Canada’s departure tax is a deemed disposition — a fair-market-value settlement of accrued gains on non-exempt assets on the day you cease to be a tax resident. Under current CRA rules (as of August 2026), Canadian real estate and registered accounts such as RRSPs and TFSAs are fully exempt, which is why most emigrants are not affected at all.
In August 2026, a Globe and Mail advisor column pushed back on a persistent myth — that Canada charges an “exit tax” as a penalty for leaving. As the column put it, the departure tax is “not an extra tax”: it would have been owed eventually even if you stayed; leaving simply pulls the settlement date forward. With emigration a recurring reality for internationally mobile families, here is how the rule actually works — based on the Canada Revenue Agency’s own rules.
Who counts as an emigrant
Under CRA rules, you generally become an emigrant for income tax purposes when you leave Canada to live in another country and sever your residential ties — disposing of or giving up your Canadian home and establishing a permanent one abroad, with your spouse or common-law partner and dependants leaving, and personal property and social ties moving with you. Keep your main ties, and you usually remain a factual resident of Canada. If a tax treaty makes you a resident of your new country, you may instead be a deemed non-resident — subject to the same rules as an emigrant.
What the departure tax is
On the day you cease to be a Canadian tax resident, the CRA treats you as having sold certain types of property at fair market value and immediately reacquired them at the same price. This is a deemed disposition. No sale happens and no money changes hands, but the accrued capital gain becomes taxable in your departure-year return — that is the departure tax.
What is exempt
The exemptions are broad, and they cover where most people’s wealth actually sits. Per the CRA, deemed disposition does not apply to: Canadian real or immovable property, Canadian resource and timber resource property; Canadian business property (including inventory) where the business runs through a permanent establishment in Canada; the whole registered-plan family — pension plans, annuities, RRSPs, RRIFs, RESPs, RDSPs, TFSAs, pooled and deferred plans — plus interests in Canadian life insurance policies (other than segregated fund policies), as listed under the Income Tax Act’s “excluded right or interest” definition. A short-term resident rule adds another layer: if you were a Canadian tax resident for 60 months or less in the 10 years before leaving, property you owned when you last became a resident (or inherited afterward) is also exempt.
What typically remains in scope: shares and other non-registered investments, jewellery, paintings and collections — the assets whose accrued gains have not yet met a taxing point.
The paperwork
| Form | What it does | When it applies (CRA) |
|---|---|---|
| T1243 | Calculates and reports the deemed disposition; gains carry to Schedule 3 | Any deemed disposition of non-exempt property |
| T1161 | List of properties inside and outside Canada | FMV of all property on departure exceeds $25,000 (cash and registered plans excluded) |
| T2061A | Election to bring otherwise-exempt property into the deemed disposition | Voluntary, useful in some planning situations |
The CRA also asks emigrants to notify Canadian payers and financial institutions of their non-resident status, and to record the departure date on the final return.
Frequently asked questions
Do I pay departure tax on my home in Canada when I leave? No. Canadian real property is exempt from the deemed disposition, so your home is not treated as sold on departure. Tax on an actual later sale as a non-resident is governed by a separate set of rules outside the departure tax.
What happens to my RRSP and TFSA? Nothing at departure. The entire registered-plan family — RRSPs, RRIFs, RESPs, RDSPs, TFSAs, pensions and annuities — sits on the exemption list under the Income Tax Act’s “excluded right or interest” definition.
I only lived in Canada for a few years — am I caught? There is a short-term resident rule: if you were a Canadian tax resident for 60 months or less in the 10 years before leaving, property you owned when you last became a resident (or inherited afterward) is also exempt. The rule mainly reaches long-term residents with accrued gains in non-registered assets.
Zagdim’s View
The Globe Advisor column’s framing holds up against the rulebook: because Canadian real estate and registered accounts are exempt, the departure tax misses most emigrants entirely. Planning attention belongs on the accrued gains in non-exempt assets — typically non-registered investment portfolios — and on the departure date itself, which fixes both the valuation moment and the tax year in which the settlement lands.
(Rules as of August 2026; the CRA’s official pages govern.)
References
CRA — Leaving Canada (emigrants)
CRA — Dispositions of property for emigrants of Canada
The Globe and Mail — Canada’s exit tax is not an extra tax
