Can I defer paying Canadian departure tax?

Yes, and it is one of the few genuinely useful elections available on the way out of Canada. When you stop being a Canadian resident, ITA 128.1(4) deems you to have disposed of most of what you own at fair market value, and the tax on that paper gain is payable even though you sold nothing. Form T1244 elects to defer paying it until you actually dispose of the property. The mechanic is a security arrangement rather than a payment plan, and that distinction is where the useful detail sits.

What does Form T1244 actually do?

It elects, and nothing more. The form is the prescribed manner for making the choice under ITA 220(4.5), and CRA’s own description ties it to the deemed disposition you report on Form T1243. The two work as a pair: T1243 reports the deemed disposition, and T1244 defers the tax arising on it.

“Complete this form if you ceased to be a resident of Canada for income tax purposes in the year and you are electing to defer the payment of tax on income relating to the deemed disposition of a property indicated on Form T1243, Deemed disposition of Property by an Emigrant of Canada.” CRA, Form T1244

Note what the description doesn’t say. It says nothing about needing a reason, demonstrating hardship, or persuading anyone. The marginal note on the governing subsection is “Security for departure tax”, which is the clearest signal of what is really going on.

Do I have to post security to defer the tax?

Not necessarily, and this is the part that gets missed. Once you elect, ITA 220(4.51) deems the Minister to have accepted adequate security for the lesser of two amounts, one of which is the tax a Canadian-resident trust would pay on $50,000 of taxable income. Up to that figure there’s nothing for you to arrange. Above it, you furnish security for the excess.

“If an individual (other than a trust) elects under subsection (4.5) that that subsection apply in respect of a taxation year … the Minister is deemed to have accepted at any time after the election is made adequate security for a total amount of taxes payable under Parts I and I.1 by the individual for the emigration year equal to the lesser of (a) the total amount of those taxes that would be payable for the year by a trust resident in Canada … the taxable income of which for the year is $50,000” ITA 220(4.51)

That figure is a floor rather than a cap on the deferral. The deferral itself can be larger; what the deemed-security rule does is remove the practical burden of arranging security for the first slice of it. For a lot of people leaving Canada with a modest portfolio, the whole departure-tax bill sits under that floor and the election is close to frictionless.

Does interest keep running on the deferred tax?

Not on the amount for which security is accepted. ITA 220(4.5)(b) directs that interest and penalty be computed as though the secured amount had actually been paid, so the deferral isn’t a loan from the CRA at prescribed rates. There’s an express carve-out, and this page doesn’t work through what it does.

“except for the purposes of subsections 161(2), (4) and (4.01), (i) interest under this Act for any period that ends on the individual’s balance-due day for the particular year and throughout which security is accepted by the Minister, and (ii) any penalty … shall be computed as if the particular amount for which adequate security has been accepted under this subsection were an amount paid by the individual on account of the particular amount.” ITA 220(4.5)(b)

Read the opening words carefully. The deeming is switched off for the purposes of three named subsections, and this page makes no claim about what happens inside them. What it does establish is that for ordinary arrears purposes, a properly secured deferral does not accumulate interest against you.

Is my Canadian house part of the deemed disposition?

No. ITA 128.1(4)(b) deems disposition of each property you own other than, for an individual, real or immovable property situated in Canada. So the family home isn’t swept in, and there is no departure tax on it to defer. It stays inside the Canadian tax net and gets dealt with when you actually sell it.

“the taxpayer is deemed to have disposed … of each property owned by the taxpayer other than, if the taxpayer is an individual, (i) real or immovable property situated in Canada, a Canadian resource property or a timber resource property” ITA 128.1(4)(b)

The same paragraph carries a second exclusion worth knowing if you were only in Canada a short while. Where you were not resident in Canada for more than 60 months during the 120-month period ending at departure, property you already owned when you last became resident is also outside the deemed disposition. Short-stay arrivals often have far less departure tax than they expect, and sometimes none.

When is the election due?

On or before your balance-due day for the year you left, which the statute calls the emigration year. That deadline sits inside the electing words of ITA 220(4.5) itself rather than in administrative guidance, and the subsection names no late-filing mechanism of its own.

The point	Where it comes from
T1243 reports the deemed disposition, T1244 defers the tax	CRA, Form T1244
The Minister shall accept adequate security once you elect	ITA 220(4.5)(a)
Security is deemed accepted up to a floor amount	ITA 220(4.51)
Interest is computed as if the secured amount were paid	ITA 220(4.5)(b)
Canadian real property is outside the deemed disposition	ITA 128.1(4)(b)(i)
Election due by the balance-due day for the emigration year	ITA 220(4.5)

• Canadian departure tax and Forms T1161 and T1243, which owns the reporting side
• The US basis step-up treaty election, for the other half of the same move
• Whether you are still a Canadian tax resident, because none of this starts until you have actually ceased residence

Being clear about what this page does not claim. It doesn’t say what counts as adequate security in a given case, what the deferred amount works out to on your facts, or what happens inside subsections 161(2), (4) and (4.01), because none of that is established by the sources quoted here. It also doesn’t say the election is always worth making.

What should I do next?

Work out what is actually caught first. Canadian real property is out, and a short stay in Canada may pull more out, so the deemed disposition may be smaller than you assume. Then compare the tax on what remains against the deemed-security floor, because that single comparison decides whether this is a form you file or a security arrangement you negotiate. Either way the deadline is your balance-due day for the year you left.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.