What is departure tax in Canada?

Departure tax is a deemed disposition tax that applies when you leave Canada. The CRA treats you as if you sold most of your assets at fair market value on the day you leave, which may trigger capital gains tax.

Who needs to pay departure tax when leaving Canada?

Anyone who ceases to be a Canadian tax resident and owns assets with accrued capital gains may be subject to departure tax. This includes investments, real estate (other than your principal residence), and business interests.

What is Section 216 election?

Section 216 allows non-residents earning Canadian rental income to elect to file a Canadian tax return and pay tax on net rental income instead of the 25% withholding tax on gross rent.

What is Section 217 election?

Section 217 allows non-residents receiving certain Canadian pension and benefit income to elect to pay tax at graduated rates instead of the flat 25% withholding tax.

Wills, Trusts, and Probate for Canadian Expats: Protecting Your Estate Across Borders

You've finally done it—bought that beachfront condo in Mexico, retired to Portugal's sunny coast, or relocated to Spain for a new chapter. Life as a Canadian expat is exciting, but here's a question that might keep you up at night: what happens to your assets when you're gone? If you still own property in Canada while building a life abroad, your estate could become tangled in a legal tug-of-war between countries—each claiming the right to decide how your assets are distributed.

Cross-border estate planning isn't just for the ultra-wealthy. Any Canadian with assets in multiple countries needs to understand how wills, trusts, and probate work across jurisdictions. Get it wrong, and your loved ones could face years of legal battles, massive fees, and outcomes you never intended.

Whether you're considering Colombia's tax-free pension benefits, Thailand's affordable healthcare, or Panama's world-renowned retiree program, your departure planning should include more than just visa applications and moving logistics. Estate planning is the piece most Canadians overlook—often until it's too late.

Key Takeaways

You may need multiple wills: A single Canadian will often isn't enough if you own assets abroad—each country may require its own legally valid will
Jurisdictions can conflict: Different countries apply different rules to your estate, potentially overriding your wishes through "forced heirship" laws
Probate multiplies across borders: Your estate may need to go through separate probate proceedings in each country where you hold assets
Trusts work differently internationally: A trust that's effective in Canada may be unrecognised, penalised, or taxed heavily in your new country
Coordination is critical: Multiple wills must be carefully drafted so they complement—not contradict or revoke—each other
Destination matters enormously: Estate planning in Mexico (no forced heirship) differs dramatically from Colombia (75% restricted) or Spain (EU choice-of-law available)

Understanding the Jurisdictional "Tug-of-War"

When a Canadian expat dies with assets in multiple countries, a fundamental question arises: whose laws apply? The answer is rarely straightforward, and that ambiguity creates what estate lawyers call a "conflict of laws."

How Different Countries Claim Authority

Each country uses different criteria to determine whether its laws should govern your estate:

Domicile: Your permanent home, where you intend to remain indefinitely
Habitual residence: Where you actually live day-to-day
Citizenship or nationality: The country that issued your passport
Asset location (situs): Where the specific property is physically located

The problem? These criteria often point to different countries simultaneously. A Canadian citizen habitually resident in Spain who owns property in Mexico, for example, could have three different legal systems claiming authority over different parts of their estate.

The Movable vs. Immovable Distinction

Most countries follow a fundamental distinction in estate law:

Immovable assets (real estate, land): Almost always governed by the laws of the country where the property is located
Movable assets (bank accounts, investments, personal property): Typically governed by the law of your domicile or habitual residence at death

This means a single estate can be subject to multiple legal systems simultaneously. Your Toronto condo follows Ontario law, your Riviera Maya property follows Mexican law, and your investment accounts might follow the laws of wherever you were living when you died.

Real-World Consequences

The Estate of Simone Zappia illustrates what can go wrong. With assets spanning Italy, France, and Australia valued at approximately $20 million, discrepancies between probate laws led to:

Delays lasting years
Over $1.5 million in legal fees
$500,000 in asset depreciation while the estate remained frozen

Similarly, in the O'Connor Estate case, beneficiaries scattered across Australia, the United States, and the United Kingdom faced significant delays and additional losses from currency exchange fluctuations while multiple jurisdictions sorted out competing claims.

