🐑 From Clara & Fran
We want to be upfront: this is the one year you absolutely need a cross-border CPA. Not because the concepts are impossibly complicated, but because the stakes are high, the forms are unfamiliar, and a mistake in the departure year can take years to untangle. We hired a CPA who specialises in Canadian non-resident returns and it was one of the best financial decisions of our departure year. This post will walk you through exactly what's involved — so you understand the process, know what questions to ask, and don't get any surprises.
What Makes the Departure Year Different
In a normal tax year, you file a T1 return reporting your worldwide income and paying Canadian federal and provincial tax on all of it. The departure year splits into two distinct periods: the period you were a Canadian resident (January 1 to your departure date), and the period you were a non-resident (departure date to December 31).
You file a single T1 return for the entire year — but only income from the resident period is included in your taxable income calculation. Income earned after your departure date as a non-resident is handled through withholding at source (CPP, OAS, RRIF) or not taxed by Canada at all (foreign income). The departure year return also triggers the deemed disposition — Canada's departure tax on unrealised capital gains.
Jan 1 → Departure Date
Report all worldwide income
Employment income earned in Canada
CPP / OAS / pension received
Investment income (interest, dividends, capital gains)
Rental income from anywhere
Foreign income (while still a resident)
RRSP withdrawals made before departure
Departure Date → Dec 31
NOT included in T1 income
Foreign-source income (handled in new country)
CPP / OAS / RRIF (withheld at source — shown on NR4)
Investment gains in your new country
Employment income from foreign employer
Any income that Canada has already withheld on separately
💡 The basic personal amount applies for the full year — not just the resident portion. Unlike some other countries, Canada does not prorate the basic personal amount ($16,452 in 2026) for the number of days you were resident. You claim the full amount regardless of when in the year you departed. This can result in a meaningful tax saving in your departure year.
The Deemed Disposition — Canada's Departure Tax
The most significant and often surprising element of the departure year return is the deemed disposition. When you leave Canada, the CRA treats you as if you sold all your eligible property at fair market value on your departure date — even though you didn't actually sell anything. Any resulting capital gains are included in your departure year income and taxed.
The capital gain is calculated as: fair market value on departure date minus your adjusted cost base. With the capital gains inclusion rate at 50% for 2026 (the proposed 66.67% tiered increase was cancelled in March 2025), 50% of the gain is added to your income and taxed at your marginal rate.
✗ Deemed Disposition Triggered
Non-registered investment accounts (stocks, ETFs, mutual funds)
Shares in private Canadian corporations
Foreign property (investments held outside Canada)
Real estate located outside Canada
Certain trust interests
Cryptocurrency holdings
✓ Exempt From Deemed Disposition
RRSP and RRIF — remain registered, no deemed sale
TFSA — exempt from departure tax
Principal residence — full principal residence exemption available
Canadian real estate (taxable Canadian property handled differently)
CPP and OAS entitlements
Employer pension plan entitlements
⚠️ Non-registered investment accounts are the biggest departure tax risk. If you've been investing in a non-registered brokerage account for decades, you may have significant unrealised capital gains that will all be triggered on departure. A $500,000 non-registered portfolio with a $200,000 unrealised gain means $100,000 of additional income in your departure year (at 50% inclusion). At a 33% marginal rate, that's $33,000 in departure tax. Plan this with your CPA well in advance — there may be ways to reduce the gain before departure.
✓ Deferral option for large departure tax bills: If your departure tax is significant, you can apply to the CRA to defer payment by posting security (typically the assets themselves). This lets you delay paying the departure tax until you actually sell the assets, rather than owing a large tax bill on paper gains you haven't realised. Your CPA can advise on whether this makes sense for your situation.
The Forms You Need to File — Complete Checklist
Step by Step — How to Prepare Your Departure Return
1
Establish your departure date precisely
Your departure date is the day you cease to be a Canadian resident — typically the day you leave Canada permanently, or the date you became a resident of your new country, whichever is earlier. Document it: keep your boarding pass, your new country's residency permit stamp, and any lease agreement dated from that period. The departure date is used on every form.
2
Gather all income slips for the resident period
Collect T4 (employment), T4A (pension, retirement), T5 (investment income), T3 (trust income), T4RSP (RRSP income), and any other income slips for income earned between January 1 and your departure date. Also gather any foreign income documentation for the same period — foreign bank interest, pension from other countries, rental income abroad.
