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Canadian expatriates keep two sets of books in effect: one for what they owned and earned while resident in Canada, and one for what they own and earn abroad. The dividing line is the date you stop being a Canadian resident for tax, and a lot of the paperwork hangs on it.
When do you stop being a resident?
Moving abroad doesn’t end Canadian residency by itself. The CRA looks at your residential ties. Significant ties are a home in Canada, a partner, and dependants who stay behind. Secondary ties, such as a Canadian bank account, a driver’s licence or professional memberships, count for less, though they can tip a close case.
The CRA’s own guidance says courts tend to treat a temporary absence, even a long one, as not enough to break residency. So write down the date you left, the date your family left, and what you did with the house. That note becomes the first entry in your expat file.
Think of Aisha, who takes a two-year posting in Dubai but keeps her Toronto condo, her spouse stays behind and her Canadian bank accounts stay open. She has done a lot of packing and very little to cut ties. Her file should say so plainly, and her return should too.
What happens to your assets when you leave?
Many people miss this step. The tax rules act as if you sold most of what you own, at its market price, on your last day as a resident, then bought it back at that same price. Any gain from that pretend sale is a capital gain, and people call the bill departure tax. Only certain types of property are caught, so read the CRA’s page on dispositions of property for emigrants before you assume what applies to you.
Owned more than $25,000 of property in total, at market value? Then Form T1161 lists it, and Form T1243 works out the gains. There’s an election that lets you hold off paying until you really sell, with no interest, though conditions apply.
A concrete case. Suppose you hold shares with a $40,000 unrealized gain, and you earn about $90,000 otherwise. Half the gain counts as income under the 50% inclusion rate (check the CRA’s current capital gains page before you rely on it), so $20,000 lands on your return. In Ontario that costs roughly $6,260. Put in your own gain using the capital gains tax calculator.
How do you book income from two countries?
Open a separate ledger, or at least separate accounts, for each currency. Record every foreign amount in its own currency and its Canadian dollar value together. The CRA’s rule for converting is the Bank of Canada rate on the day the amount arose, or the average annual rate for something like a monthly pension.
| Item | What to record |
|---|---|
| Foreign salary or pension | Amount in the foreign currency, rate, dollars, foreign tax withheld |
| Foreign tax paid | Amount, date, the slip or receipt |
| Bank and investment accounts | Balance and cost at each year end |
| Canadian property kept | Cost, value on the departure date |
| Rent from a home you kept | Gross rent, expenses, any tax withheld |
Foreign tax you paid may earn a foreign tax credit. That claim needs the amount of tax in your records, in dollars, by income source.
Which reporting forms do Canadian expatriates face?
While you’re a Canadian resident, Form T1135 is due when your foreign property cost more than $100,000 in total at some time in the year. Below that you still report the income, only without the form. Once you’ve become a non-resident, that form no longer applies to you.
Registered accounts change too. TFSA room doesn’t build up for years you weren’t resident, so keep the dates in your file. A withdrawal from an RRSP by a non-resident faces 25% withholding unless a tax treaty reduces it. Our RRSP withdrawal tax calculator shows the domestic withholding; for non-residents, read the CRA’s page and your treaty.
What should you do before you leave?
Get your paper in order a few months ahead, not on the plane. List every property you own with its market value on the departure date, and gather the cost records for anything that has gone up in value. Photograph statements, since a foreign bank can be hard to reach later.
Write down the date you left and the day each family member did. If the dates are fuzzy, the CRA will pick its own. Then keep a copy of the return you file for the year of departure, because later years lean on it.
What mistakes cost expats the most?
The big one is assuming that leaving is a clean break. If you keep a home, a spouse or a regular return trip pattern, the CRA may decide you never left. The second is skipping the deemed disposition because nothing was actually sold. The third is losing paper: foreign tax slips and exchange rates from years ago are hard to rebuild.
Also, every treaty treats pensions and salary a little differently, and this page gives the Canadian side only. If your case involves two tax systems, a cross-border tax specialist is worth the fee, because a wrong first-year return is costly to fix.
For the income side, use the income tax calculator for a Canadian estimate of the months you were resident.
Where we got these figures
The residency ties, deemed disposition, $25,000 listing threshold and the $100,000 foreign property threshold come from the Canada Revenue Agency‘s pages for emigrants and foreign reporting. Tax rates in the example are 2026 federal and Ontario figures, and the result is an estimate.
Frequently asked questions
Do I stop being a Canadian resident the day I move?
Not automatically. The CRA looks at your residential ties, such as a home, spouse or dependants in Canada, and a temporary absence often isn't enough to break residency.
What is departure tax?
It's the tax on a deemed sale of most of your property at fair market value on the day you leave. You may be able to defer paying it until you actually sell.
When do I file Form T1161?
When the total fair market value of the property you owned on leaving is over $25,000.
Do I still report foreign property after I emigrate?
Form T1135 applies to Canadian residents with foreign property costing over $100,000. Once you are a non-resident it no longer applies, but check the rules for the year you leave.
What rate converts foreign income into dollars?
The Bank of Canada rate on the day the amount arose, or the average annual rate for regular payments such as a monthly pension.
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