If you are a Canadian resident and planning to leave the country for an extended period of time, there are certain forms that may need to be filed, such as: Form T1161, Form T1243 (Deemed Disposition of Property by an Emigrant of Canada). In an effort to inform Canadian taxpayers, our AG Tax professionals have prepared a brief summary of these forms and the potential tax implications. In this article, we will discuss Form T1243, Deemed Disposition of Property by an Emigrant of Canada.
What is Form T1243?
Form T1243 is used to report the capital gains or losses from the deemed disposition of assets that may occur when a Canadian taxpayer leaves Canada for an extended period of time. In this situation, the Canadian government assumes that the taxpayer has disposed of all their Canadian property at the prevailing market price on the day they leave the country and to have reacquired all of it at that same price. Any capital gain or loss from the deemed dispositions will need to be reported on form T1 (Canadian individual tax return).
Who Needs to File Form T1243?
If you are a resident of Canada moving to settle in another country permanently (or for an extended period of time), you may need to file Form T1243. This form is for Canadian residents who have been deemed to have disposed of property when they left Canada.
What Kind of Property is Required to be Reported on T1243?
Do note that your real estate, business property, retirement & pension plans, stock options, and interest in life insurance policies do not need to be reported on this form. However, please be advised that this list is not limited to these assets. Please consult your AG Tax advisor regarding which of your assets will be considered to be disposed of in the event you choose to emigrate from Canada.
What are the Tax Implications of T1243?
There is a possibility of double taxation as the basis of the property that was deemed to have been disposed of will be adjusted to its fair market value for Canadian tax purposes. If this adjustment results in a gain this amount will be reported and taxed on their Canadian tax return. However, the country the taxpayer is immigrating to may not recognize this change in basis, so when the property is actually sold in the future that same gain may be taxed again in the taxpayer’s new home country. Generally a foreign tax credit is not available in these situations to offset the double taxation. Careful consideration must be taken to prevent and minimize these circumstances.
AG Tax LLP Can Help
If you are planning to leave Canada for an extended period of time, emigration rules should be reviewed to prevent any unwelcome surprises from the CRA. AG Tax has a team of international tax specialists who can help you determine whether or not your travel activities have the potential to trigger the T1243 filing requirement, and what can be done to avoid a situation where double taxation may occur.
If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of U.S. and Canadian tax laws as well as cross-border compliance
Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.
We can assist with:
- Canadian Personal and corporate tax returns
- Cross Border Taxation and Business Planning
- U.S. Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- State Sales Tax & E-commerce Taxation
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 416-238-5920 (Greater Toronto Area, ON)
- 604-538-8735 (Greater Vancouver Area, BC)
- 780-702-2732 (Greater Edmonton Area, AB)
Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
