Dispositions of property for emigrants of Canada

This page provides information for emigrants of Canada on deemed dispositions of property.

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Deemed dispositions

If you ceased to be a resident of Canada in the year, you were deemed to have disposed of certain types of property at their fair market value (FMV) when you left Canada and to have immediately reacquired them for the same amount. This is called a deemed disposition.

This applies to most properties. Some exceptions are:

  1. Canadian real or immovable property, Canadian resource property, and timber resource property
  2. Canadian business property (including inventory) if business is carried on through a permanent establishment in Canada
  3. 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 personal trusts resident in Canada, and interests in life insurance policies in Canada (other than segregated fund policies) (for a complete list, refer to the definition of “excluded right or interest” in subsection 128.1(10) of the Income Tax Act)
  4. property you owned when you last became a resident of Canada (or property you inherited afterward) if you were an individual who was a resident of Canada for 60 months or less during the 10-year period before you emigrated and you are not a trust

Note 

If you ceased to be a resident of Canada and you elected to declare the deemed disposition of properties listed in item 1 or item 2 above, include those properties when calculating your deemed dispositions and complete Form T2061A, Election by an Emigrant to Report Deemed Dispositions of Property and any Resulting Capital Gain or Loss.

Reporting the deemed disposition

On your 2023 return, report any capital gains or capital losses that result from your deemed disposition.

To calculate and report any capital gains (or losses) on property that you are deemed to have disposed of on the date you ceased to be a resident of Canada, complete Form T1243, Deemed Disposition of Property by an Emigrant of Canada. Include on your Schedule 3, Capital Gains (or Losses), the capital gains (or losses) that you reported on Form T1243.

List of properties

If the fair market value (FMV) of all of the properties that you owned when you left Canada was more than $25,000, complete Form T1161, List of Properties by an Emigrant of Canada, to list all of your properties inside and outside Canada and attach it to your 2023 return.

Certain properties are excluded from this calculation and should not be included in the list.

Do not include: 

  1. cash (including bank deposits)
  2. 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, and rights or interests in certain other trusts (for a complete list, refer to the definition of "excluded right or interest" in subsection 128.1(10) of the Income Tax Act read without reference to paragraphs (c), (j), and (l).)
  3. property you owned when you last became a resident of Canada (or property you inherited afterward) if you were an individual who was a resident of Canada for 60 months or less during the 10-year period before you emigrated and you are not a trust, and the property is not taxable Canadian property
  4. any item of personal-use property (such as household effects, clothing, cars, collectibles) that has a fair market value of less than $10,000 (see the definition of "personal-use property" in section 54 of the Income Tax Act.)

Note 

All amounts are in Canadian dollars.

Penalty

File your tax return by the filing due date. The penalty for failing to file Form T1161 by the due date is $25 for each day the return is late. There is a minimum penalty of $100 and a maximum penalty of $2,500.

Note 

Even if you do not have to file a return, you must send Form T1161 on or before your filing due date.

Deferring the tax owing

You can elect to defer the payment of tax on income relating to the deemed disposition of property (departure tax), regardless of the amount. You would then pay the tax later, without interest, when you sell (or otherwise dispose of) the property. This election does not apply to the deemed disposition of an employee benefit plan.

To make this election, complete Form T1244, Election, under Subsection 220(4.5) of the Income Tax Act, to Defer the Payment of Tax on Income Relating to the Deemed Disposition of Property.

You must make this election by April 30 of the year after you emigrate from Canada.

If you make this election and the amount of federal tax owing on income from the deemed disposition of property is more than $16,500 (more than $13,777.50 for former residents of Quebec), you have to provide adequate security to cover the amount. You may also be required to provide security to cover any applicable provincial or territorial tax payableContact the CRA as soon as possible to make acceptable arrangements before April 30.

Unwinding a deemed disposition for returning residents

If you ceased to be a resident of Canada after October 1, 1996, and you later re-establish Canadian residency for income tax purposes, you can elect to make an adjustment to the deemed dispositions that you reported when you emigrated from Canada. The CRA refers to this as an election to “unwind” a previous deemed disposition.

You can make this election to unwind if you still own some or all of the property that was deemed disposed of when you emigrated. If you make this election for taxable Canadian property, you can reduce the gain reported on your tax return for the year that you emigrated by an amount that you specify, up to the amount of the gain that you reported.

If you make this election for property other than taxable Canadian property, you can reduce the amount of the proceeds of disposition that you reported on your tax return for the year that you emigrated by whichever is the least:

Note

The definition of taxable Canadian property changed on March 5, 2010. Special rules may apply for property that was considered taxable Canadian property when you became a non-resident but may no longer be considered taxable Canadian property when you return to Canada. For more information, go to Changes to Taxable Canadian Property.

The election to unwind may result in the reduction or elimination of the tax owing for the gain from the previously reported deemed disposition of property on emigration (departure tax). If you make this election and had previously elected to defer payment of the tax owing on the income from the deemed disposition, some or all of the security that you may have provided may be returned to you.

You can make this election by sending your request in writing on or before your filing due date for the year that you re-establish Canadian residency for income tax purposes. You must also include a list of the properties that you own and the FMV of each property that this election applies to. To find where to send your request, go to Where to mail your documents.

Previously deferred tax

When you immigrate to Canada, you are generally considered to have disposed of, and to have immediately reacquired, most properties that you own on the date you immigrate. If you had previously elected to defer payment of departure tax, you may now have to pay the deferred tax. For more information, contact the CRA.

Disposing of property after you emigrate

After your emigration, you may dispose of, or plan to dispose of, any of the property that was deemed to be disposed at the time of your emigration. If you had previously elected to defer payment of the departure tax, the actual disposition of these assets may mean that you must pay some or all of the deferred amount.

To report your actual disposition, send a list of the following information to 'Non-Resident T1 Adjustments' at the Winnipeg Tax Centre:

Payment of any resulting amounts owing is due by April 30 of the year following the disposition. For more information on making payments on your departure tax, contact the CRA.

If the property you have, or plan to dispose of, is taxable Canadian property, you may have additional reporting requirements. Some examples of taxable Canadian property are:

For the procedures you must follow when disposing of such property, go to Disposing of or acquiring certain Canadian property or Disposing of certain types of Canadian property. You can also refer to Information Circular IC72-17R6, Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents of Canada – Section 116.

Forms and publications

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