Leaving Canada: Everything You Need to Know Before Making the Move
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Thinking of leaving Canada? Maybe you’re looking for a better lifestyle, lower taxes, or new opportunities abroad. But before you pack your bags and say goodbye, there are a lot of things to consider—especially when it comes to taxes and legal obligations.
Leaving Canada isn’t as simple as just hopping on a plane. There are exit taxes, residency requirements, and financial matters that you need to handle properly. If you don’t take care of these things, you could end up owing money to the Canada Revenue Agency (CRA) or facing unexpected financial and legal issues down the road.
In this guide, we’ll cover everything you need to know to exit Canada the right way—from capital gains taxes to cutting financial ties—so that you don’t run into problems later.
Exit Tax: What You Need to Know
One of the biggest surprises for people leaving Canada is the exit tax (also known as departure tax). This applies to your worldwide assets, including stocks, crypto, real estate, and businesses.
How does exit tax work?
When you leave Canada and become a non-resident for tax purposes, the CRA considers that you’ve “sold” all your assets at fair market value—even if you haven’t actually sold anything. This is known as a deemed disposition, and it means you may owe capital gains tax on any appreciation in value.
For example:
You bought stocks at $50, and now they are worth $100.
You haven’t sold them, but CRA will tax you on the $50 gain as if you had.
Capital gains tax applies to 50% of your gains, and your tax rate depends on your income bracket.
The same rule applies to crypto—if you bought Bitcoin for $10,000 and now it’s worth $100,000, you can’t just move to a tax-free country like Dubai and avoid paying tax. You must report and pay capital gains tax before you leave.
Business owners: If your business is worth over $1.2–$2 million, you may also owe capital gains tax when leaving Canada. However, businesses below this threshold might be eligible for tax relief.
Tip: Before leaving, get a professional valuation of your business and assets to avoid underreporting your wealth (which could lead to penalties).
Cutting Your Ties with Canada
To become a non-resident for tax purposes, you need to cut your primary and secondary ties with Canada. Otherwise, CRA can still consider you a Canadian tax resident—meaning you’d still have to pay taxes in Canada even if you live abroad.
Primary Ties (Must be severed)
✅ Sell or rent out your home (but NOT to a family member—this won’t count).
✅ Move your spouse and children with you (if applicable).
✅ End government services like OHIP (health insurance) and provincial benefits.
If you keep any of these ties, CRA may still consider you a tax resident, and you’ll continue to owe taxes in Canada.
Secondary Ties (Should be minimized)
These won’t necessarily make you a tax resident, but having too many of them could:
❌ Canadian bank accounts (keep only one, if necessary).
❌ Canadian credit cards.
❌ Canadian phone number.
❌ Memberships or subscriptions (e.g., gym, insurance, clubs, etc.).
Tip: If you’re serious about reducing your taxes, ensure your financial footprint moves with you. Open bank accounts, set up phone numbers, and establish memberships in your new country.
Where Will You Be a Tax Resident?
Canada doesn’t just let you leave and pay 0% tax—you need to prove that you’re a tax resident somewhere else.
If you’re moving to Dubai, you can become a tax resident by:
Spending at least 90 days per year in the UAE. Setting up a business or getting a residency visa. Applying for a Tax Residency Certificate (this proves to CRA that you pay tax elsewhere—even if it’s 0%).
If you don’t establish tax residency somewhere else, CRA might argue that you’re still a Canadian tax resident—which means they can tax your worldwide income.
Example of a bad scenario:
You leave Canada and travel between Bali, Thailand, and Spain with no tax residency.
CRA asks, “Where do you pay taxes?”
You have no proof of tax residency.
CRA considers you a Canadian tax resident, and you owe taxes on all income worldwide.
Solution: Set up residency in a low-tax country like Dubai so that you have proof if CRA ever asks.
How Long Can You Visit Canada After Leaving?
Even after becoming a non-resident, you might want to visit Canada for family, business, or vacation. But you need to be careful about how much time you spend there.
Golden Rule of International Taxation:
Where do you spend most of your time?
If you spend 6 months or more in Canada, CRA can consider you a tax resident again.
If you spend less time in Dubai than in Canada, CRA might argue that Canada is still your main home.
Safe strategy: If you spend 90 days per year in Dubai, limit your Canada visits to 15–30 days per year.
Filing Your Exit with the CRA
Once you’ve made your decision to leave, you need to officially inform the CRA. Here’s what you need to do:
File your final tax return as a Canadian resident (declare your departure date). Pay your exit tax on any capital gains. Cancel government benefits like OHIP and other social services. Settle any outstanding tax balances (if you owe money, pay it off before leaving).
If you receive any government benefits after leaving, you may have to pay them back
Need Help? Let’s Make Your Move Easy
Leaving Canada isn’t as simple as just getting on a flight—you need to exit properly to avoid tax issues. If you don’t, you might still owe taxes in Canada for years, even while living abroad.
At GenZone, we help people like you set up tax residency in Dubai so you can legally reduce your taxes and enjoy financial freedom.
Want expert guidance? Book a free consultation call to see how we can help.
