Cross Border Tax Q&A – Tax Consequences of Leaving Canada
Posted on 05. Jun, 2010 by Phil Hogan, CA in Cross Border Tax Q&A
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
Phil Hogan, CA
250-661-9417
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If you would like to reach me to discuss a tax or accounting matter please call 250-661-9417 or email me at phil@philhogan.com.
The accounting and tax information provided on this website is for informational purposes only and does not represent binding professional advice. Appropriate tax treatment and advice will depend on an individuals particular circumstances and set of facts.
