Key Facts to Know (2026):

• Canadian tax residency test: primarily “residential ties” — not days

• 183-day rule: applies as a secondary “deemed residence” test for non-residents visiting

• Primary residential ties: dwelling, spouse/dependents, personal belongings in Canada

• Secondary residential ties: driver’s license, health coverage, bank accounts, memberships, etc.

• Section 128.1 departure tax: applies on unrealised gains at deemed disposition on emigration

• Departure tax deferral: available for RRSP/RRIF (rollover), some assets (with security)

• OAS 20-year rule: need 20 years Canadian residence after age 18 for full OAS while non-resident

• RRSP treatment for non-residents: withholding tax on withdrawals (25% typical, 15% under treaty)

• TFSA for non-residents: no new contributions allowed; existing accounts can remain

The Residential Ties Reality

Canada is unusual in not being days-based. The CRA determines tax residency primarily by “residential ties” — the network of connections that indicate Canada is your regular home.

Primary ties (most important):

Dwelling place in Canada (owned or rented)   

Spouse or common-law partner in Canada   

Dependents in Canada

Secondary ties:

Personal property in Canada (car, furniture, clothing)   

Social ties (memberships in Canadian organizations)   

Economic ties (Canadian employment, Canadian business, bank accounts)   

Landing immigration status (permanent resident status)   

Canadian driver’s license   

Canadian passport   

Provincial health coverage   

Canadian utilities in your name

You can have zero days in Canada in a year and still be Canadian tax resident if enough primary and secondary ties remain.

How to Actually Break Ties

(Step 1) Plan ahead and pick an official ‘tax departure date’:

• Pick a date in the near future to be your official ‘departure date’ - make it reasonable/achievable (the more assets/ties you have, the more preparation time you’ll need)

• Execute the following five steps as close to that official departure date as possible, preferably within 1-3 months of each other

(Step 2) Sever primary ties first:

• Sell or lease out your Canadian home   

• If married, spouse leaves too (or file for permanent separation)   

• Move dependents abroad

(Step 3) Cut secondary ties:

• Cancel driver’s license   

• Cancel provincial health coverage   

• Close most Canadian bank accounts (or transfer to non-resident status)   

• Cancel Canadian memberships   

• Move personal belongings

(Step 4) Establish new residency somewhere:

• Get residency in another country (UAE, Panama, Portugal, etc.)   

• Get a home there   

• Get tax residency certificate

• Open an account there and deposit a non-trivial amount of savings/income

• Update your address with CRA

(Step 5) Document everything:

• Physical presence records   

• Correspondence showing new address   

• Tax returns filed elsewhere   

• Utility bills, bank statements at new address

If you’re an FTR client, our Partners will assist you with these steps and guide you through the whole process, as well as provide expert advice on what’s actually necessary and what’s not, tailored to your specific situation.

The Departure Tax

Under Section 128.1 of the Income Tax Act, becoming non-resident triggers deemed disposition of most capital property at fair market value. Unrealised capital gains become taxable.

Exceptions include:   

• Canadian real property (taxed when actually sold)   

• RRSP/RRIF (rollover)   

• TFSA (no deemed disposition but no growth benefit while non-resident)   

• Some other specific exceptions

For nomads with substantial unrealised gains (crypto, private business, growth stocks), the departure tax can be very substantial. Planning around timing is important.

Nomad/Expat Reality

Canadian nomads and expats who don’t properly break residential ties remain fully Canadian tax resident. They owe tax on worldwide income and are subject to Canadian filing requirements — even if physically abroad most of the year.

Many Canadian nomads discover this years into their travel and face significant back-tax liability.

The Practical Approach

For a Canadian nomad to genuinely become non-resident:   

• Establish real primary residence somewhere else   

• Sever the CRA’s primary ties comprehensively   

• File departure return properly   

• Pay departure tax on deemed dispositions (or arrange security)   

• Report to CRA the change in status   

• Get Canadian residency certificate showing non-residence

Half-measures leave you exposed. Full measures work and future-proof your offshore financial position.