Top 10 Mistakes Canadians Make When Leaving Canada (And How to Avoid Them)

In 2024, 106,134 Canadians permanently left the country—the highest number since 1967. The first half of 2025 has already shattered records, with over 54,000 departures putting this year on track to be the biggest exodus in Canadian history.

But here's the uncomfortable truth: a significant portion of these emigrants are making expensive mistakes that will haunt them for years. Some will discover they still owe Canadian taxes on their worldwide income. Others will face surprise tax bills of $50,000 or more. Many will find their investment accounts frozen at the worst possible time.

The Canada Revenue Agency doesn't send you a checklist when you leave. There's no exit interview, no warning system, no "Are you sure you want to do this?" confirmation. You simply leave—and then the consequences arrive, often years later, often devastating.

After helping hundreds of Canadians plan their departures, we've identified the ten most common and costly mistakes. Whether you're retiring to Portugal, taking a job in Singapore, or chasing better weather in Mexico, avoiding these errors could save you tens of thousands of dollars.

Mistake #1: Thinking That Leaving Canada Ends Your Canadian Tax Obligations

The misconception: "I moved to Spain six months ago, so I'm done with Canadian taxes."

The reality: Canada doesn't care where your body is—it cares where your life is.

This is the foundational mistake that leads to all the others. Canadians assume that physically leaving the country automatically severs their tax obligations. It doesn't. Not even close.

Canada uses a residency-based tax system, not a location-based one. The CRA examines your "residential ties" to Canada—a complex web of factors that determines whether you're still considered a Canadian tax resident, regardless of where you actually sleep at night.

Primary ties (any single one can maintain your tax residency):

• A home in Canada available for your use
• A spouse or common-law partner remaining in Canada
• Dependent children in Canada

Secondary ties (collectively, these matter):

• Canadian bank accounts and investments
• Provincial health insurance
• Driver's licence and vehicle registration
• Professional memberships
• Social connections and club memberships

You can live in Lisbon for three years, pay Portuguese taxes, integrate into Portuguese society, and still be considered a Canadian tax resident if you maintained enough ties. In that case, you'd owe Canadian tax on your worldwide income—including everything you earned in Portugal.

The fix: Deliberately and systematically sever your residential ties before or immediately upon departure. Sell or rent your home to arm's-length tenants. Cancel provincial health coverage. Close unnecessary accounts. Document everything. Your departure should be a clean break, not a gradual fade.

Mistake #2: Being Blindsided by Departure Tax

The misconception: "I'll deal with taxes when I sell my investments."

The reality: Canada taxes your unrealized gains the moment you leave.

This is the mistake that causes the most financial damage, often running into six figures.

When you cease to be a Canadian tax resident, the CRA triggers a "deemed disposition" on most of your assets. This means you're treated as if you sold everything at fair market value on your departure date—even though you haven't sold anything.

The capital gains tax is real and due immediately. If you've built up significant gains in a non-registered investment portfolio, the bill can be staggering.

Example: You have a $600,000 non-registered portfolio with $250,000 in unrealized gains accumulated over 15 years. On departure day, the CRA treats this as a $250,000 capital gain. With the 50% inclusion rate, you have $125,000 of taxable income added to your final Canadian return. Depending on your province and other income, you could owe $40,000-$60,000 in departure tax—and you haven't actually received a single dollar.

What's exempt from departure tax:

• RRSPs, TFSAs, RESPs, FHSAs (registered accounts)
• Canadian real estate (taxed when actually sold)
• Personal-use property under certain thresholds
• Cash

What triggers departure tax:

• Non-registered investment accounts (stocks, ETFs, mutual funds, bonds)
• Shares in private corporations
• Valuable collections (art, jewellery, collectibles) over thresholds

The fix: Calculate your departure tax exposure before making any decisions. You may be able to reduce the bill by strategically harvesting capital losses, timing your departure, or making charitable donations. But you can only plan if you know what you're facing.

Mistake #3: Keeping Your Canadian Home "Just in Case"

The misconception: "I'll keep the house and rent it out. Good investment, and I have somewhere to stay when I visit."

The reality: How you handle your home determines your entire tax situation—and most people get it wrong.

Your home is the single most important factor in determining tax residency. Get this wrong, and nothing else matters.

The dangerous middle ground: Many Canadians try to have it both ways. They rent out their home but include clauses allowing them to stay there during visits. They let family members live there rent-free. They keep a bedroom available "just for when they're in town."

All of these can maintain your Canadian tax residency because you still have a dwelling available for your use. The CRA doesn't care that you're not physically there most of the year—they care that you could be there whenever you want.

The safe options:

1. Sell the property: Cleanest break. Capital gain sheltered by Principal Residence Exemption if you sell while still a resident.

