Ask Allan Forum
Get expert answers to your tax questions straight from Allan, our owner and experienced CPA. It’s free, direct, and designed to help you make the best decisions when it comes to your taxes.
Hello,
I understand that departure tax is not paid on TFSAs when leaving Canada. However, I often hear that it is best to sell these investments before becoming a Canadian non-resident. Why is this the case? Also, is it best to sell my non-registered stocks and repurchase them before leaving the country in order to pay lower departure tax on them since the difference between cost and new price would be smaller?
Thank you.
Hi Michele,
Most foreign countries do not recognize TFSAs as tax-sheltered investments. This means that any gains or income realized within a TFSA is taxable in the foreign jurisdiction. As a result, there's no real benefit in keeping a TFSA if you are a non-resident of Canada, unless your new home country either recognizes the tax-free status of TFSAs or has a low income-tax rate.
Selling and repurchasing your non-registered securities will reduce or eliminate your departure tax because you are crystalizing the gains by selling.