Residency rules are complex and intertwined with other countries’ rules. International tax treaties often come into play in determining whether you have indeed emigrated for tax purposes.
You must first determine whether or not, in fact you have ceased to be a resident of Canada. There are no hard and fast rules in determining if you are a resident. You may physically leave the country, but have enough ties to Canada so as to remain a resident for tax purposes. Generally, to cease residency, there must be a sense of permanence to severing your ties to Canada. Examples would be selling your residence, moving your family with you, canceling memberships and subscriptions, canceling credit cards and bank accounts, canceling your driver’s license, canceling your health plan and not spending more than 183 days in Canada.
If it is determined that you have become a non resident, you will still be taxed on employment, business, property and investment earnings in Canada. Your tax liability will be affected by the particular tax treaty with the country you are immigrating to.
On departure from Canada, you will be deemed to have sold most of your assets at fair market value. Exceptions to this rule include but are not limited to:
- real estate
- pension entitlements
- property used in a business.
All other property may result in an immediate tax liability. CRA may allow a deferral of tax on these assets until they are actually disposed of if appropriate security is posted with CRA. There is relief on the first $100,000 of capital gains where no security has to be posted nor any tax paid until the asset is disposed of.
You must report to CRA the value of all significant assets upon emigration if the total value of your assets is greater than $25,000.
Careful analysis of Canadian rules and the rules of the country you are immigrating to are necessary prior to departure to ensure you are paying the appropriate amount of tax if any.
 |