How to Become a Non-Resident of Canada for Tax

There’s no application for it. You become a non-resident of Canada for tax by cutting your significant residential ties, meaning your home, your spouse or partner and your dependants, and settling in another country. You “declare” it by filing a return for the year you leave with your departure date on page 1. Form NR73 is optional and gets you an opinion, not a status. This guide is part of the Leaving Canada guides, and it covers the order that makes the change hold up.

How do I declare non-residency to the CRA?

Through your tax return for the year you leave. The CRA tells emigrants to enter the date of departure on page 1, in the “Residence Information” area, and if you work out that no return is due, to let the CRA know the date you left as soon as possible (CRA, Leaving Canada (emigrants)). There’s no form that grants the status.

What the CRA does offer is an opinion. Form NR73 is for people who have left or plan to leave and “need help determining” their residency status (CRA, Form NR73). The CRA’s opinion rests entirely on the facts you give it and “is not binding on the CRA” (Folio S5-F1-C1, paragraph 1.55). Whether NR73 is worth filing depends on how clean your facts are.

After the departure year, you file in Canada only when your Canadian income calls for it. The Canadian non-resident tax return guide sorts that out by income type.

Which ties do I have to cut to become a non-resident?

The significant ones, all of them. The CRA’s folio says that generally, unless you sever all significant residential ties when you leave, you stay a factual resident taxed on world income. The ties that are “almost always” significant are your dwelling place, your spouse or common-law partner, and your dependants (Folio S5-F1-C1, paragraphs 1.10 and 1.11). Secondary ties are weighed together.

Tie	How the CRA weighs it	What to do by your departure date
A home in Canada kept available to you, owned or leased	Significant tie	Sell it, end your lease, or lease it to a third party on arm’s-length terms
Spouse or common-law partner in Canada	Usually significant; not if you’d already separated because the relationship broke down	Move together, or accept that the date moves to when they leave
Dependants in Canada	Usually significant	Same as the spouse
Car, furniture, clothing, a Canadian driver’s licence, vehicle registration, provincial health coverage, a seasonal home, a Canadian passport, memberships	Secondary, weighed collectively	Cut what you don’t need; one alone rarely decides it
Canadian bank accounts, RRSPs, credit cards, securities accounts, a Canadian employer	Secondary (economic ties)	Keeping some is common; tell the payers you’re a non-resident
Mailing address, post office box, safety deposit box, phone listing	Generally of limited importance alone	Low priority, but they add up

The home is the tie with an exception. If you lease it to a third party at arm’s length, the CRA looks at all the circumstances, including who the tenant is, the market when you left and why you went, and may treat the home as significant only when combined with other ties (Folio paragraph 1.12). An empty home you can move back into still counts. The order the residency tests run in, and how they stack, is in am I still a Canadian tax resident?

What order should I cut ties in before I leave?

Front-load the significant ties so they end on or before the day you want to be your departure date, and set up your life in the new country at the same time. The folio says your remaining ties carry more weight if you don’t establish significant ties abroad, and more weight if your return to Canada was foreseen when you left, such as a job contract waiting for you here (Folio S5-F1-C1, paragraphs 1.17 and 1.21).

A workable order, drawn from what the folio says the CRA looks at:

1. Months before: decide what happens to the home and when the family moves. These two set the date more than anything else.
2. Before the date: sign the lease or sale, and line up the new home, job or school abroad.
3. On the date: the last significant tie ends and you’re resident in the new country.
4. Right after: tell Canadian payers you’re a non-resident so Part XIII withholding starts. The CRA looks at that, and at whether you paid or secured the departure tax, as an indication you meant to leave (Folio paragraphs 1.18 and 1.19).
5. With the return: report the departure date and the deemed disposition. The leaving-Canada tax checklist has the full list, in order.

Visits home are fine once the ties are gone. The folio says occasional return visits, personal or business, don’t affect your status after a clean break, though regular visits plus leftover secondary ties do get weighed (paragraph 1.20).

How is my departure date set?

By your facts, read against a general rule. The CRA will generally take the date you sever all residential ties, which usually lines up with the latest of three dates: the day you leave Canada, the day your spouse or common-law partner and dependants leave, and the day you become a resident of the country you’re moving to (Folio S5-F1-C1, paragraph 1.22). The CRA’s emigrant page states the same three.

There’s one exception. If you lived in another country before you came to Canada and you’re leaving to resettle there, you usually become a non-resident on the day you leave, even if your spouse stays behind for a while to sell the home or let the kids finish a school year already under way (Folio paragraph 1.23).

If the US also claims her as a resident in May and June, the treaty tie-breaker decides which country she belongs to for those weeks. With her family and home still in Canada, that usually doesn’t move the date, but it’s the route covered in deemed non-resident of Canada.

What changes on the day I become a non-resident?

Canada stops taxing your world income and starts taxing only Canadian-source income, mostly through tax withheld at source. You’re also deemed to have sold most of your property at fair market value that day. RRSPs, RRIFs, TFSAs and Canadian real estate are among the exceptions (CRA, Dispositions of property for emigrants).

On the accounts and benefits side, per the CRA’s emigrant page:

• Bank accounts and payers. If you still have Canadian bank accounts or amounts paid to you from Canada, you’re required to tell those payers and your financial institutions you’re no longer a resident.
• TFSA. You can keep it, and investment income and withdrawals stay exempt from Canadian tax. You can’t contribute while you’re a non-resident, and your room doesn’t grow.
• HBP and LLP. If you’re in the Home Buyers’ Plan or Lifelong Learning Plan, special rules apply when you leave.
• Benefits. As a non-resident you’re generally not eligible for the Canada Groceries and Essentials Benefit or the Canada child benefit, and if payments keep arriving, the CRA says to contact it immediately.

The departure tax side, including Form T1161 when your property tops $25,000, is in what Canada’s departure tax catches.

Can I keep a Canadian bank account as a non-resident?

Generally, yes. The CRA lists Canadian bank accounts, retirement savings plans, credit cards and securities accounts as secondary residential ties, and says it would be unusual for a single secondary tie to make you a factual resident on its own (Folio S5-F1-C1, paragraph 1.14). What matters is the whole pattern of ties left behind.

Two things come with the account. The bank has to know you’re a non-resident, and Canadian payers then withhold Part XIII tax on income like dividends and pensions at 25% unless a treaty cuts the rate, which is generally your final tax on it (CRA, Non-residents of Canada). Arm’s-length interest is generally exempt.

What if I keep a home or family in Canada?

Then you’re probably still a factual resident, taxed on world income as if you never left. The CRA says that if you leave and keep residential ties, you’re usually a factual resident and not an emigrant (CRA, Leaving Canada (emigrants)). A spouse who stays behind is usually a significant tie, unless you’d already separated because the relationship broke down (Folio paragraph 1.13).

The way out with ties still in place is a tax treaty. If you’re also a resident of a treaty country and the treaty’s tie-breaker picks that country, you may be a deemed non-resident, and the CRA says deemed non-residents follow the same rules as emigrants. That includes the departure tax on the date it applies.

Next steps

Write down the three dates as you expect them, and the date each significant tie ends. If they don’t line up, move the ones you control. Keep the closing statement or lease, the family’s travel records, and proof of the new home, then file the departure return with that date on page 1.

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