Unlike the UK or Australia, Canada does not use a fixed day-count threshold for tax residency. Instead, the Canada Revenue Agency (CRA) evaluates your overall situation using a primary ties and secondary ties framework. This qualitative approach means you must consider the totality of your circumstances, including where your home, spouse, dependents, and economic interests are located.
The CRA considers the following as primary ties, and maintaining any one of them strongly suggests you remain a Canadian tax resident:
Even without primary ties, the CRA may consider you a resident based on the cumulative weight of secondary ties:
The CRA evaluates the significance of each secondary tie. For example, maintaining a Canadian driver's license carries more weight than holding a small Canadian bank account. If you have multiple secondary ties, the CRA may find you remain resident even without primary ties.
To establish non-resident status, you must sever primary ties and reduce secondary ties to a minimum. Key steps include:
When you cease to be a Canadian tax resident, the CRA applies a "deemed disposition" rule. You are treated as if you sold all your capital assets at fair market value on the day you departed, and must report any capital gains on your final resident return. This applies to stocks, mutual funds, real estate (excluding your principal residence), and other capital property.
Certain assets are exempt from deemed disposition, including Canadian real property, business property used in a Canadian business, and assets held in registered plans (RRSP, RRIF, TFSA). However, the TFSA has special rules—while it remains tax-free while you are a non-resident, any contributions made while non-resident are subject to a 1% per month tax, and growth earned while non-resident may be taxed by your new country of residence.
| Asset Type | Deemed Disposition? | Notes |
|---|---|---|
| Publicly traded shares | Yes | Report capital gain on departure |
| Canadian real estate | No | Subject to non-resident withholding on future sale |
| RRSP/RRIF | No | Taxed on withdrawal as non-resident |
| TFSA | No | No contribution allowed as non-resident |
| Cryptocurrency | Yes | Treated as capital property |
| Principal residence | No (if sold before departure) | Sell before leaving for tax-free gain |
If the deemed disposition creates a tax liability exceeding CAD $16,500, you can post security with the CRA instead of paying immediately. This is useful for individuals with large unrealized gains who may not have liquid funds at the time of departure.
As a non-resident, you are taxed only on Canadian-source income. The most common types and their tax treatment are:
| Income Type | Default Withholding | Treaty Reduction Possible? |
|---|---|---|
| Rental income | 25% of gross (NR6 for net basis) | Varies by treaty |
| Pension income (non-RRSP) | 25% of gross | Reduced to 15% under many treaties |
| RRSP/RRIF withdrawals | 25% of gross (or 15% if resident in US) | US treaty: 15% |
| Dividends | 25% of gross | Reduced to 15% under most treaties |
| Interest (arm's length) | 0% (exempt) | Generally exempt |
| Employment (Canadian work) | Part XIII tax or Section 216 | Treaty may exempt short-term |
Non-residents receiving certain types of Canadian-source income—including Old Age Security (OAS), Canada Pension Plan (CPP), RRSP/RRIF payments, and non-RRSP pension income—can elect under Section 217 to be taxed at graduated resident rates instead of the flat 25% non-resident withholding. This election is beneficial when your total income is low enough that the graduated rates produce a lower effective tax rate than 25%.
To make the election, file Form NR5 with the CRA to request a reduction in withholding, then file a Section 217 return by June 30 of the following year. The election covers all eligible income types—you cannot cherry-pick which sources to include.
| Bracket | Taxable Income (CAD) | Federal Rate |
|---|---|---|
| 1 | $0 - $57,375 | 15% |
| 2 | $57,376 - $114,750 | 20.5% |
| 3 | $114,751 - $177,882 | 26% |
| 4 | $177,883 - $253,414 | 29% |
| 5 | $253,415+ | 33% |
Provincial taxes are added on top of federal rates. Provincial rates vary widely, from a low of about 10% in Alberta to highs exceeding 21% in Nova Scotia. As a non-resident, you do not pay provincial tax on Canadian-source income, which can result in significant savings compared to your resident tax rate.
Non-residents with Canadian-source income must navigate several filing obligations:
The Canada-US tax treaty is one of the most frequently used and detailed treaties. Key provisions for expats include:
Some ties are worth keeping even as a non-resident. RRSPs can remain in place and grow tax-deferred, though withdrawals will be subject to non-resident withholding. A TFSA can remain open but should not receive new contributions. Provincial health insurance typically cannot be maintained, so arrange private health coverage in your new country. Your Canadian passport and citizenship are unaffected by tax residency changes.
For RRSP withdrawals as a non-resident, the withholding rate is 25% on lump-sum withdrawals, or 15% for periodic payments if you are a US resident under the treaty. If you anticipate needing RRSP funds, plan the timing of your departure and withdrawals carefully to minimize the combined tax impact across both countries.
Disclaimer: The information provided on this page is for general informational purposes only and does not constitute financial, legal, or tax advice. Always consult with a qualified professional advisor before making financial decisions. Rates, thresholds, and regulations change frequently — verify current figures with official government sources.