Picture this: you've worked hard for decades, built up your nest egg, and finally reached retirement. Instead of shovelling snow in January, you're dreaming of sipping coffee on a Mediterranean balcony or walking a beach in Costa Rica.
For many Canadian retirees, expatriating is the ultimate golden-years goal. But before you book that one-way ticket, there's a rather large elephant in the room: the Canada Revenue Agency (CRA). Moving abroad doesn't mean you automatically stop paying Canadian taxes — in fact, leaving Canada can trigger some of the most complex tax events of your life.
1. Severing ties: are you really a "non-resident"?
The CRA doesn't let you simply declare yourself a non-resident because you feel like one. To be considered a non-resident for tax purposes, you must sever your residential ties to Canada. The CRA looks at two types:
- Primary ties: a home in Canada available for your use, or a spouse/common-law partner and dependants who remain in Canada.
- Secondary ties: a Canadian driver's licence, Canadian bank accounts, provincial health insurance, or strong social and economic ties.
The takeaway: if you keep a condo available for your use, the CRA will likely still consider you a factual resident of Canada — meaning you're taxed on your worldwide income. To become a non-resident, you generally need to give up your primary Canadian home and significantly reduce your secondary ties.
2. The "departure tax" (deemed disposition)
If you successfully sever your ties and become a non-resident, you'll be hit with what's colloquially known as the departure tax. When you emigrate, the CRA assumes you sold all your property at its fair market value (FMV) on the date you left — even if you sold nothing. This is a "deemed disposition."
- If your assets have gone up in value, you report the capital gain on your final Canadian tax return and pay the tax.
- If your assets have gone down in value, you can claim a capital loss.
What's exempt from the departure tax?
- Canadian real estate (including your principal residence, usually tax-free thanks to the Principal Residence Exemption).
- RRSPs, RRIFs and TFSAs.
- Canadian pension rights, such as CPP/QPP.
Note: while Canadian real estate isn't taxed on departure, you'll still owe Canadian capital gains tax when you eventually sell it as a non-resident.
3. What happens to your retirement accounts?
RRSPs and RRIFs
Your RRSPs and RRIFs aren't subject to the departure tax. But when you start withdrawing as a non-resident, the CRA applies a Part XIII withholding tax. The default rate is 25%. If you move to a country with a Canadian tax treaty (the US, UK, most of Europe), that rate is often reduced to 15% — and sometimes lower for periodic pension payments.
The TFSA trap
The Tax-Free Savings Account is a beautiful thing in Canada, but it can become a nightmare abroad. The CRA still treats it as tax-free — your new country of residence likely won't. Many countries (including the US) don't recognize the TFSA as a tax-sheltered retirement account and may treat it as a foreign trust or an ordinary taxable investment account, taxing the growth every year. Always check how your destination country treats TFSAs before moving.
4. Government pensions: OAS and CPP
If you've lived in Canada for at least 20 years after age 18, you can keep receiving Old Age Security (OAS) and Canada Pension Plan (CPP) payments while living abroad. But the taxman still wants his cut.
- CPP/QPP: subject to a 25% withholding tax, often reduced to 15% (and sometimes 0% for QPP) under a tax treaty.
- OAS: also subject to a 25% withholding tax, reducible by treaty.
- The silver lining: as a non-resident, your OAS is not subject to the OAS recovery tax (the "clawback"), no matter how high your worldwide income.
Pro tip — the Section 217 election. If your Canadian-source income is relatively low, you may be able to file a Canadian return under Section 217 of the Income Tax Act, which lets you be taxed at Canadian marginal rates instead of the flat withholding rate. That can produce a refund if your marginal rate is lower than the withholding rate.
5. Don't forget the provinces
Many expats focus entirely on federal taxes and forget they also have to sever ties with their province. If you leave Canada on October 15, you're generally considered a resident of your province for the entire year and will owe provincial taxes for that year. To avoid being taxed by a province in later years, you must physically leave and establish residency elsewhere. Québec in particular has its own distinct tax rules and treaties, so if you're leaving La Belle Province, get specialized advice.
6. The magic of tax treaties
The biggest fear for expats is double taxation — paying tax in Canada and again in your new country. Canada has tax treaties with more than 90 countries. These treaties dictate which country has the primary right to tax specific types of income (pensions, dividends, capital gains) and allow you to claim foreign tax credits in your new country for taxes paid to Canada.
Warning: tax treaties are incredibly complex. The Canada–US treaty, for example, has very specific RRSP rules that differ from Canada's treaties with Portugal or Thailand.
Your expatriation checklist
- Hire a cross-border tax specialist. Look for a CPA who specializes in international tax and expatriation, ideally one who knows your destination country's rules.
- Calculate your departure tax. Get a professional valuation of your assets so you know your exit tax and have the liquidity to pay it.
- Review your investment portfolio. Shift toward holdings that are tax-efficient for a non-resident (for example, minimizing Canadian dividends, which are heavily taxed for non-residents).
- Notify the CRA. File form NR73 (Determination of Residency Status), or make sure your final return clearly indicates your date of emigration.
- Update your estate plan. Canadian and foreign wills don't always play nicely together, and "deemed disposition at death" rules apply differently to non-residents.
Final thoughts
Retiring abroad is an exciting chapter that can dramatically improve your quality of life. But the move from "Canadian resident" to "non-resident" is a major financial event. Understand the departure tax, the fate of your registered accounts, and the power of tax treaties, and your golden years can be spent enjoying retirement — not worrying about the CRA.
And while you're planning the tax side, don't overlook the health side: once you leave, your provincial plan stops following you. Emergency medical coverage abroad — and coverage for trips back to Canada — becomes essential. Have a look at where Canadians are heading or trip cancellation and interruption coverage before you go.
Disclaimer: this article is for educational purposes only, as of August 2026. Ehcover is an insurance broker, not a CPA or financial advisor. Tax laws change, and international tax situations depend heavily on individual circumstances and specific bilateral treaties. Always consult a qualified cross-border tax professional before making decisions about emigration or your retirement accounts.