Why You Probably Need More Than One Will

Many Canadians assume their Canadian will covers everything they own, anywhere in the world. Technically, a properly executed Canadian will can be valid in many countries—Canada joined the Hague Apostille Convention in January 2024, simplifying international document recognition. But "valid" doesn't mean "effective."

The Limitations of a Single Canadian Will

Even when a foreign country recognises your Canadian will as valid, problems arise:

Double probate: Your estate may need to complete probate in Canada first, then separately seek recognition in the foreign country—a process that can take six to twelve months or longer
Translation and authentication: Documents must be professionally translated and may require additional legal procedures
Local executor requirements: Some countries only permit residents to serve as executors
Conflicting provisions: What's perfectly legal in Canada may be overridden by local laws

How Multiple Wills Work Together

The solution for many expats is a "situs will" strategy—separate wills for each jurisdiction where you hold significant assets:

Primary will: Covers assets in your country of residence and any residual worldwide assets
Situs wills: Cover specific assets in other countries, drafted to comply with local requirements

Critical coordination rules:

Each will must explicitly state it covers only specific assets in that jurisdiction
Each will must reference the others and state it does not revoke them
Standard revocation clauses (like "I revoke all previous wills") must be removed or carefully modified
Lawyers in both jurisdictions should review all documents together

Example: A Canadian Retiree in Mexico

Consider Maria, a Canadian who retired to Playa del Carmen. She owns:

A house in Langford, BC worth $850,000
A beachfront condo in Mexico held through a fideicomiso (bank trust) worth $400,000 USD
RRSP and TFSA accounts with a Canadian bank worth $600,000
A Mexican bank account with 500,000 pesos

Maria should have:

A Canadian will covering her BC property, registered accounts, and any other Canadian assets
A Mexican will (testamento) covering her fideicomiso beneficiary rights, Mexican bank accounts, and any personal property in Mexico

Both wills should cross-reference each other and clearly state which assets they govern.

The Forced Heirship Challenge

One of the most significant conflicts Canadian expats face is "forced heirship"—legal rules in many countries that mandate how estates must be distributed, regardless of what your will says.

Countries with Forced Heirship Rules

Forced heirship is prevalent in:

Civil law countries: France, Germany, Italy, Spain, Portugal, Switzerland, most of Latin America
Islamic law jurisdictions: Saudi Arabia, UAE, Iran
Parts of Canada: Québec has obligatory support provisions (though less strict than European forced heirship)
Parts of the US: Louisiana follows Napoleonic Code traditions

How Forced Heirship Conflicts with Canadian Wills

In Canada (outside Québec), you generally have complete "testamentary freedom"—you can leave your assets to whomever you choose. But if you own property in a forced heirship country, local law may override your wishes.

Example from France:

Under French law, children are "reserved heirs" entitled to a mandatory share:

One child: 50% of the estate is reserved
Two children: 66% is reserved
Three or more children: 75% is reserved

If you're a Canadian living in France who wants to leave everything to your second spouse, French law could force a significant portion to your children from a previous marriage—even if your will says otherwise.

The Brussels IV Escape Hatch

For Canadian expats in the European Union, the EU Succession Regulation (Brussels IV) offers a potential solution. This regulation allows you to choose your nationality's law to govern your entire estate within the EU.

If you're a Canadian citizen living in France with EU property, you can:

Explicitly elect Canadian law in your will
Specify which provincial law applies (e.g., Ontario, BC)
Gain testamentary freedom to distribute assets as you wish

But this only works if:

Your will clearly and explicitly makes this election
The will is properly drafted to comply with both jurisdictions
You don't accidentally undo the election elsewhere in your estate plan

Countries outside the EU—like Mexico, the UK (post-Brexit), and much of Latin America—don't offer this choice-of-law option, making local legal advice essential.

Understanding Probate Across Borders

Probate is the legal process that validates your will and authorises your executor to manage your estate. In cross-border situations, this process can multiply in complexity and cost.

