Canada has always been a country of movement—people immigrate for economic stability and a high quality of life, while others emigrate for business opportunities, lower taxes, or warmer climates. But 2025 brings new considerations to the decision of whether to stay or leave—including the return of Donald Trump as U.S. President and the looming threat of tariffs on Canadian imports and other punitive measures.
Recently, the U.S. administration announced a 30-day pause on proposed 25% tariffs on Canadian imports, following Canada’s commitment to strengthening border security and addressing organized crime. While this delay buys time for negotiations, the uncertainty surrounding trade and taxation is prompting many Canadians to rethink their residency and financial strategies.
For many business owners, professionals, and investors, tax considerations are an important factor in any decision to move. Whether considering a shift to the U.S. or returning to Canada, it’s crucial to understand the financial consequences of immigration and emigration.
Residency & Taxation: The Hidden Costs of Leaving Canada
For Canadians contemplating emigration, the departure tax is one of the biggest financial considerations. Under Section 128.1(4) of the Income Tax Act, when an individual leaves Canada and becomes a non-resident, they are subject to deemed disposition rules—meaning the Canada Revenue Agency (CRA) treats many assets as if they were sold at fair market value.
What is Taxed When You Leave?
✅ Investments & Marketable Securities – Taxed at fair market value, with capital gains triggered upon departure.
✅ Private Company Shares – Business owners may face major tax bills if they hold significant equity in a Canadian corporation.
✅ Stock Options – Taxed based on the work period in Canada before departure.
✅ Limited Partnership Interests – Deemed disposition rules apply, potentially affecting real estate and business holdings.
What is NOT Subject to Departure Tax?
❌ Canadian Real Estate – Properties in Canada are not subject to deemed disposition, but renting them out can trigger tax withholding requirements.
❌ RRSPs, TFSAs, and Pensions – These accounts are generally not subject to departure tax, but tax rules vary for distributions taken while abroad.
❌ Excluded Rights or Interests – Certain assets, including pensions and stock options from Canadian companies, may qualify for exemption from deemed disposition.
Additionally, emigrants must file final tax forms (T1161, T1243, and T1244) and may be required to post security for unpaid taxes on unrealized gains.
Coming Back? Immigration to Canada Comes with Tax Surprises
For those returning to Canada after living abroad, understanding the tax implications of re-establishing residency is essential.
What Happens When You Return?
🔹 Reassessment of Worldwide Assets – Upon becoming a Canadian resident again, individuals are taxed on worldwide income, not just Canadian-sourced income.
🔹 Deemed Disposition & Reacquisition – The CRA may allow an election to reverse departure tax, but assets with post-emigration losses may not be fully restored.
🔹 Foreign Trusts & LLCs – U.S. legal structures such as LLCs and revocable living trusts may not be tax-efficient in Canada and may require restructuring.
🔹 Cost Base Adjustments – Assets held outside Canada may be subject to a step-up in cost base, impacting future capital gains calculations.
Many returning former residents must also file Form T1135 for foreign assets exceeding CAD $100,000, and tax complexities can arise when bringing personal or business assets back into Canada.
Trump’s Tariff Threats: A Game Changer for Business Owners & Investors?
While Canadians are accustomed to balancing tax considerations, the re-emergence of Trump’s tariffs adds a new layer of financial uncertainty.
Key Concerns for Canadian Entrepreneurs & Investors
🔹 Manufacturing & Exporters – A 25% tariff on Canadian goods could reduce competitiveness, making U.S. expansion or relocation more appealing.
🔹 Capital Flight & Investment Decisions – Businesses may be forced to reconsider where they hold assets and operate entities in response to economic pressures.
🔹 Real Estate & Marketable Securities – With market volatility tied to trade policy, investment planning is more critical than ever.
For some, the risk of tariffs may accelerate plans to emigrate and establish tax residency in a country with lower business costs. For others, uncertainty in the U.S. could make staying in Canada the safer bet.
Stay or Go? Key Factors for Canadians to Consider
Before making any cross-border moves, Canadians must weigh key financial and legal factors:
✅ Taxation – What will your residency change mean for tax obligations on global assets, businesses, and investments?
✅ Business Strategy – Will U.S. trade policies affect your industry, revenue, or corporate structure?
✅ Family & Lifestyle – Are you prepared for changes in healthcare, social benefits, and estate planning?
In an era of shifting global policies, Canadians must stay informed and proactive about cross-border tax planning. Whether emigrating to minimize tax exposure or returning for economic stability, understanding the financial implications of your residency choices is crucial.
What’s your financial and mobility strategy in this changing economic landscape?
Recognized by Best Lawyers in Canada for trusts and estates and family law, she previously chaired the Canadian Bar Association Wills and Trusts Subsection (Vancouver).
Contact Nicole by email or phone at (778) 742-5005 x216.
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