2. Rent to arm's-length tenants at market rates with a standard lease: This typically doesn't maintain residential ties, but you'll have Canadian rental income to report and the home will be subject to capital gains when eventually sold.

3. Keep as investment but understand the consequences: You'll file Canadian non-resident tax returns (Section 216), face 25% withholding on gross rent, and lose the Principal Residence Exemption on any future sale.

The critical warning: If you sell your Canadian home after becoming a non-resident, you cannot claim the Principal Residence Exemption. You'll owe capital gains tax on the full appreciation, and the lawyer must withhold 25% of the gross sale price (not just the gain) pending CRA clearance. On a $1.2 million home, that's $300,000 held back regardless of your actual tax liability.

The fix: Make a definitive decision about your property before you leave. If you're keeping it, structure the rental properly and understand you're creating ongoing Canadian tax obligations. If you're selling, do it before your departure date to preserve the exemption.

Mistake #4: Not Telling Your Brokerage You're Leaving

The misconception: "My investments are in good shape. I'll just let them ride."

The reality: The moment you notify your brokerage of your non-resident status, most will lock your account.

This catches nearly everyone off guard, and the timing couldn't be worse—right when you're trying to manage your financial transition.

Here's what happens: Canadian securities regulations create compliance burdens for brokerages serving non-resident clients. Most retail brokerages (TD Direct Investing, RBC Direct, Questrade, CIBC Investor's Edge, BMO InvestorLine) respond by converting non-resident accounts to "liquidate only" status.

What this means:

• ✅ You can hold existing investments
• ✅ You can receive dividends and interest
• ✅ You can sell securities
• ❌ You cannot buy new securities
• ❌ You cannot reinvest dividends (DRIPs disabled)
• ❌ You cannot rebalance by purchasing
• ❌ You cannot make new contributions

You're essentially frozen. You can watch your portfolio and you can sell, but you cannot actively manage it. If the market crashes and you want to buy the dip—too bad. If you need to rebalance because one sector has grown disproportionately—too bad. If dividends pile up as cash instead of reinvesting—that's your new reality.

Your options:

1. Transfer to Interactive Brokers before leaving: One of the few brokerages that maintains full trading privileges for Canadian non-residents. Must be done before departure. This is the best option for most people who want to maintain active control.

2. Liquidate and reinvest abroad: Accept the capital gains consequences and establish new accounts in your destination country.

3. Accept the limitation: If your portfolio is well-diversified and you don't need to actively trade, you might simply accept the "hold and sell only" constraint. Many buy-and-hold investors find this workable.

4. Use a cross-border wealth manager: An option for those with $250,000+ who want hands-off management, but fees are high.

The fix: Contact your brokerage before you leave to understand their specific policies. If maintaining active trading is important, transfer to an appropriate institution while you still have full access.

Mistake #5: Assuming Your TFSA and RRSP Work the Same Way Abroad

The misconception: "Tax-free is tax-free. My TFSA will still grow tax-free wherever I live."

The reality: Most countries don't recognize Canadian registered accounts, and you may owe foreign taxes on "tax-free" growth.

This is perhaps the most misunderstood aspect of international moves. Canadians assume their registered accounts maintain their tax advantages everywhere. They don't.

The TFSA trap:

Your Tax-Free Savings Account is a uniquely Canadian creation. Most countries don't have an equivalent structure and don't recognize its tax-advantaged status. When you become a tax resident of another country, they may:

• Tax annual investment income (dividends, interest, capital gains) inside your TFSA as current income
• Tax withdrawals as if they were regular investment income
• Include the TFSA in wealth tax calculations (France, Spain, Norway, Switzerland)

The account that was completely tax-free in Canada could be fully taxable in your new country—potentially at high marginal rates.

The RRSP complexity:

RRSPs are somewhat better protected because more tax treaties specifically address pension accounts. The Canada-US treaty, for example, generally recognizes RRSP tax deferral. But many other countries don't, and you could face:

• Annual taxation on RRSP growth (even before withdrawal)
• Double taxation on withdrawals (Canadian withholding + foreign income tax with imperfect credits)
• Forced distribution rules that don't align with Canadian rules

Additional complications:

• You cannot contribute to a TFSA as a non-resident
• TFSA contribution room doesn't accumulate while you're away
• RRSP contributions may still be possible with unused room, but rarely make sense
• Foreign reporting requirements (like US FBAR/FATCA) may apply to your Canadian accounts

The fix: Research your destination country's specific treatment of Canadian registered accounts before you go. Our tax treaty guides cover how major destination countries treat TFSAs and RRSPs. In some cases, you may be better off collapsing TFSAs (tax-free in Canada) and strategically drawing down RRSPs (paying Canadian tax at known rates) rather than facing unknown or unfavourable foreign treatment for decades.

Mistake #6: Moving to a Non-Treaty Country Without Understanding Withholding Rates

The misconception: "I'll still get my CPP and pension. What's the difference where I live?"