Canadian Probate Fees by Province

In Canada, probate fees (called "estate administration tax" in Ontario) vary significantly by province:

Province	Fee Structure
British Columbia	$0 for first $25,000; $6 per $1,000 from $25,000-$50,000; $14 per $1,000 over $50,000
Ontario	$0 for first $50,000; $15 per $1,000 over $50,000
Alberta	Flat fees based on value tiers (maximum ~$525)
Québec	No probate fees for notarial wills; flat court fee ($65-$225) for non-notarized wills
Saskatchewan	$7 per $1,000 of estate value

For a $1 million estate:

Ontario: Approximately $14,500 in probate fees
British Columbia: Approximately $14,000 plus filing costs
Alberta: Under $600

International Probate Complications

When you die with assets in multiple countries, each jurisdiction typically requires its own probate or equivalent process:

Commonwealth "resealing": Canada, UK, Australia, New Zealand, and some other Commonwealth countries allow probate grants to be "resealed"—recognised in each other's jurisdictions without starting fresh. This can simplify administration but doesn't eliminate local processes entirely.

Non-Commonwealth countries: Most require separate, independent probate proceedings. For example:

Mexico: A Canadian will must be probated in Canada, then separately recognised by Mexican courts—a process that can take six to nine months and require authentication, translation, and local legal representation
European Union: EU countries often require a European Certificate of Succession for cross-border administration
United States: Each state has its own probate system; "ancillary probate" is required for property in states where the deceased wasn't domiciled

Minimising Probate Through Beneficiary Designations

Certain assets pass outside the estate and avoid probate entirely:

Registered accounts with named beneficiaries: RRSPs, RRIFs, TFSAs, and life insurance with designated beneficiaries pass directly
Joint ownership with right of survivorship: Property automatically transfers to the surviving joint owner
Mexican fideicomiso trusts: Properly structured, these allow you to name beneficiaries who receive the property directly, bypassing Mexican probate

Trusts in Cross-Border Planning

Trusts are powerful estate planning tools in Canada, but they behave very differently in international contexts.

Canadian Trusts: Basic Concepts

In Canada, trusts can:

Hold assets outside your estate (avoiding probate)
Provide ongoing asset management for beneficiaries
Create tax-planning opportunities (though rules have tightened significantly)
Protect assets for vulnerable beneficiaries

International Trust Complications

Civil law countries (most of Europe, Latin America): Many don't recognise the trust concept at all. A trust that works perfectly in Canada may be:

Ignored entirely, with assets treated as part of your estate
Taxed as if you personally own the assets
Subject to forced heirship rules despite being "in trust"

United States: Canadian trusts may be treated as "foreign trusts" by the IRS, triggering:

Complex reporting requirements (Form 3520, Form 3520-A)
Potential penalties for non-compliance
Adverse tax treatment

Structures That Work Across Borders

Mexican fideicomiso: For property in Mexico's restricted zone (within 50 km of the coast or 100 km of borders), foreigners must use this bank trust structure. Benefits include:

Full control and ownership rights remain with you
Beneficiaries can be named to receive property directly at death
Avoids Mexican probate for the property itself
Renewable every 50 years

Offshore asset protection trusts: Jurisdictions like Nevis explicitly don't recognise foreign forced heirship claims, potentially protecting movable assets from override by civil law countries—though this is complex and requires specialist advice.

Estate Tax Considerations

Canada's "Deemed Disposition" at Death

Canada doesn't have an estate tax per se, but imposes income tax on "deemed disposition" at death. Your assets are treated as if sold at fair market value, triggering capital gains tax on appreciation.

Current inclusion rate (2025): 50% of capital gains are taxable at your marginal rate (though rates above certain thresholds may increase).

Key exemptions:

Principal residence exemption
Spousal rollover (defers tax until surviving spouse's death)
Registered accounts pass tax-free to surviving spouse

Foreign Estate and Inheritance Taxes

Many countries impose additional taxes:

United States: Federal estate tax applies to worldwide assets of U.S. citizens and U.S. property of non-residents (over US$60,000 for non-residents)
France: Inheritance tax rates from 5% to 45% depending on relationship
United Kingdom: Inheritance tax at 40% over £325,000 threshold
Mexico: No inheritance tax, but capital gains tax may apply on deemed disposition

Double Taxation Relief

Canada has tax treaties with many countries to prevent double taxation. Generally:

Foreign tax credits can offset Canadian tax payable
Treaties allocate taxing rights between countries
Proper planning is essential to claim relief

Estate Planning by Destination: Popular Canadian Expat Countries

If you're considering relocating from Canada, estate planning requirements vary dramatically depending on where you settle. Here's what you need to know about the most popular destinations for Canadian expats.

Spain

Why Canadians choose it: Top-ranked expat destination with excellent healthcare, climate, and culture.