Deemed Dispositions: You are deemed to have disposed of certain assets at their fair market value at the time of your departure and to have reacquired them for the same amount right after.
- Applies to most property, with the exception of Canadian real property, Canadian business property, RRSPs and other pensions
- An increase in fair market value over the adjusted cost has to be reported as a capital gain and taxed accordingly
- You can elect to defer the payment of tax on income relating to the deemed disposition and pay it later when you sell or otherwise dispose of the property.
- If the tax exceeds $14,500, payment can still be deferred; however, the CRA will require you to post some security with them. The security must be paid by the due date of the return.
Principal Residence: If you are not planning on renting out your former principal residence on a long- term basis once you leave Canada, you should consider selling it on or about the time of your departure, preferably before entering the U.S. The gain on your principal residence is not taxed in Canada.
Non-resident Tax Withholding: If you will continue to receive income from Canadian sources, the payers are required to withhold non-resident tax at a rate of 25%. This withholding tax satisfies your tax liability to Canada, and no income tax return will be required. The Canada-U.S. tax treaty allows a reduced rate of withholding on certain types of income.
For more information you may wish to read our article entitled Emigrating From Canada