The reality: Without a tax treaty, Canada takes 25% of most income types right off the top.

Canada has tax treaties with approximately 95 countries. These treaties typically reduce withholding rates on Canadian-source income from the statutory 25% to 15% or less. But if you move to a country without a treaty, you'll pay the full statutory rate.

Withholding rates comparison:

Countries without comprehensive tax treaties with Canada include:

• Most of Central America (Costa Rica, Panama, Guatemala, Honduras)
• Many Caribbean nations
• Most of Africa
• Several Southeast Asian countries
• Various Pacific Island nations

The math: A retiree receiving $40,000 annually in CPP, OAS, and RRIF withdrawals would have $10,000 withheld annually in a non-treaty country versus $6,000 in a treaty country. That's $4,000 per year—$40,000 over a decade—lost to higher withholding, purely because of destination choice.

Important nuance: Some non-treaty countries offer other advantages (lower local taxes, lower cost of living, favourable treatment of foreign income) that may offset higher Canadian withholding. Panama, for example, has no treaty but also doesn't tax foreign-source income. You need to model the complete tax picture, not just the Canadian piece.

The fix: Factor withholding rates into your destination decision. Use the departure tax calculator to model different scenarios and understand the long-term impact of your country choice on Canadian-source income.

Mistake #7: Filing Form NR73 Thinking It Will Help

The misconception: "I'll get official confirmation that I'm a non-resident. Then I'll be protected."

The reality: Form NR73 is non-binding and can backfire spectacularly.

Many Canadians, seeking certainty about their status, file Form NR73 (Determination of Residency Status - Leaving Canada) expecting the CRA to confirm their non-residency. This seems logical—get it in writing, avoid future problems.

But here's the trap: the CRA's determination is not binding, and filing the form puts your situation under official scrutiny before you're ready.

What can go wrong:

1. You reveal ties you didn't realize were significant: The form asks detailed questions about your connections to Canada. Your honest answers might highlight residential ties you hadn't considered problematic.

2. CRA determines you're still a resident: Even if you believe you've severed ties, a CRA official might disagree. Now you have an official determination against you, making it harder to argue non-residency.

3. Processing time creates limbo: The form can take months to process, during which your status is officially uncertain.

4. It's not actually binding: Even if CRA says you're a non-resident, they can later change their position based on new information or a different interpretation. The determination provides guidance, not protection.

The better approach:

• Don't file NR73: It's not required.
• File your departure tax return properly: Report your departure date and pay any applicable taxes.
• Let your actions speak: Sever ties clearly and completely.
• Document everything: Keep records of when you sold your home, cancelled accounts, established foreign residency, etc.
• Establish clear residency elsewhere: The stronger your ties to your new country, the weaker Canada's claim on your tax residency.

The fix: Focus on properly executing your departure rather than seeking CRA validation. Understand the residency rules yourself, document your tie-severing actions thoroughly, and let your behaviour demonstrate non-residency. Our residency determination guide walks you through exactly what the CRA looks for.

Mistake #8: Ignoring Currency Risk

The misconception: "Exchange rates go up and down. It'll average out."

The reality: Currency movements can devastate your purchasing power—or dramatically enhance it—and most people have no plan.

If you receive Canadian-dollar income (CPP, OAS, RRIF withdrawals, rental income, Canadian dividends) but spend in your local currency, exchange rate movements directly affect your standard of living.

Real examples of currency impact:

The Japanese yen fell approximately 30% against the Canadian dollar between 2021-2022. A Canadian retiree in Japan suddenly had 30% more local purchasing power without any change in Canadian income. Their rent, food, and healthcare effectively became 30% cheaper in CAD terms.

Conversely, the British pound has seen periods of significant strength. When £1 equaled $1.85 CAD in 2014, Canadians in the UK found their pensions buying substantially less than when £1 equaled $1.55 CAD a few years later.

This isn't just an emerging market problem: Major currencies like the Euro, Swiss Franc, Australian Dollar, and British Pound have all seen 15-20% swings against CAD within single-year periods. Even "stable" countries carry currency risk.

Strategies to manage currency risk:

1. Build buffer into your budget: Plan for expenses assuming 15-20% adverse currency movement.

2. Maintain some assets in local currency: If you hold investments denominated in your spending currency, adverse exchange movements hurt your Canadian assets but help your local assets—a natural hedge.

3. Use forward contracts or currency hedging: For large predictable transfers (like converting RRIF withdrawals), you can lock in exchange rates months in advance.

4. Choose destinations strategically: Countries where CAD has historically been strong provide more stability, though past performance doesn't guarantee future results.

5. Keep flexibility: If exchange rates become unfavourable, can you reduce expenses, delay large purchases, or temporarily draw more from local-currency assets?

