Leaving And Returning To Canada
Residency has significant implications on the tax obligations of an individual. Canadian residents pay tax on their worldwide income and non-residents pay tax only on certain income they earn in Canada.
Sometimes it is advantageous to change residency for Tax and Tax Planning or for Estate Planning. The timing of leaving from or returning to Canada and the assets you hold at that time may affect your immediate tax liability. Sometimes people leave for other than tax reasons, but tax still applies upon departure.
When a person ceases to be a resident of Canada, they are deemed to have disposed of certain types of property at its fair market value when leaving Canada and to have immediately reacquired them for the same amount. A person then has to report a capital gain or capital loss that results from the deemed disposition on their tax return (due on April 30 the year following the departure) and pay the resulting tax.
We can assist you to achieve the maximum departure tax deferral
A departing taxpayer can elect to defer payment of tax on income arising from the deemed disposition of property, regardless of the amount. A departing taxpayer could then pay the tax when the property is actually sold. If the deferral election is made, interest does not start to accrue on the amount deferred until such time as the property is sold.
At Granville Law Group we can advise you on:
- Optimum tax structures when leaving Canada in order to minimize taxes and tax reporting;
- Ascertaining non-resident status,
- Tax consequences of becoming a non-resident, including departure tax and future tax obligations;
- Tax consequences of returning to Canada, and
- Timing of reacquiring Canadian residency status.