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My spouse and I departed Canada in July 2024 and have not returned to Canada since departing. We filed our 2025 taxes as a resident, IE we did not file our departure tax.
We sold primary residence prior to leaving Canada, however still own vacant, undeveloped, un-serviced, non-occupied land in Canada. Other Investments and assets in Canada include cash savings/bank accounts, RRSP’s and non-registered account/crypto currency.
We have an incorporated company in Canada, as I was a contractor/consultant prior to leaving Canada, my spouse was employed elsewhere, I was working through the Corporation. The Corp is owned by myself and spouse, 51/49% respectively. The Company has no employees, just the shareholders. There is some cash savings in the company, assets are minimal, mostly depreciated. There has been no business activity since leaving, but we have banking fees/accounting fees, small amount of T5 income. We have filed and paid our FY2025 taxes and GST.
We are retired, no longer working or receiving income in Canada or abroad. However, we did receive income in 2024 as we were both working for half the year. Since the income was low, we have been automatically receiving climate change rebates, which we do not want, but unfortunately have been auto deposited to our account. The only other income for 2024/2025 is T5 interest income and dividend income from the Corp. Dividend income for this tax year 2025, is yet to be determined – I would appreciate advise on this.
We are sustaining ourselves on savings at the moment. Our intention is to draw down on our RRSP’s over the next several years, which will trigger large amount of withholding tax. Since its our only income, this would mean tax rebates to us each year. Not sure if this is wise, or if RRSP should convert to RRIF.
We purchased a house in Central America, since leaving Canada and are applying for permanent residence here. This may take 1 or more years. We do not wish to return to Canada to live, but want the ability to return if we so choose.
Current ties to Canada are health insurance (did not cancel), drivers licenses, bank accounts, RRSP’s. We have personal belongings in storage, vehicles and higher value items were sold prior to leaving.
Regarding CPP, I am 55, not eligible yet. My spouse is 60 and is eligible but has not made an application for benefits.
Based on all of the above, what do you recommend we do with our personal filings and corporate filings this year? How do we rectify our late departure tax filing and come into compliance? What should we do with the Corp? Is the property we purchased abroad (our primary residence) taxable in Canada? Is the raw land we own in Canada subject to capital gains tax? Do you have recommendations on RRSP vs RRIF, what to do about CPP and the Corporation? Any other advice is appreciated.
Hello,
Based on what you described, you likely need to correct your 2024 personal tax returns to report a departure from Canada in July 2024, assuming the facts support that you became non-residents at that time. If so, your 2024 returns should likely be amended from full-year resident returns to emigrant returns, with the departure date disclosed and any required departure tax forms filed.
A few important points:
- Departure tax generally applies to many non-registered assets at fair market value on the date you left Canada.
- Canadian real estate, including your vacant land, is generally excluded from departure tax, but Canada would still tax the gain when that land is eventually sold.
- RRSPs are also excluded from departure tax.
- Crypto and non-registered investments are the main assets that should be reviewed carefully for possible deemed disposition on departure.
- If the total fair market value of your reportable property exceeded $25,000 on departure, Form T1161 may also be required.
Your foreign home is generally not taxable in Canada simply because you bought it after leaving. The key issue is whether you were still Canadian tax residents after July 2024. If you properly became non-residents in 2024, Canada would generally not tax future gains on a home purchased abroad.
The corporation also needs attention. A Canadian corporation must still remain compliant even if you have left Canada. If there has been no activity, you may be able to keep it dormant, distribute funds, or wind it up, but that decision should be reviewed carefully first. If dividends are paid to you now as non-residents, non-resident withholding tax and NR4 reporting may apply.
On the RRSP/RRIF question, this should be reviewed as part of a withdrawal strategy. RRSP or RRIF withdrawals by non-residents are generally subject to withholding tax, but a section 217 return may allow you to recover some of that tax if the withdrawals are your main Canadian-source income.
The climate payments are another sign that the residency status likely needs to be corrected. If you were non-residents, those payments were likely not properly payable and CRA may reverse them once the filings are fixed.
My recommendation is to:
- confirm the correct departure date and non-resident status,
- amend the 2024 personal returns,
- review whether departure tax applies to the non-registered investments, crypto, and possibly the corporate shares,
- decide what to do with the corporation, and
- plan RRSP/RRIF withdrawals properly as non-residents.
This is fixable, but it should be handled in a coordinated way rather than one issue at a time.