3
Value all property subject to deemed disposition as at your departure date
Get the fair market value of every asset subject to deemed disposition as at your departure date: non-registered investment accounts (closing statement from that date), shares in private companies (professional valuation may be needed), foreign property, cryptocurrency. Get your adjusted cost base (ACB) for each — this is the original cost plus any reinvested distributions. The gain = FMV minus ACB.
4
Complete Form T1243 — the deemed disposition calculation
List each asset, its FMV on departure date, its ACB, and the resulting gain or loss. Net the gains against any losses. The net capital gain flows to Schedule 3 of your T1 return at 50% inclusion rate (capital gains inclusion rate for 2026). This is the core departure tax calculation.
5
Complete Form T1161 if total property FMV exceeds $25,000
List all property you owned on your departure date with a total fair market value above $25,000. This includes property both subject and not subject to deemed disposition — it's a comprehensive inventory. The $25,000 threshold is total value, not gain. Almost every Canadian emigrant with any savings will need to file this.
6
File the T1 return by the deadline
The departure year T1 is due April 30 of the following year — the same deadline as for resident Canadians. If you or your spouse had self-employment income during the resident period, the filing deadline extends to June 15, but any tax owing is still due April 30. File with T1161 and T1243 attached. Mail or NETFILE — the CRA's My Account portal still works for departure year returns.
7
Pay any departure tax owing by April 30
If your return shows tax owing — including departure tax on deemed dispositions — payment is due by April 30 even if you file by June 15. If the departure tax bill is large and primarily from unrealised gains, consider the deferral option using Form T1244 before paying a large cash amount on paper gains.
The Timeline — When Everything Happens
Pre
12+ months before departure — plan your departure tax position
Identify unrealised gains in non-registered accounts. Consider whether to crystallise gains before departure (paying marginal tax now vs 25% departure tax later), harvest losses, or restructure holdings. This is where pre-departure planning pays the biggest dividends.
Dep
Departure date — document everything
Save every piece of evidence: boarding pass, new country residency permit or visa, lease agreement, utility bills in your name abroad. Get fair market value statements for all non-registered investments as at this date from your broker.
Jan
January — income slips start arriving
T4, T5, T3, and other slips for the resident period arrive from employers, banks, and investment platforms. NR4 slips showing CPP/OAS/RRIF paid and withheld after departure also arrive — these are not included in your T1 income but keep them for your records.
Apr 30
April 30 — tax owing due (filing deadline for most)
Tax owing — including departure tax — must be paid by April 30. File the T1, T1161, and T1243 by this date. If you're using Form T1244 to defer departure tax, it must be filed by this date too.
After
After filing — set up ongoing non-resident compliance
File Form NR5 to apply treaty withholding rates to CPP/OAS/RRIF. Notify Service Canada of your new address. Update your financial institutions with your non-resident status. Consider whether a Section 217 return makes sense in subsequent years based on your income level.
⚠️ The three most common departure return mistakes: 1) Forgetting to include the deemed disposition on non-registered accounts — the CRA will find it on reassessment. 2) Missing Form T1161 — triggers a $25/day penalty up to $2,500. 3) Not paying the departure tax by April 30 even if filing later — interest accrues from May 1. All three are avoidable with a cross-border CPA who specialises in emigrant returns.
🐑 Our Experience
Our departure year return was genuinely the most complex document we'd ever filed. The deemed disposition on our non-registered accounts produced a meaningful capital gain, and getting the fair market values right as at our exact departure date required coordination with our broker. Our CPA had done dozens of these returns and knew exactly what documentation the CRA expects.
The fee was around $800 — money extremely well spent given what was at stake. The return came back with a refund (the basic personal amount sheltered more of our income than expected) and we've had no issues with the CRA since. The departure year is genuinely the hard part. Every year since has been straightforward.
The complete picture
How to Become a Non-Resident of Canada for Tax Purposes
What ties to sever, what forms to file, and what the full process looks like — step by step.
Read the Guide →
Keep Reading
Sources & Disclaimer: This article is for informational purposes only and does not constitute tax or financial advice. Information sourced from CRA T4056 Emigrants and Income Tax 2024, CRA Guide T4058 Non-Residents and Income Tax 2024, CRA Forms T1161 and T1243 instructions, Cardinal Point Wealth Management, WealthNorth 2026, Greenback Tax Services 2026, MilestoneTax Canada. Capital gains inclusion rate 50% for 2026 following cancellation of tiered proposal in March 2025. Tax rules change — always verify at canada.ca and consult a cross-border CPA for your specific situation.