While the narrative of immigration to Canada is strong, many Canadians also leave the country. According to Statistics Canada, 106,134 people left the country to relocate elsewhere in 2024. The reasons are varied; work, love and a lack of affordability.
“It was really hard to afford the cost of living in Toronto,” says Amanda Armstrong, a social impact entrepreneur and career coach who lives in Nairobi, Kenya. “I was also a single-income household and I lost my job in 2019. I couldn’t afford to pay rent anymore, and I wasn’t making that much money as a small-business owner. So during the pandemic, I came to Kenya for six months just to get out of Canada.”
When Armstrong returned to Toronto from her trip, her landlord told her his daughter was moving in, and that she would have to move. “I just wasn’t making enough money to cover rent and expenses, so I thought, ‘This is my sign to go move to Kenya,’ so I moved.” She’s been living there for the past three and a half years.
There are two definitions for leaving the country if you’re leaving permanently or temporarily. You’re considered a factual resident of Canada if you leave but keep residential ties to the country like a home, spouse or common-law partner or dependants. Secondary residential ties include Canadian bank accounts, credit cards, a Canadian passport and health insurance. You’re considered an emigrant if you leave Canada and break residential ties, such as giving up your home in Canada and establishing a permanent home in another country.
“What I deal with a lot is employees who get sent to work in other countries,” says Frank Casciaro, CPA, CGA and Canadian national GES tax leader, global employer services at RSM Canada. “But they keep their house here, their family stays here. They’re coming back on the weekends or holidays, and they’re strictly just working in the other country. And in that scenario the idea is that they would still be a resident of Canada, because they have residential ties here.”
If you’re thinking about leaving Canada, whether temporarily or permanently, what happens to your savings, investments and retirement? Can you keep contributing to your registered retirement savings plans?
Taxes
Samantha Sykes, a senior investment adviser at Raymond James, says the income of a Canadian who is a factual resident is subject to Canadian taxes.
“An emigrant is considered to have severed ties with Canada and their global income is only subject to tax in the new country,” she says. “So if they are just like, peace out, I don’t want to be here anymore, then you face departure tax on your Canadian assets.
This so-called “deemed disposition” means that when it comes to your taxes, you are considered to have sold your assets at their fair market value on the day you leave the country, the day of departure.
“When you exit, you’re going to generate a tax liability unless you own nothing,” says Jennifer Reid, CPA, CGA with RSM Canada. She also points out that many emigrants believe they only have to pay tax on their Canadian assets when they have to pay tax on their worldwide assets.
Then you have to look at whether you actually get a benefit in the other country from that tax liability. Reid says some treaties may offer an offset but each country is different.
Non-residents only pay tax on income earned from Canadian sources.
Health coverage
“Once you say, ‘I am no longer a resident of Canada and I’m not paying taxes,’ the first thing is, you lose your OHIP,” says Armstrong. OHIP’s guidelines say that if someone plans to be outside of the country for more than seven months in a 12-month period you can keep your OHIP coverage for up to two years if you have a valid health card, Ontario is your primary home and you have been in the province for a minimum of 153 days in each of the two 12-month periods immediately before leaving the country.
Investments
“I think the biggest thing I learned was about the investment side of things,” Armstrong says. “I was hoping that I could just keep my Wealthsimple investments going, and I could still contribute, because I wanted to use that platform for investing purposes.” Because she was no longer a resident of Canada, she had to stop investing through any type of Canadian financial institution, and manages her investments through Kenyan institutions.
And you have to pay taxes on your investments, says Reid. “You need to let your banks know that you’re a non-resident, because they need to withhold tax when they issue funds out of those accounts,” she says. “So if you have an RRSP and you are a non-resident, you take funds out, they should be withholding 25 per cent tax.” That withholding tax is determined by the CRA. Plus, you may have to pay taxes on your once-tax-free savings account depending on the jurisdiction you move to, as it might not recognize the tax-free status of the TFSA.
Reid also said that non-residents can keep their RRSP but can’t contribute to it. That’s because people who aren’t making Canadian income no longer build up contribution room in their RRSP. The same applies to their TFSA.
Experts say it’s important to talk to financial and tax professionals who have experience working with the tax laws of your new country. “For example, I had a client who used to be (live) here, and then they moved to Japan, and they have RSPs, and TFSAs, and they used to be able to deal with folks here, and then for compliance reasons, pretty much all the financial firms said they were no longer comfortable working with them,” says Sykes.
It worked out for Armstrong. She said it was hard in the beginning due to setting up costs like housing and the visa, which increased to $10,000 from $4,000 for two years.
“I’m here for personal reasons. My partner’s Kenyan, we’re happy here, and we want to stay here. But for other people exploring moving to a new country, I would pick a country that is as affordable as possible.”
