Leaving Canada for Australia: What's the Tax Picture?

The same departure tax that applies to any Canadian emigrant applies when you leave for Australia: CRA treats you as if you sold every capital asset on the day you go, and you owe tax on the gain. Australia has no mirror arrival tax, and the Canada-Australia tax treaty (signed May 21, 1980, amended by Protocol January 23, 2002) includes a cost-base step-up so the two countries do not double-tax the same growth. The three decisions that matter most: making a clean break or leaving ties behind, what to do with your RRSP and TFSA, and whether to keep renting out Canadian property after you leave.

Who is this page for, exactly?

Canadian tax residents moving to Australia on a long-term or permanent basis: skilled-worker visa (subclass 482 or 494), permanent residence (subclass 189, 190, or 191), partner visa, or citizenship. Not for working-holiday makers staying under a year, and not for Australians moving to Canada. If you are leaving Canada for the US specifically, the treaty coverage is different, so start with the leaving-Canada tax checklist and the US-specific guides linked from it. The Canadian departure mechanics below apply to every destination; what changes by country is how the arriving side treats your assets, pensions, and income once you land.

The decision map: what happens, in what order?

One table you can navigate the whole event with. The full Canadian-departure walkthrough is in the leaving-Canada tax checklist; this is the Australia-corridor version.

Step	What happens	Deadline or trigger	Form(s)
1. Sever Canadian residential ties	Sell or vacate your home, cancel provincial health, close or redirect the ties CRA weighs	Months before the move	None, but document everything
2. Pick your departure date and keep proof	The latest of: the day you leave, the day your family leaves, or the day you become an Australian resident	Moving day	One-way tickets, lease closing, visa activation
3. Value everything you own at FMV on departure day	The deemed disposition inventory for the departure tax	Departure date	T1161 (if reportable property exceeds $25,000), T1243
4. File your final Canadian return	Worldwide income up to the departure date, plus the deemed gains	April 30 following departure (June 15 if self-employed)	T1 with departure date, T1161, T1243
5. Apply for Australian TFN and register for Medicare	Tax File Number required before your first pay; Medicare Levy applies from residency	On arrival	ATO online, Services Australia
6. Set up Part XIII withholding on Canadian income	Payers (bank, RRSP custodian, pension plan) switch to non-resident withholding	Immediately after departure	NR301 (declaration of treaty eligibility)
7. Decide on RRSP, TFSA, and rental property	Leave the RRSP (withholding on withdrawal), collapse the TFSA (Australia does not recognize it), NR6 if renting	Before or immediately after departure	NR6 (rental), Section 216 return annually
8. File your first Australian return	Worldwide income from the date you become an Australian resident, step-up basis on assets	October 31 following the end of the Australian tax year (July 1 to June 30)	Individual tax return

What triggers departure tax when you move to Australia?

Section 128.1 of the Income Tax Act deems you to have disposed of every piece of capital property at fair market value on the day you stop being a Canadian resident. That includes investment portfolios, shares in private corporations, and rental properties (subject to the principal residence exemption). The gain goes on your final Canadian return, and you owe tax at your marginal rate. The departure date is normally the latest of three days: the day you leave, the day your spouse or dependants leave, or the day you become an Australian tax resident.

The full departure inventory goes onto Form T1161 (if reportable property exceeds $25,000) and the deemed dispositions onto Form T1243. Both ship with your final T1. The mechanics are identical regardless of destination country; what changes is how Australia treats the same assets on arrival. Under Article 13(6) of the Canada-Australia treaty, Australia treats you as having re-acquired each property at fair market value immediately before you became an Australian resident. That step-up means Australia only taxes the growth that accrues after you arrive, and Canada only taxes the growth to the departure date. For the full mechanics, see what a deemed disposition is and how it works.

The principal residence exemption applies for the year of departure. If you plan to rent the home out after you leave, the NR6 and Section 216 mechanics apply (these are not US-specific; any non-resident renting out Canadian property uses them).

How does Australia decide you’re a tax resident?

Australia does not use a single bright-line day-count test the way the US does with the substantial presence test. The ATO applies four tests, and satisfying any one makes you a resident for tax purposes. The primary test is the “resides” test: it looks at the ordinary meaning of where you live, where your home is, where your family lives, and where your economic ties sit. If you physically move to Australia, set up a home, and start working, you will almost certainly satisfy the resides test from the date you establish those patterns (ATO residency tests).

If the resides test is unclear, three statutory fallbacks exist. The domicile test: your permanent home is in Australia, unless your permanent place of abode is outside. The 183-day test: you are physically present for more than half the Australian income year (July 1 to June 30), unless your usual place of abode is outside Australia and you do not intend to take up residence. The superannuation test: you are an eligible member of certain Australian government superannuation schemes.

If the timing of your move means both countries claim you as a resident for part of the year, the treaty tie-breaker in Article 4(3) resolves it. The Canada-Australia version uses two steps only: permanent home first, then centre of vital interests (your closer personal and economic relations). Unlike the US-Canada treaty, there is no habitual abode or citizenship step. Once the tie-breaker assigns you to Australia, section 250(5) of the Canadian Income Tax Act deems you non-resident in Canada. For more on how Canada determines whether you have actually left, see am I still a Canadian tax resident and whether filing Form NR73 is worth it.

What happens to your RRSP and TFSA in Australia?

