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Canadians Working Outside the Country

The pandemic has a lot of people thinking about moving to another country where the pace is slower and the way of life costs less. If you’re looking to work from another country, it’s important to know whether you are still paying taxes in Canada or in the country you’ve just moved to.

It’s important to note that what you may think of as temporary may not be what the Canadian government thinks of as temporary. If you have given up your residence in Canada and your family has left the country with you, you will likely be considered to have permanently left Canada. If you have left the country and you’ve kept your residence or your family is still in Canada, you may be considered to have left temporarily. 

If you’ve lived in another country before moving to Canada and you resettle in that previous country, you will be deemed a non-resident of Canada on the day of your departure. That is regardless of whether your family is still in Canada until they sell your house. 

If you leave Canada and retain your residence here, you may be considered a factual resident of Canada, which means you will still be paying taxes in Canada. If you are a factual resident, you must continue to file your taxes with Revenue Canada or Revenu Quebec like you would if you were residing in Canada. 

These would be some examples of factual Canadian residents: 

  • Work temporarily outside Canada 
  • Commute (cross the border daily or weekly) from Canada to your place of work in the United States 
  • Vacation outside of Canada 
  • Spend part of the year in the U.S. for health reasons or on vacation 
  • Teach or attend school in another country

When would I be considered a non-resident?
If you have divested your residence, you would be considered a non-resident the day you leave Canada. If your family is staying to sell your residence, you will be considered a non-resident on the day of their departure. You would be taxed for the period preceding your departure date or the date your family left to join you. If you owe taxes, you must file. If you want a refund, you must file.

Departure tax
If you sell your house and personal property before you leave Canada permanently, you may be subject to a capital gains tax known as a departure tax.

If you leave the country permanently, any property you own valued at over $10,000, becomes a deemed disposition, which means Revenu Quebec, or Revenue Canada consider the property sold (even if you didn’t sell it) and reacquired at Fair Market Value. You will pay a capital gain on deemed dispositions.

Investments and bank accounts
If you are leaving the country permanently you must contact your financial institution and let them know you are no longer a resident of Canada. If you are still being paid by a company or organization in Canada, you also must let your payer know you are no longer a resident. 

You are allowed to keep the following investments without having them considered deemed dispositions: 

  • Pension plans 
  • Annuities 
  • Registered retirement savings plans 
  • Pooled registered pension plans 
  • Registered retirement income funds 
  • Registered education savings plans 
  • Registered disability savings plans 
  • Tax-free savings accounts 
  • Deferred profit-sharing plans 
  • Employee profit-sharing plans 
  • Employee benefit plans 
  • Salary deferral arrangements 
  • Retirement compensation arrangements 
  • Employee life and health trusts 
  • Rights or interests in certain other trusts 
  • Employee security options subject to Canadian tax 
  • Interests in certain Canadian personal trusts 
  • Interests in life insurance policies in Canada (not including segregated fund policies) 

The following investments are all considered deemed dispositions and subject to a capital gains tax: 

  • Real estate outside Canada 
  • Unincorporated businesses outside of Canada 
  • Private or public company shares in Canada or outside Canada 
  • Mutual funds units in Canada or outside Canada 
  • Partnership interests 
  • Interests in non-resident inter vivos trusts 
  • Other portfolio investments 
  • Personal use property as well as listed personal property like works of art, jewelry, stamps, coins, and rare manuscripts 

At SLF, we’re here to help. For more information on moving and working outside of Canada, contact your SLF Advisor.