I will be emigrating from Canada to the US, what are the tax consequences of my emigration?

If you are departing from Canada permanently, you will be required to pay taxes on any capital gains that arise from the deemed disposition of your non-personal assets. This means that all assets excluding those listed at the end of this FAQ are deemed to be disposed at their fair market value on the date of departure.

However, based on the treaty provisions between Canada and the US, any taxable gain that arises upon emigration can be used to bump up the cost base of that asset, so that when you actually dispose of the asset, you aren’t taxed on the same gain twice.

List of Canadian Properties that are exempt from deemed disposition clause:

• Canadian real property, Canadian resource property, and timber resource property;
• Canadian business property (including inventory) if the business is carried on through a permanent establishment in Canada;
• pensions and similar rights, including registered retirement savings plans, registered retirement income funds, registered education savings plans, registered disability savings plans, tax-free savings accounts, and deferred profit-sharing plans;
• rights to certain benefits under employees profit-sharing plans, employee benefit plans, employee trusts, employee life and health trusts, and salary deferral arrangements;
• certain rights or interest in a trust;
• property you owned when you last became a resident of Canada, or property you inherited after you last became a resident of Canada, if you were a resident of Canada for 60 months or less during the 10-year period before you emigrated;
• employee security options subject to Canadian tax; and
• interests in life insurance policies in Canada (other than segregated fund policies).

ABOUT THE AUTHOR

ALLAN MADAN

CA.CPA.CGA

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

Related Resources