Thinking about leaving Canada? Here are the financial considerations you need to know

financialpost.com:

By Simran Arora and Chris Warner

“The grass always looks greener …” goes the trope. With the tax changes in the 2024 federal budget, many successful Canadians seem to be considering whether greener pastures exist abroad. Perhaps it’s the United States for a more accommodating business climate, Saudi Arabia because it has no income tax or Australia for the better weather.

For those considering a departure, there are many financial considerations. From our perspective as financial planners, the biggest one is tax. Leaving Canada without prudent planning could see assets taxed at rates of more than 50 per cent. If planned ahead, this could be substantially reduced.

But emigration is complex. Everyone considering it should seek advice from a financial team that includes an experienced tax lawyer. Understanding that, here is some helpful general information.

Where one lives matters, but it isn’t the whole story. Someone can become a non-resident without becoming an emigrant. This is called a factual tax resident of Canada.

Fundamentally, a factual tax resident is a Canadian living abroad. Their global income is subject to Canadian tax.

Conversely, an emigrant is considered to have severed ties with Canada. Their global income is typically only subject to tax in the new country.

When you become an emigrant, you can face a departure tax on Canadian assets, which can be significant. Factual residents of Canada living abroad normally avoid departure tax, but have other considerations.

Determining residency status mainly comes down to time spent outside of Canada and residential ties to Canada.

Canadian-born citizens may become non-residents if they establish residency in another country or spend more than 183 days outside Canada