your worldwide capital property at fair market value on the day you leave, and taxed on the resulting gain.
You have not sold anything. You have not received a dollar. You owe tax anyway.
This is the single most important fact about leaving Canada, and it is the opposite of the British position, where gains are only taxed on an actual sale.
What escapes it
The list of exemptions is where the planning happens.
| Excluded from the deemed disposition |
|---|
| Canadian real property |
| RRSP, RRIF, TFSA, DPSP, RPP |
| Personal-use property under 10,000 dollars |
Canadian real estate is not deemed disposed of, but it stays inside the Canadian net: when you eventually sell it as a non-resident, Canada taxes the gain then.
Registered plans are untouched on departure, though withdrawals afterwards attract Part XIII withholding tax.
Everything else, shares, foreign property, private company interests, crypto, is on the table.
The forms, and the deadline
Three forms matter, and they go with your final Canadian return for the year of departure.
- T1243 computes the deemed gains.
- T1161 lists property with a fair market value above 25,000 dollars, and it is required even where no tax arises.
- T1244 makes the election to defer payment of the departure tax until the property is actually sold, generally against adequate security.
The filing deadline is 30 April of the following year, or 15 June if you or your spouse carried on a business.
That deferral election is the most useful tool on this page. It does not remove the tax, it removes the cash-flow problem of paying tax on a sale that has not happened.
The 60-month rule, which changes everything for newcomers
Here is the exemption almost nobody mentions, and it is decisive for a large group of people.
If you were resident in Canada for fewer than 60 months during the ten years before you leave, property you owned before you arrived escapes the departure tax entirely.
Someone who moved to Canada for a four-year contract and leaves again does not pay departure tax on the portfolio they brought with them. Someone who stayed six years does.
If you arrived recently and are considering leaving, that five-year line is worth putting in the calendar before anything else.
Canada against the UK and the US
Three countries, three completely different exits.
Canada taxes unrealised gains on the day you leave, with exemptions and a deferral election.
The United Kingdom does not tax you for leaving at all, but claws back gains realised abroad if you return within five years.
The United States does not let you leave: citizenship-based taxation follows you until you renounce, and renouncing has its own exit tax.
Nobody should generalise from one to another, and people do it constantly.
The order of operations
- Check the 60-month rule first. It may make everything else irrelevant.
- Value your assets properly at the departure date. The deemed disposition is calculated on fair market value, and a defensible valuation is your protection.
- Decide about the deferral election, and what security you can provide.
- Consider what to realise before leaving, and what to hold, because Canadian rates on the departure gain may be better or worse than what awaits you.
- Then pick the destination, and check the treaty.
Sources
Rules verified in August 2026 against section 128.1 of the Income Tax Act and Canada Revenue Agency published guidance on forms T1161, T1243 and T1244. An error reported to us gets fixed.
This page informs, it does not advise. Departure tax is exactly where general information stops being enough: talk to a Canadian cross-border specialist before you go, as our terms of use set out.