As tax season approaches you may be thinking about filing your taxes. If you live outside of Canada or are planning to move out of the country whether it be for school, work, retirement, or a year of travel, this will impact how you file your taxes and whether you pay Canadian taxes. Many ask: Do Canadian expats pay taxes? The answer depends on several factors, including your residency status, income sources, and any applicable tax treaties. The answer is not so simple as it depends on several factors.
At Orbit International Moving Logistics Ltd., we specialize not only in helping clients through the international moving process, but also in equipping you with vital information to ease your transition—including your Canadian income tax liability.
Were You in Canada for Part of the Previous Tax Year?
If you are considered a resident of Canada, you will file what you earn total (from all over the world) in Canadian dollars and pay the applicable Canadian taxes, although you may qualify for various credits depending on your sources of income and taxes paid in your country of residence.
What Factors Help Determine Your Residency Status?
The CRA considers various elements when assessing your tax residency, such as:
- Whether your move is temporary or permanent
- Ownership of a home in Canada
- Ties to a Canadian spouse or common-law partner
- Dependents or children in Canada
- Canadian passport and driver’s license
- Canadian bank accounts and health insurance
- Time spent in Canada during the tax year
- Intent to return to Canada
Even if you reside abroad, strong residential ties can result in being considered a factual or deemed resident for federal income tax purposes.
What If You Aren’t Coming Back to Canada?
If you no longer consider Canada your home and do not intend to return, you’ll likely be classified as a non-resident. In that case, you are required to file a Departure Tax Return and may be liable to pay departure tax on capital gains related to Canadian property or investments. It’s crucial to declare the fair market value of these assets at the time of departure.
To avoid double taxation, Canada has double tax treaties with many countries. These agreements help ensure you’re not taxed twice on the same taxable income, and they often offer foreign tax credit relief if foreign tax paid exceeds your Canadian obligation.
Get Professional Guidance for Cross-Border Tax Filing
It’s always better to be safe than sorry. If you’ve spent—or plan to spend—significant time outside of Canada, it’s important to connect with the Canada Revenue Agency (CRA) to determine your official residency status. This classification directly impacts whether Canada will impose income taxes on your employment income, rental income, business income, or investment income earned while abroad.
Working with a certified accountant or CPA who specializes in international tax law ensures that you remain compliant with both domestic and foreign tax regulations. They can also help you maximize eligible benefits and properly file your Canadian income tax return, even as a non-resident. In addition, they’ll guide you through the tax implications for Canadian investments such as Tax-Free Savings Accounts (TFSAs), the Home Buyers’ Plan (HBP), and Registered Retirement Savings Plans (RRSPs). Keep in mind, even if you are considered a non-resident, you may still be required to pay Canadian withholding tax on Canadian-source net income, including Canada Pension Plan payments and income from organizational pension plans.
Whether you’re preparing to leave Canada or have already made the move, Orbit Moving is here to support you every step of the way. From expert immigration services to reliable international moving logistics, we help ensure a seamless transition—without missing a beat when it comes to your financial and tax responsibilities. Contact us today to get a free estimate for your moving needs.
