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.
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