Cross Border Tax Q&A – Tax Consequences of Leaving Canada

Question

Hello Phil

I’ll be leaving Canada after a long stay (11 years) to take a job in Seattle. I’m still a US citizen and plan on staying at the new job in the long-term.

I’m aware that I need to file a final Canadian return but I’m unsure how to handle all the intricacies of such a return.

I may need your help in filing, but before I make a decision can you give me a sense of what I’m in for.

Thanks

XXXXXX

Answer

Hi XXXXXX

You’re correct, if you plan on leaving Canada for good (as long as you sever most of your social and economic ties) you’ll need to file a final T1 personal Canadian return. Here are some items to consider:

• On your final Canadian return you’ll only need to include any income earned to the date of departure.
• You will have “deemed to have disposed” of certain assets as you exit Canada. This is what we call “Canadian departure tax”. The Canadian government takes their share of tax on certain assets that are not specifically tied to Canada. Some examples include: US real estate, stocks, bonds, trust units, partnership interest and certain types of businesses.
• Certain types of assets not included in the deemed disposal are items we call “taxable Canadian property”. These items include: registered plans such as RRSP, RIF, LIRA, pension plans, etc., Canadian real estate, employee stock options, life insurance and certain types of trusts.

We would have to discuss your particular situation in more depth before I could advise you on additional tax matters related to your exit from Canada.

Please give me a call and we can discuss

Regards

Newsglobal, CA

250-661-9417