ELI5 summary
First: are you actually a non-resident?
Residency for tax is a question of fact, not citizenship or immigration status. The CRA looks mainly at residential ties: whether you keep a home in Canada, whether your spouse or dependants stay here, and secondary ties such as bank accounts, a driver’s licence and provincial health coverage. Leaving for a two-year contract while your family stays in your Canadian home usually means you remain resident. Selling the house and moving with your family usually means you do not.
The date you become a non-resident is generally the latest of the dates you leave, your spouse or dependants leave, and you become resident in the new country. You file a final Canadian return for the year of departure, reporting worldwide income up to that date.
No departure tax on registered accounts
When you emigrate, Canada treats you as having sold most of your property at fair market value, which can create a capital gains bill known as the departure tax. TFSAs, RRSPs, RRIFs and FHSAs are excluded. Nothing is taxed on these accounts simply because you leave, and you are not required to close them.
The TFSA
- Room stops accruing. You get the full annual limit for any year in which you were resident at some point, including the year you leave. You get nothing for years in which you were non-resident the whole time.
- Do not contribute while non-resident. A contribution made while you are a non-resident is taxed at 1% per month until you withdraw it or become resident again, even if you have unused room.
- Withdrawals are still tax-free in Canada. Anything you withdraw while non-resident is added back to your room the next January 1, but you can only use that room after you become resident again.
- Your new country may tax it. The TFSA’s shelter is a Canadian rule. Many countries, including the United States, do not recognize it and tax the income earned inside a TFSA each year. Check the rules where you are going before you move.
The RRSP and RRIF
You can keep your RRSP, it continues to grow tax-deferred in Canada, and you can still contribute if you have unused room, although a deduction is only useful if you have Canadian income to deduct it against.
Withdrawals are where the rules change. A withdrawal by a non-resident is subject to non-resident withholding tax of 25%. For many people that is the final Canadian tax. Tax treaties can reduce the rate on periodic pension payments, such as regular RRIF withdrawals, commonly to 15%, but lump sums are usually taxed at 25%. In some cases a non-resident can elect under section 217 to file a Canadian return and pay tax at regular graduated rates instead, which can produce a refund if the rest of their income is low.
The United States generally recognizes RRSPs and RRIFs as retirement plans under the treaty, so income inside them is not taxed by the U.S. until it is withdrawn. Other countries vary.
Worked example
Ahmed moves to the United Kingdom in 2026 with $150,000 in an RRSP. He leaves the RRSP untouched and it keeps growing untaxed in Canada. In 2031, he withdraws $30,000 as a lump sum. The institution withholds 25%, or $7,500, and remits it to the CRA; that is his final Canadian tax on the withdrawal. The UK may also tax the withdrawal, with a credit for the Canadian tax under the treaty. Had he converted to a RRIF and drawn regular payments, the treaty rate on periodic payments could have been lower.
Home Buyers’ Plan and Lifelong Learning Plan balances
If you owe money to your RRSP under the HBP or LLP, becoming a non-resident accelerates it. You must repay the entire remaining balance by the earlier of the date you file your return for the year you leave and 60 days after you become a non-resident. Anything not repaid is added to your income on your final return and taxed at your marginal rate.
The FHSA
You can keep an FHSA after you leave, but a withdrawal only qualifies as tax-free for a home purchase if you are a resident of Canada from the time of the withdrawal until you buy the home. That means an FHSA cannot be used tax-free to buy a home abroad, or to buy in Canada while you still live elsewhere. Your options are to keep it until you return, transfer it to an RRSP or RRIF within the participation period, or make a taxable withdrawal, which for a non-resident is subject to non-resident withholding.
Coming back
When you return and re-establish residence, TFSA room resumes accruing from that year, and any withdrawals you made while abroad become usable room. The rules in the newcomers guide apply to the year you return.
Show the math
Deemed disposition on emigration (ITA s.128.1(4)) excludes rights under RRSPs, RRIFs, TFSAs, FHSAs, RPPs and similar plans. TFSA: room accrues for each year the individual is resident at any time and 18 or older; contributions while non-resident attract 1% per month tax on the contribution (not net of room) for each month the individual is non-resident and the amount is not withdrawn. RRSP/RRIF payments to non-residents: Part XIII tax at 25%, reduced by treaty for periodic pension payments; section 217 election available. HBP/LLP: unpaid balance included in income unless repaid by the earlier of the filing date and 60 days after becoming non-resident. FHSA qualifying withdrawal requires Canadian residence from the withdrawal until the qualifying home is acquired.
Before you leave
- Decide your departure date and gather evidence of it, such as a lease or employment letter abroad.
- Stop automatic TFSA contributions.
- Repay HBP or LLP balances within the 60-day window, or budget for the tax.
- Tell each institution your new address and non-resident status so the right withholding applies.
- Get advice in the destination country about how it treats TFSA, RRSP and FHSA income.
Key takeaways
- Registered accounts are exempt from departure tax and can be kept after you move.
- TFSA room stops accruing and contributions while non-resident cost 1% per month.
- RRSP and RRIF withdrawals face 25% non-resident withholding, often reduced by treaty for periodic payments.
- Repay HBP and LLP balances within 60 days of leaving; FHSA withdrawals require Canadian residence.