Key takeaways
- Departure tax is a “deemed disposition”: some property is treated as sold at fair market value on the day you leave
- Exempt: Canadian real estate, Canadian business property, RRSP, RRIF, TFSA, RESP, RDSP and other registered plans
- Short-term residents (60 months or less in Canada in the last 10 years) are exempt for property they owned when they arrived
- Only 50% of a capital gain is taxable as of October 2026; the planned increase to two-thirds was cancelled
- File Form T1161 if your property is worth more than $25,000; you can defer the tax with Form T1244 (security needed above $16,500 federal tax)
Who needs to read this
Who this page is for: anyone leaving Canada who holds investments outside registered accounts, owns property abroad, holds crypto, or owns shares of a private company. If all your savings are in an RRSP, TFSA or your Canadian home, departure tax will probably not affect you, but you may still need to file Form T1161.
How the deemed disposition works
On the day you stop being a Canadian resident, the Income Tax Act treats you as if you sold certain property at its fair market value (FMV) and bought it back at the same price. You do not actually sell anything. No money changes hands.
For each asset, the gain is:
FMV on departure day − adjusted cost base (ACB) = capital gain or loss
The ACB is usually what you paid, plus purchase fees and reinvested distributions. Half of the net gain (the “taxable capital gain”) is added to your income for the year you leave. Losses on other deemed sales can reduce your gains.
The CRA reverted to the one-half inclusion rate in 2025, and the government cancelled the proposed increase to two-thirds on March 21, 2025. So 50% applies as of October 2026.
What is taxed and what is exempt
| Usually taxed (deemed sold) | Not taxed at departure |
|---|---|
| Shares, ETFs and mutual funds in a non-registered account | Canadian real estate, including your home and rental property |
| Crypto assets | RRSP, RRIF, TFSA, RESP, RDSP, FHSA and pension plans |
| Real estate outside Canada | Canadian business property used in a business with a permanent establishment in Canada |
| Shares of a private corporation | Canadian resource and timber property |
| Personal-use items such as art or collectibles that went up in value (items worth $10,000 or more also go on the T1161 list) | Property you owned when you last became a resident, if you were resident 60 months or less in the 10 years before leaving |
Exempt Canadian real estate is not tax-free forever. If you sell it later as a non-resident, you pay Canadian tax on the gain then, and the buyer can withhold tax unless you get a clearance certificate. See selling a home as a non-resident (section 116).
Common myths about the exit tax
- “Canada taxes all my savings when I leave.” No. Only gains are taxed, and only on certain property. Cash, GICs and money in registered plans are not deemed sold.
- “I have to cash out my RRSP before I go.” No. Your RRSP stays. Withdrawals later face non-resident withholding instead, often at a lower rate than if you cashed it all out in a high-income year.
- “My house will be taxed.” Not at departure. Your principal residence exemption covers the years you lived in it while resident. Gains after you leave can be taxable when you sell.
- “Newcomers who leave after a few years pay tax on what they brought.” Not if you were resident 60 months or less in the last 10 years: property you brought with you is exempt.
Forms: T1161, T1243 and T1244
T1161: List of properties by an emigrant of Canada
File it with your final return if the total FMV of all property you own on your departure day is more than $25,000. You do not count cash, registered plans, personal-use items worth less than $10,000 each, or exempt short-term resident property. You must file it even if you owe no tax. The late-filing penalty is $25 a day, at least $100 and up to $2,500.
T1243: Deemed disposition of property by an emigrant
This form works out the gain or loss for each asset. The result goes on Schedule 3 of your return.
T1244: Election to defer the payment of tax
You can choose to pay the departure tax later, when you actually sell. File T1244 by April 30 of the year after you leave. If the federal tax on your deemed gains is more than $16,500 ($13,777.50 for Quebec residents), the CRA asks for acceptable security, such as a letter of credit or a charge on property. The CRA does not charge interest on tax you defer this way.
Worked example
Maria lives in Ontario and moves to Portugal in July 2026. She has $150,000 of ETFs in a non-registered account. She paid $90,000 for them. She also has $80,000 in an RRSP and a condo in Toronto. She earned $40,000 from January to July.
- RRSP and condo: not deemed sold.
- ETFs: gain of $150,000 − $90,000 = $60,000. Taxable part (50%) = $30,000.
- Her income rises from $40,000 to $70,000. Using 2026 brackets, that adds about $4,946 federal and $2,175 Ontario tax: about $7,121 in total (before credits).
- She must file T1161 because her property is over $25,000. The federal tax is under $16,500, so she could defer with T1244 without giving security.
Try your own numbers in the departure tax calculator.
Records to keep
Departure tax depends on values on one day, which can be hard to prove years later. Keep:
- brokerage statements for the month you leave, showing each holding and its market value
- your adjusted cost base records (purchase confirmations, reinvested distributions, return of capital)
- a written valuation for private company shares, foreign real estate and valuable items
- a copy of your final return with T1161, T1243 and T1244
These records also help if you return to Canada and want to unwind the deemed sale, or if your new country asks for your cost when you sell.
If you live in Quebec
Quebec residents file a Quebec return too, and Quebec has its own rules and forms for property of an emigrant. The federal security threshold for deferring is lower ($13,777.50) because of the Quebec abatement. Check with Revenu Québec.
Ways people reduce or manage departure tax
- Check the short-term resident rule. Newcomers who leave within 5 years often owe nothing on assets they brought.
- Use losses. Assets with losses are also deemed sold, which offsets gains.
- Defer with T1244 if you do not want to sell investments to pay the tax.
- Watch double tax. Your new country may tax the same gain when you really sell. Some treaties, and some countries’ rules, give you a higher starting cost. Ask a cross-border tax professional.
- Plan if you might come back. If you return and still own the property, you can elect to unwind the deemed sale. See the returning to Canada checklist.
Back to the main leaving Canada tax guide.