Canadian expats may still have Canadian tax obligations, but this depends on tax residency status, how and when residential ties are severed, and whether a Canadian tax treaty applies.
Canada taxes individuals based on residency, not citizenship, which means many Canadians living abroad continue to have Canadian tax responsibilities until they become non-residents for tax purposes.
Canadian Expat Taxes: The Big Picture
Canadian income tax is determined by residency status, not by holding a Canadian passport.
- Canadian residents are generally taxed on worldwide income
- Canadian non-residents are usually taxed only on specific Canadian-source income
Once you become a non-resident of Canada, Canadian tax typically applies only to income such as:
- Rental income from Canadian property
- Certain pensions
- Some Canadian investment income
Do Canadian Expats Pay Taxes?
Canadian expats who retain significant residential ties to Canada may be treated as factual residents or deemed residents by the Canada Revenue Agency (CRA). In those cases, they must report worldwide income to the CRA.
If the CRA determines that you are:
- A non-resident, or
- A deemed non-resident under a tax treaty
then Canadian tax generally applies only to specific Canadian-source income, often collected through withholding tax at source.
Canadian Tax Residency and CRA Status
The CRA determines tax residency by reviewing your overall factual situation, not a single factor. Common residency indicators include:
- Ownership or access to a home in Canada
- A spouse or common-law partner in Canada
- Dependants residing in Canada
- Canadian driver’s licence
- Canadian health coverage
- Active Canadian bank or credit accounts
- Time spent in Canada during the year
Spending 183 days or more in Canada during a tax year can result in deemed resident status, while living abroad with minimal Canadian ties may support non-resident classification.
Canada Non-Resident Tax and Leaving Canada
If you clearly leave Canada and establish your home in another country, the CRA will usually consider you an emigrant and non-resident from the date you sever primary residential ties or become a tax resident elsewhere.
- Worldwide income is reported only up to your departure date
- After departure, Canadian non-resident tax generally applies only to Canadian-source income such as:
- Rental income
- Certain investment income
- Some pensions
Canadian Departure Tax (Deemed Disposition)
When you become a non-resident, Canada’s departure tax rules apply.
The CRA treats most non-registered capital assets as if they were sold at fair market value the day before you cease residency. This deemed disposition may trigger capital gains tax.
Certain assets are excluded, including:
- Canadian real property
- Some Canadian business property
- Registered plans (RRSPs, TFSAs, pensions)
Although excluded from departure tax, these assets may still be taxed later when they are sold or paid out.
Canadian Tax Treaties and Tie-Breaker Rules
Canada has an extensive network of tax treaties designed to:
- Prevent double taxation
- Resolve cases where two countries claim you as a tax resident
Tax treaties often apply tie-breaker rules, which consider:
- Permanent home
- Centre of vital interests
- Habitual abode
- Nationality
These rules determine whether you are treated as a resident of Canada or the other country for treaty purposes.
Practical Steps for Canadian Expats
- Review your CRA residency status before or shortly after moving abroad
- Consider CRA Form NR73 (leaving Canada) or NR74 (entering Canada) if you require a formal CRA opinion
- Document when major residential ties are severed and when residency begins in another country
- Coordinate advice with a cross-border tax professional, especially if you hold:
- Investments
- Stock options
- Business interests
Professional Advice and Relocation Support
Cross-border tax situations are complex and highly individual. If you are living abroad, planning to leave Canada, or unsure of your tax residency status, working with a qualified cross-border tax professional is strongly recommended. A certified accountant or CPA with international tax experience can confirm your CRA residency classification, ensure proper filing, and help you remain compliant with both Canadian and foreign tax obligations.
Orbit International Moving Logistics, also known as Orbit Moving, does not provide tax or legal advice. Our role is limited to supporting the relocation side of your move, including international moving logistics and coordination with immigration and relocation professionals, so you can focus on addressing your tax matters with the appropriate experts.
If you are planning an international move, contact Orbit Moving for a free moving estimate and reliable relocation support while you work with a qualified tax advisor on your Canadian expat tax strategy.
