Iam filling T1135 form & have paid Accrued Interest every year from my Fixed Deposit/ GICs in India. If I become Non resident of Canada, Will I have to pay any Departure tax on that again? Please advise.
Planning for becoming Non Resident of Canada
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Hi Vivek,
Great question, and one that comes up often when clients are planning for non-residency.
1. No departure tax on accrued interest already reported
If you have been reporting the annual accrued interest from your Indian Fixed Deposits / GICs on your Canadian tax return each year (as required), then there is no additional departure tax on that same interest when you become a non-resident of Canada.
Departure tax applies to unrealized capital gains on certain types of property. Accrued interest that has already been included in your income is not subject to a second tax.
2. What happens after you become a non-resident?
Once you leave Canada and become a factual or deemed non-resident:
- Canada no longer taxes interest you earn from Indian bank deposits (unless the payer is a Canadian resident, which it is not).
- You will report that interest only in the country where you become tax-resident after departure.
3. Continue reporting until your departure date
Make sure you continue to include accrued interest up to the date you cease residency on your final (departure) return. After that date, Canadian reporting stops.
If you’d like help confirming your departure date or understanding which assets are subject to departure tax, feel free to post more details here.
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