Departure tax is the tax on the accrued gains of your property when you cease to be a Canadian resident, based on a deemed disposition at fair market value.
When you emigrate and stop being a Canadian tax resident, you are treated as having sold most of your property at fair market value on your departure date, a deemed disposition. Any accrued capital gains become taxable on your final Canadian return, which is why it is nicknamed the departure tax.
Some property is excluded (such as Canadian real estate and registered plans), and it is possible to elect to defer the tax by posting security until the property is actually sold. Departure is a major tax event that needs planning well before you leave, particularly for those holding investments or private company shares.
You leave Canada permanently holding a stock portfolio with $150,000 of accrued gains. You are deemed to have sold it at fair market value on departure, and the resulting capital gain is taxed on your final Canadian return.
Primary source
- Income Tax Act, s. 128.1(4) Emigration
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Property tax is an annual municipal levy on real estate, charged by the city or town where the property sits rather than by the CRA. The bill is the assessed value of the property multiplied by the tax rate the municipality sets each year, and it funds local services such as roads, waste collection, policing and the education portion the province adds. Assessed value is set by a provincial assessment authority, so it is not the price you paid.
Multiply the assessed value of the property by the tax rate for its property class. Assessment is set by a provincial assessment authority on its own cycle and increases are often phased in, so the value lags the market. The rate is set each year by the municipality out of its budget, with an education portion added by the province. Both figures appear on your notice, which is why identical homes in different municipalities carry different bills.
A tax credit reduces the tax you owe, whereas a deduction reduces the income the tax is calculated on. Non-refundable credits, such as the basic personal amount or tuition, can bring tax down to nil but pay nothing beyond that. Refundable credits, such as the GST/HST credit, are paid out even when no tax is owing. Almost every credit is claimed on the return, so filing is what releases the money.
Taxable wages are the part of an employee's pay that income tax is calculated on: salary, hourly wages, overtime, bonuses, commissions, most allowances and the value of taxable benefits such as personal use of a company vehicle. They are not the same as gross pay, and they differ again from pensionable and insurable earnings, which drive CPP and EI. Box 14 of the T4 reports employment income for the calendar year.
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Reviewed and fact-checked by Udit Gupta
Ex Big 4 — Ernst & Young, Deloitte · International & cross-border tax specialist · CPA Canada (In-Depth Tax Program) · Chartered accountant, ICAI & MIA
Udit Gupta has over 15 years of experience helping corporations and business owners with corporate structuring, corporate tax filing, bookkeeping, payroll, GST/HST, cross-border tax and CRA representation. Big 4 trained at Ernst & Young and Deloitte, and qualified as a chartered accountant in India and again in Malaysia, he founded his accounting practice in 2014 to serve entrepreneurs, startups and non-resident business owners across Canada. View full member bio.
The Institute of Chartered Accountants of India — member 521458 · Malaysian Institute of Accountants — member CA 44667 · Ex Big 4: Ernst & Young, Deloitte · CPA Canada (In-Depth Tax Program), completed 19 Dec 2023 · In-Depth GST/HST Part I, 12 Jul 2022 · Part II, 5 Jul 2023
Editorial policy. Every page is researched against primary sources — the Income Tax Act, CRA publications and CPA Canada guidance — and every rate or threshold is stated with the tax year it applies to.
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