Canada does not have a separate "exit tax" law, but it has something with the same effect. When you stop being a Canadian tax resident, the Income Tax Act treats you as having sold most of your property at fair market value on the day you leave, and as having bought it back at the same price. Any gain that results is taxed on your final resident return. This is what people call Canada's departure tax.
The rule exists because Canada taxes residents on worldwide gains but generally cannot tax non-residents on gains from foreign assets or most Canadian shares. Without the deemed sale, growth built up while you lived in Canada could escape Canadian tax entirely.
This guide covers when the rule applies, which assets it catches, how to report it and the options to defer payment, using the Canada Revenue Agency's (CRA) published guidance as of October 2026.
Key takeaways
- On the day you become a non-resident, most property is treated as sold at fair market value. Half of any net capital gain is taxable.
- Canadian real estate, registered plans such as RRSPs and TFSAs, and pensions are generally not caught.
- You report the deemed sale on Form T1243 and may need to list your property on Form T1161 if it is worth more than $25,000.
- You can defer payment of the tax, interest-free, until you actually sell. Security is required if the federal tax on the deemed sale is above $16,500.
- If you return to Canada and still own the property, you may be able to unwind the deemed sale.
When you stop being a Canadian resident
Residence for Canadian tax purposes is a question of fact. The CRA's guidance on determining your residency status focuses on residential ties:
- Significant ties: a home in Canada, a spouse or common-law partner in Canada, and dependants in Canada.
- Secondary ties: personal property such as a car or furniture, social ties, bank accounts and credit cards, a provincial driver's licence, and provincial health coverage.
You usually become a non-resident on the latest of three dates: the day you leave, the day your spouse or partner and dependants leave, or the day you become a resident of your new country. Keeping a home available in Canada or leaving your family behind can mean you remain a factual resident, even if you spend most of the year abroad.
A tax treaty can change the answer. If you are resident in both Canada and a treaty country, the treaty's tie-breaker rules may make you a "deemed non-resident" of Canada, which has the same tax effect as emigrating. Our guide to tax treaty tie-breaker rules explains how those rules work. For a wider look at how countries judge residence, see how tax authorities decide where you live.
People who are unsure of their status can ask the CRA for an opinion using Form NR73, Determination of Residency Status (Leaving Canada). Filing the form is optional, and the CRA's opinion is only as good as the facts you give it.
What the deemed disposition covers
Under section 128.1 of the Income Tax Act, the deemed sale applies to most property you own when you leave, wherever it is located. The table below summarizes the CRA's list of dispositions of property for emigrants.
| Generally deemed sold | Generally not deemed sold |
|---|---|
| Shares in public and private companies, Canadian or foreign | Canadian real estate, resource property and timber property |
| Mutual fund units and ETFs held outside registered plans | Property of a business carried on through a permanent establishment in Canada |
| Foreign real estate | RRSPs, RRIFs, TFSAs, RESPs, RDSPs and PRPPs |
| Cryptocurrency | Pensions, annuities and most employee benefit plans |
| Partnership interests | Certain life insurance policies |
| Valuable personal property, such as art, jewelry and collections | Property owned by short-term residents (see below) |
Canadian real estate is excluded because Canada keeps the right to tax it when a non-resident sells. You can elect to include excluded Canadian real estate or business property in the deemed sale, using Form T2061A, for example to use losses. That choice is technical and fact-specific.
Crypto is treated like other capital property for this purpose, so unrealized gains on coins held outside Canada can be caught. Our article on crypto taxes when you move abroad looks at that issue across countries.
The short-term resident exception
If you lived in Canada for 60 months or less in the 10 years before you leave, property you owned when you last became a resident, or inherited after you arrived, is not subject to the deemed sale. Property you bought while living in Canada is still caught. This mainly helps people on temporary assignments.
How the tax is calculated
The gain on each asset is its fair market value on the departure date minus its adjusted cost base. Under current rules, half of a net capital gain is included in income and taxed at your marginal rate for the year of departure. Capital losses from the deemed sale can offset gains.
A simple example: Maya leaves Canada with a share portfolio worth $400,000 that cost $250,000. The deemed gain is $150,000, and $75,000 is added to her taxable income for the year she leaves. Her actual tax depends on her other income, her province and any losses she can use.
Values are reported in Canadian dollars, so currency movements on foreign assets also affect the gain.
