Answers · Topic 6 of 10
Moving, Residency and Departure answers.
Leaving Canada, arriving from the US, or living between the two: departure tax, residency tests, non-resident filings and retirement accounts. 20 questions, each answered in the first paragraph.
By the AnalytIQ Accounting team · Last reviewed: September 6, 2026
Can I keep my TFSA if I move to the US?You can keep a TFSA after moving to the US, and Canada will never tax it.Do Canadians working remotely from Canada for a US company pay US tax?No, in the normal case.Do I pay into both CPP and US Social Security if I work in both countries?No.Do non-residents of Canada need to file a Canadian tax return?Not automatically.Do US stocks held in a Canadian brokerage account count for T1135?Yes.Does departure tax apply to my principal residence?No.How are CPP and OAS taxed if I retire in the US?Once you are a US tax resident, the Canada-US tax treaty makes CPP and OAS taxable only in the United States.How can a US company hire a Canadian employee or contractor?A US company has four workable routes: register directly with the CRA as a non-resident employer and run Canadian payroll, use an employer of record that hires the person on its behalf, engage the person as an independent contractor, or incorporate a Canadian subsidiary.How do I become a non-resident of Canada for tax purposes?You become a non-resident of Canada by severing your significant residential ties, primarily a home in Canada, a spouse or common-law partner, and dependants, and by taking steps to build a genuine life elsewhere.How do I report foreign income on a Canadian tax return?Canadian residents report worldwide income, so every foreign amount goes on the T1 in Canadian dollars at the gross figure before any foreign tax was withheld.How does the 25% non-resident withholding on Canadian rental income work?When a non-resident owns Canadian rental property, whoever pays the rent, usually the tenant or a property manager acting for them, must withhold 25% of the gross rent and remit it to the CRA by the 15th day of the month after the rent was paid.How does the foreign tax credit work in Canada?The Canadian foreign tax credit reduces your Canadian tax by the income tax you paid to another country on the same income, so the income is taxed once at the higher of the two rates rather than twice.What happens to my 401(k) or IRA when I move to Canada?You can generally leave a 401(k) or traditional IRA exactly where it is after becoming a Canadian resident, and the Canada-US tax treaty preserves the tax-deferred growth inside the account for Canadian purposes as it already is under US rules.What happens to my RRSP and TFSA when I leave Canada?Your RRSP is not affected by the departure-tax deemed disposition, so it keeps growing tax-deferred, but withdrawals made as a non-resident face Canadian withholding tax rather than being added to a Canadian return.What is a deemed disposition and when does the CRA apply it?A deemed disposition is a rule that treats you as having sold a property at its fair market value for tax purposes, even though no actual sale took place and no cash changed hands.What is a dual-status tax year and how do I file one?A dual-status tax year is a US concept: within one calendar year you were a nonresident alien for part of the year and a resident alien for the rest, which is what happens in the year you move to or from the United States.What is a section 216 return for non-resident landlords?A section 216 return is an election that lets a non-resident who earns rental income from Canadian real estate be taxed on the net rental income, after expenses, at graduated Canadian rates instead of the default 25% withholding on the gross rent.What is departure tax in Canada and how much is it?Departure tax is the income tax that arises when the CRA treats you as having sold most of your property at fair market value on the day you stop being a Canadian resident.What is the 60-month rule for Canadian departure tax?The 60-month rule excuses you from the departure-tax deemed disposition on certain property if you were resident in Canada for 60 months or less during the 120 months (10 years) before you leave.What is the penalty for not filing a T1135, and how do I fix a missed year?A T1135 filed late carries a penalty of $25 for every day it is overdue, with a minimum of $100 and a maximum of $2,500 for the year, as at the time of writing.
Where we do the work
Rules at a glance · Moving, Residency and Departure
Not sure which applies to you? Get a free proposal or book 15 minutes.
ResidencyTies, not a formResidency ends when significant ties - a home, a spouse, dependants - are severed, not on a form.
Key formT1161 / T1243Departure-year forms list the property deemed sold and calculate the resulting capital gain.
Watch forDeemed dispositionMost property is deemed sold at fair market value on departure; residence and RRSPs are excluded.
Threshold60-month ruleProperty owned before your last arrival is exempt if you lived in Canada 60 of the prior 120 months.
What we take off your plate
Cross-border tax for people moving to or from Canada, handled.
- Departure-year return filed with the T1161, T1243 and treaty tie-break
- TFSA, RRSP and 401(k) or IRA moves sequenced before you cross the border
- Canadian and US returns prepared by one team
- Treaty positions and foreign tax credits lined up
- FBAR and T1135 foreign reporting
- ITIN applications certified in-house
Mistakes we fix
Three things that go wrong for people moving to or from Canada.
- Treating the 60-month rule as covering everything owned, not just pre-arrival property
- Contributing to a TFSA after becoming a US resident and triggering the 1% monthly penalty
- Skipping the section 216 election and leaving 25% withheld on gross rent instead of net income
Recognise one? Book a call and we will tell you what it is costing you.
How we can help · Moving, Residency and Departure
Where we do the work.
Fixed fees, quoted after a short discovery call. Canadian and US filings under one roof.
Cross-border taxDeparture or arrival handled as one project: the forms, the disposition and the tie-break.Cross-border tax →Tax servicesNon-resident and section 216 returns filed so rental income is taxed net, not gross.Tax services →Advisory & CFOThe exit or entry date, asset sales and account moves priced out before you cross the border.Advisory & CFO →
Free proposal
A fixed fee for your cross-border tax work, in writing.
- Tell us about your business. The form takes about a minute.
- A short discovery call. Fifteen minutes to confirm what you need.
- A fixed fee in writing. We reply within one business day. No hourly surprises.
- Canadian and US filings under one roof
- Cloud-first: QuickBooks Online, Dext, Wagepoint
- Brampton, Ontario, with clients across Canada and the US
Answers
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