Neither account triggers the departure tax. The RRSP continues to grow tax-deferred inside Canada, and you keep it open. The issue is what happens when you withdraw. As a non-resident, RRSP and RRIF withdrawals attract Part XIII withholding at 25% by default under section 212(1)(h), reduced to 15% for periodic payments under Article 18 of the treaty. Lump-sum withdrawals are not “periodic,” so the full 25% applies unless you elect under Section 217 to file a Canadian return and be taxed at graduated rates.

Australia taxes your worldwide income as a resident, so RRSP withdrawals are included in your Australian assessable income. Australia gives a foreign tax credit for the Canadian withholding, preventing double taxation. The practical question is timing: if you plan to draw down the RRSP over several years, the annual Section 217 election and Australian foreign tax credits interact year by year.

The TFSA is a different problem. Canada has no tax consequences on departure (no deemed disposition, no withholding on withdrawal), but Australia does not recognize the TFSA as a tax-sheltered vehicle. Investment income and gains inside the TFSA are taxable in Australia as they accrue, reported each year on your Australian return. The CRA also stops allowing new contributions once you are non-resident, and any contributions made while non-resident attract a 1% per-month penalty. The standard advice is to collapse the TFSA before or shortly after departure and reinvest in a structure both countries understand. For more detail on RRSP mechanics after leaving, see RRSP for non-residents after leaving Canada and Part XIII withholding rates.

How are Canadian pensions taxed in Australia?

Canadian pension income paid to an Australian resident (CPP, OAS, employer pensions, RRIF minimum withdrawals) is subject to Canadian Part XIII withholding, capped at the lesser of 15% or the tax you would have paid as a Canadian resident, under Article 18 of the Canada-Australia treaty. Australia also includes the pension in your worldwide income and taxes it at your marginal rate, but gives a foreign income tax offset for the Canadian withholding. The net result is you pay the higher of the two countries’ rates on that income, not both rates stacked.

The Section 217 election lets you file a Canadian return and be taxed at graduated rates instead of the flat withholding. For smaller pension amounts, graduated rates can produce an effective rate well below 15%, which then flows through as a smaller foreign tax credit in Australia.

OAS is portable. Service Canada pays it to Australian residents the same as to anyone else. The recovery tax (the “clawback” under ITA 180.2) applies if your worldwide net income exceeds the threshold ($93,454 for 2025, indexed annually), whether you live in Canada or not. The rate is 15% of the excess.

Canada and Australia have a social security agreement (in force since September 1, 1989) that helps with benefit eligibility: if you do not qualify for CPP or OAS based on Canadian contributions or residence alone, periods of Australian residence after age 18 can count toward the minimum. The agreement does not coordinate coverage (there are no certificates of coverage to exempt you from one country’s system), so if you work in Australia, you contribute to Australia’s superannuation guarantee and may also owe CPP contributions on any remaining Canadian employment income.

Does Australia tax worldwide gains from day one?

Yes. Once you satisfy any of the four ATO residency tests, Australia taxes your worldwide income, including capital gains on assets held anywhere in the world. The critical qualifier is the treaty step-up: Article 13(6) of the Canada-Australia treaty treats you as having acquired each property at fair market value on the date of your move. So Australia only taxes the growth after you arrive.

Australia offers a CGT discount for assets held more than 12 months: individuals include only 50% of the capital gain in assessable income. The 12-month clock starts from the treaty step-up date (when Australia deems you to have acquired the property), not from when you originally bought it in Canada. Hold the asset for at least 12 months after arriving and the discount applies to the Australian-side gain.

One structural difference from the US-Canada treaty worth knowing: the Canada-Australia treaty’s residual capital-gains clause (Article 13(5)) does not exclusively assign taxing rights to the residence state. It preserves each country’s domestic law. In practice, Canada taxes you through the departure deemed disposition, Australia taxes you on post-arrival gains as a resident, and the step-up plus foreign tax credit mechanism prevents the overlap from becoming double taxation on the same dollar of growth.

What does this cost, honestly?

The departure tax costs whatever your unrealized gains are worth: the tax hits at your marginal rate on the gains deemed realized on departure day. Zero unrealized gains means zero departure tax. The compliance cost sits on top: a final Canadian return (with T1161, T1243, and potentially T1244 if you elect to defer the tax and post security), plus your first Australian return with step-up basis tracking on every asset carried over. For most people leaving Canada for Australia with investment accounts, pension income, and a property decision to make, the cross-border accounting work for the transition year is the heaviest single year of filing you will have.

The order of operations, condensed?

The sequence is the same as any Canadian departure, with Australia-specific items slotted in. The full version is in the leaving-Canada tax checklist; here is the short form for the Australia corridor.

1. Months before: inventory residential ties, plan how each one ends, decide on the home (sell, rent with NR6, or keep vacant).
2. Weeks before: collapse the TFSA (or accept Australian taxation on it), notify CPP/OAS of the address change, cancel provincial health.
3. Departure day: note the date, keep proof (one-way ticket, lease closing, visa activation).
4. Arrival in Australia: apply for a Tax File Number, register for Medicare, open an Australian bank account, start the 12-month CGT discount clock on all carried assets.
5. First Australian pay: employer withholds PAYG at Australian rates, Medicare Levy (2% of taxable income) begins.
6. April 30 following departure: file the final Canadian T1 with T1161 and T1243.
7. October 31 after the first Australian tax year ends (June 30): file the first Australian return with worldwide income, step-up basis, and foreign income tax offset for any Canadian withholding.
8. Ongoing: Part XIII withholding on Canadian pension and RRSP income, annual Section 217 election decision, Australian worldwide reporting.

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