Digital Nomad
Non-Residents and Departure Tax: Understanding Your Obligations When Leaving Canada
Leaving Canada has tax consequences—including deemed dispositions and reporting obligations. Here's what digital nomads and expatriates need to know to avoid surprises.
By NomadicTax Research Team • 5-8 min read • September 16, 2026
## Who Is a Non-Resident for Tax Purposes?
When you move abroad to live in another country, you typically become a **non-resident** for Canadian income tax purposes on the later of:
- the date you leave Canada;
- the date your spouse/common-law partner and dependants leave; or
- the date you become a resident of another country. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html?utm_source=openai))
You must tell CRA the date of departure and sever residential ties to avoid being taxed as a resident.
## What is Departure Tax?
Departure tax is a **deemed disposition rule** under Canadian law. On your date of emigration, certain property you own—shares, real property, collections, etc.—are considered sold at fair market value and immediately reacquired. This triggers capital gains or losses as if you sold. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html?utm_source=openai))
### Key Exception:
If total fair market value of all your specified properties exceeds **$25,000**, you must file **Form T1161** listing the property. If it’s below, the form may not be needed. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html?utm_source=openai))
## TFSA, HBP, and LLP When You Leave
- **TFSA**: You may keep the account, and investment income and withdrawals remain tax-exempt in Canada—but once you are non-resident, **no further contributions** are permitted, and contribution room **does not increase** while you are abroad. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html?utm_source=openai))
- **Home Buyers’ Plan (HBP)** and **Lifelong Learning Plan (LLP)**: Special rules may apply. You may still need to repay or follow existing repayment schedules—check the CRA’s guidance. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html?utm_source=openai))
## Filing and Other Responsibilities
- File your final return as a resident for the part of the year you lived in Canada. Report worldwide income until the date of departure. After departure, tax only on Canadian-source income unless treaty says otherwise. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html?utm_source=openai))
- Let payers or financial institutions know that you’re leaving and won’t be contributing or required to pay certain withholdings.
- For income received after departure, source withholding tax likely applies—unless you elect (under section 217 of the Income Tax Act) to include that income in a Canadian return. This is often more favourable. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html?utm_source=openai))
## Example Scenario
Sophie lived in Toronto until September 30, 2026, then left to live in Spain on October 15. Her departure date for Canadian tax purposes would be October 15. She owns shares with a cost base of $100,000, fair market value of $150,000. She must report a deemed disposition in 2026 for $50,000 capital gain (worldwide income until departure). After leaving, her TFSA can't receive new contributions, but she keeps her funds invested and tax-exempt in Canada.
If Sophie owns paintings and shares totaling over $25,000 FMV at departure, she must file Form T1161.
## Strategies to Mitigate Tax Exposure
- **Pre-departure planning**: Sell or transfer some capital property before departure to lock in gains at current capital gains treatment or use losses if available.
- **Treaty benefits**: Work with a tax advisor to understand treaty provisions between Canada and your new country of residence—some treaties help avoid double taxation.
- **Use of trusts or holding corporations**: Depending on your situation, consider holding appreciated assets in structures that defer or reduce deemed dispositions—or only partially triggered.
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**Author**: NomadicTax Research Team
**Category**: Digital Nomad