The forms involved
Departure tax reporting is done with your final Canadian return as a resident, which is due by 30 April of the following year (or 15 June if you or your spouse ran a business, though any balance is still due on 30 April).
| Form | Purpose | When needed |
|---|---|---|
| T1243 | Calculates gains and losses on deemed dispositions | When you have deemed dispositions on departure |
| T1161 | Lists the property you own when you leave | When the total fair market value of your property is more than $25,000 |
| T1244 | Elects to defer payment of the departure tax | When you want to pay later |
| T2061A | Elects to include Canadian real estate or business property | Optional |
| NR73 | Asks the CRA for a residency opinion | Optional |
When counting toward the $25,000 threshold for Form T1161, you leave out cash and bank deposits, registered plans and pensions, and personal-use property worth less than $10,000 each. The penalty for filing Form T1161 late is $25 a day, with a minimum of $100 and a maximum of $2,500, and it applies even if you have no other filing obligation.
Deferring the payment
You can elect to defer paying the tax on the deemed sale until you actually sell the property. There is no interest on the deferred amount. The election is made on Form T1244, filed by 30 April of the year after you leave.
If the federal tax on the deemed sale is more than $16,500 ($13,777.50 for former Quebec residents), you must give the CRA adequate security, such as a letter of credit or a charge on property. Provincial security may also apply. When you later sell, you report the sale and pay the deferred tax by 30 April of the following year.
After you leave
Once you are a non-resident, Canada generally taxes you only on Canadian-source income. Some common examples:
- Dividends, rent and pensions paid from Canada are subject to a 25% non-resident withholding tax, which a tax treaty may reduce. Arm's-length interest is generally exempt.
- RRSP and RRIF withdrawals face the same withholding. Many people leave these plans in place, but the new country may tax the plan's income or withdrawals differently.
- TFSAs can be kept, but contributions made while non-resident are subject to a 1% tax for each month they stay in the account, and the new country may not recognize the account as tax-free.
- Rental income from Canadian property is subject to withholding, with an option to file a separate return under section 216.
Becoming non-resident in Canada does not automatically make you resident somewhere else, and Canada's rules do not depend on what the new country decides. Where you go next affects how the same gains are taxed later. Some countries give new residents a cost base equal to the value on arrival, and some treaties, including the one with the United States, contain rules to reduce double taxation on gains that Canada has already taxed. Others do neither. Our list of countries with exit taxes shows how Canada compares with other systems.
One option some nomads look at for their next base is Honduras tax residency through Próspera, a special economic zone on Roatán with a flat lump-sum tax of $5,000 per year and a 7-day annual presence requirement. Whether that or any other residency changes your Canadian position depends entirely on Canada's own residence rules and any treaty that applies.
Coming back to Canada
If you become a Canadian resident again and still own property that was deemed sold when you left, you can usually elect to "unwind" the deemed disposition. For most property this reduces the gain you reported on departure, up to certain limits. The election is made in writing by the filing deadline for the year you return. Any security you posted can then be released, and deferred tax may be reduced or cancelled.
Frequently asked questions
Does Canada have an exit tax?
Not under that name. The departure tax is the capital gains tax that arises from the deemed sale of most of your property when you stop being a Canadian resident. It is reported on your final resident return.
Is my house in Canada subject to departure tax?
Canadian real estate is generally excluded from the deemed sale. However, when you later sell it as a non-resident, Canada can tax the gain, and there are separate reporting and withholding rules for non-resident sellers. The principal residence exemption may cover only the years when you were resident.
Do I lose my RRSP if I leave Canada?
No. RRSPs and RRIFs are not deemed sold when you leave, and you can generally keep them. Withdrawals after you leave are subject to non-resident withholding tax, which a treaty may reduce.
Can I avoid paying departure tax right away?
You can defer payment until you actually sell the property by filing Form T1244. No interest applies, but you must provide security if the federal tax on the deemed sale exceeds $16,500.
What happens if I never file Form T1161?
The CRA can charge a late-filing penalty of $25 per day, from a minimum of $100 up to $2,500. The form is required whenever the value of your reportable property exceeds $25,000.
Important: This article is general information, not tax, legal or financial advice. Rules change often and depend on your personal circumstances. Speak with a qualified professional in each relevant country before you act.