Are you planning to sever your ties with Canada for job or business purposes? Then you must know about the Canadian Departure Tax Rules. It is because without paying the departure tax you cannot leave Canada. Rather if you are quite unaware of the rules related to these taxes you may end up paying much more as departure tax in normal circumstances.
What are Canadian Departure Tax Rules?
If you are an individual taxpayer and planning to emigrate then as per the rules you will become a non-resident for taxation purposes after emigrating. In such a case you have to calculate departure tax based on your final income tax return. This is also known as departure tax or departure return that makes a significant impact on the overall income tax to be paid by an individual taxpayer.
So when you are emigrating the overall tax paid can greatly increase due to this departure tax. However, a clear understanding of the Canadian departure tax rules can help you minimize the outstanding tax amount. These are the tax returns that have to be paid on April 30 by individual taxpayers and by June 15 for those earning income from a business.
Processes To Be Followed While Filing Departure Tax Returns
While filing departure tax returns you have to list all your assets including worldwide income until the date of departure from Canada. It includes the losses you suffered due to the sale of the property or profit you earned at the time of departure.
You can opt from paying the departure tax return if your assets are not completely sold. It can be done by filing form T1244 on or before April 30 of the year after your emigration.
Also Read- Starting business in Canada as non-Canadian
According to the CRA if the amount of tax you owe to the Canadian government is above 16,500 then you have to provide some security like a letter of credit, bank guarantee, or mortgage on real property.
One of the important parts of the emigration and departure tax process is deemed disposition. In this case, it is considered that you have sold your properties (even though in reality you have not sold them) at the fair market value (FMV) and have reacquired them immediately by paying the same amount. This process is called deemed disposition. Assets like jewelry, paintings, collection, and shares are included in this calculation.