Canada's Departure Tax, Explained

~8 min read·Updated August 2026

Calculator:Departure Tax Estimator — run your own numbers.

When you stop being a Canadian tax resident, the CRA doesn't just let your investments walk out the door untaxed. It treats most of what you own as if you sold it the day before you left — even though you haven't sold anything and won't see a dollar of cash. This is Canada's departure tax, and it catches people off guard because there's no transaction that triggers it: just the act of leaving.

The core mechanism: deemed disposition

The CRA calls this a deemed disposition. On your departure date, most capital property you own is treated as sold at fair market value and immediately reacquired at that same value. The gain between what you paid (your adjusted cost base) and what it's worth on departure day becomes a taxable capital gain on your final Canadian tax return — exactly as if you'd actually sold it, except the cash never moves and you keep holding the same investments.

What's excluded — the good news first

Not everything you own is caught by this.

Registered accounts (RRSP, TFSA, FHSA, RESP), Canadian real estate, employer pension entitlements, and CPP/QPP rights are all exempt from departure tax entirely. So is personal-use property under $10,000. What's left — the property that actually gets taxed — is narrower than most people expect.

What's actually taxed

The deemed disposition generally applies to non-registered investment accounts, foreign real estate, cryptocurrency, and private business shares. For each, you need two numbers: the fair market value (what it's worth on your departure date) and the adjusted cost base (what you originally paid, including reinvested distributions). The gap between them is your gain.

Canada's capital gains inclusion rate is 50% — only half of that gain is added to your taxable income for the year, and it's taxed at your marginal rate for your departure year, not a flat rate. Someone in a modest income bracket might see something in the 20–25% range applied to the taxable half; someone at the top of Ontario's bracket could see roughly 53%.

Worked example

$10,000 of non-registered investments, bought for $7,000.

Capital gain: $3,000. Taxable amount at the 50% inclusion rate: $1,500. At a 35% marginal rate, estimated tax owing: roughly $525 — on an account most people wouldn't think to plan around at all before they leave.

Two exceptions worth knowing

ℹ️The 60-month short-term resident rule

If you were a Canadian resident for less than 60 months in the 10 years before you leave, property you owned before becoming a Canadian resident is generally exempt entirely. This matters a lot for people who immigrated to Canada as adults and later moved on — the departure tax isn't meant to claw back gains that happened before Canada had any claim on you.

✅The spousal rollover

If your spouse or common-law partner is staying behind as a Canadian resident, capital property can sometimes be transferred to them at cost base before you leave — deferring the gain until they eventually sell, rather than triggering it on your departure.

You can defer the bill — the forms to know

You don't necessarily have to pay the departure tax the year you leave. Three CRA forms matter here:

T1161 — a list of the property you owned on departure, required if the total value exceeds $25,000.
T1243 — the actual deemed disposition calculation.
T1244 — an election to defer payment of the tax until you actually sell the property.

If your estimated tax owing is under roughly $16,500 (the approximate federal tax on a $100,000 gain), you'd typically qualify for automatic deferral under subsection 220(4.5) just by filing T1244 — no security required. Above that threshold, you can still elect to defer, but the CRA will likely require you to post security to guarantee eventual payment of the debt.

📋File T1244 even if the tax feels small

The deferral election has to actually be filed to apply — it isn't automatic just because your bill is under the threshold. Missing this on your final Canadian return means paying tax on gains you haven't realized in cash.

Departure tax vs. the US exit tax — don't confuse them

If you're a long-term Green Card holder or US citizen later leaving the US, America has its own, separate departure-style tax under IRC Section 877A. They're unrelated regimes from two different countries with different triggers and thresholds — see the moving back guide for how the US side works if that applies to you. There's also a third, unrelated regime worth knowing about even if you never leave Canada at all: US estate tax on US-situs assets, which can apply to a Canadian resident's US stocks or property on death.

Estimate your own bill with the Departure Tax Estimator, using today's balances from the CoastFIRE Calculator if you've already entered them.