The fix: Model your budget at multiple exchange rate scenarios. Understand how a 20% adverse movement would affect your lifestyle, and build contingency plans before you need them.

Mistake #9: Forgetting That Provincial Health Coverage Ends

The misconception: "I've paid into the system my whole life. I'll be covered."

The reality: Provincial health insurance terminates within months of departure, and replacement coverage is expensive.

Most provinces cancel your health coverage after 6-7 months of absence (some sooner). There's no grandfather clause for years of contributions. Once you're gone, you're gone.

What this means:

• No OHIP, MSP, RAMQ, or equivalent coverage abroad
• No coverage when visiting Canada (you're now a tourist in your own country)
• Emergency medical care without insurance can cost hundreds of thousands of dollars

The cost of replacement coverage:

International health insurance for expats typically costs $1,000-$3,000+ per month depending on:

• Your age (premiums increase dramatically after 50, 60, 70)
• Health history and pre-existing conditions
• Coverage level (basic vs. comprehensive)
• Destination country (US coverage is most expensive)
• Deductibles and co-pays

A healthy 55-year-old couple might pay $1,500-$2,000/month for comprehensive international coverage. A 70-year-old with pre-existing conditions could face $3,000-$4,000/month or be uninsurable through standard markets.

Additional considerations:

• Pre-existing condition exclusions: Many international policies won't cover conditions you had before enrollment, or require waiting periods.
• Coverage gaps: Some policies exclude certain countries, activities, or condition types.
• Coordination with destination country systems: If your new country has public healthcare you can access, you may only need supplementary coverage.
• Travel back to Canada: You'll need travel medical insurance for any visits home.

The fix: Research health insurance options before you finalize your departure plans. Get quotes based on your actual health situation. Factor $12,000-$36,000+ annually into your budget—this is often the largest expense people underestimate.

Mistake #10: Thinking You Need to Pay $5,000+ for a CPA to Figure This Out

The misconception: "This is too complicated. I need to hire an expensive cross-border tax specialist."

The reality: The fundamentals aren't that complex—they've just been gatekept by professionals who charge by the hour.

Here's an uncomfortable truth about the "cross-border tax planning" industry: much of what specialists charge $5,000-$10,000 for is applying straightforward rules that you can understand yourself with the right tools and education.

What you actually need to know:

1. Your departure tax exposure: This is just math. Take your non-registered investments, calculate the unrealized gains, apply the inclusion rate and your marginal tax bracket. A good calculator does this in seconds.

2. Which ties matter for residency: The CRA's rules are documented. Primary ties (home, spouse, dependents) vs. secondary ties (accounts, memberships, licenses). It's a checklist, not a mystery.

3. How tax treaties affect your income: Each treaty is publicly available. The withholding rates are published. Your destination country's treatment of foreign pensions is knowable.

4. The timing of your decisions: When to sell your home, when to sever ties, when to establish foreign residency—these follow logical principles, not secret knowledge.

The industry doesn't want you to know this: Cross-border tax planning has been marketed as impossibly complex specifically because complexity justifies high fees. But the 106,000+ Canadians leaving annually aren't all wealthy enough to drop $10,000 on planning—and they shouldn't have to.

What actually helps:

• Calculators that model your specific situation: Input your assets, income sources, and destination—see your departure tax, withholding rates, and treaty benefits instantly.

• Educational content that explains the rules clearly: Not 50-page legal documents, but practical guides written for real people making real decisions.

• Tools that help you understand tax treaties: Which countries have treaties? What are the rates? How does your pension income get treated? This information exists—it just needs to be accessible.

• AI assistance that can answer your specific questions: "What happens to my TFSA if I move to Portugal?" shouldn't require a $500/hour consultation.

When you might actually need a professional:

• Genuinely complex situations: business ownership, stock options, multiple properties, cross-border employment
• Legal document preparation: wills, powers of attorney, corporate restructuring
• Disputes with CRA: if you're already in trouble, get a lawyer

But for the vast majority of Canadians planning a straightforward departure? You can figure this out yourself with the right resources.

The fix: Educate yourself first. Use calculators to understand your numbers. Read guides that explain the rules. Get your questions answered. Then decide if you need professional help for specific complex issues—not as a substitute for understanding your own situation.

The Bottom Line: Knowledge Is the Difference

The 106,000+ Canadians who left in 2024—and the record numbers leaving in 2025—are making life-changing decisions. Some will execute flawlessly, minimizing taxes and maximizing their fresh start abroad. Others will spend years cleaning up preventable mistakes.

The difference isn't paying $10,000 for professional advice. It's understanding your situation before you make irreversible decisions.

The information you need exists:

• Departure tax is calculable—you just need to run the numbers
• Tax treaty rates are published—you just need to know where to look
• Residency rules are documented—you just need to understand what matters
• Timing implications are predictable—you just need to model the scenarios

What we've built at Expatify:

We got tired of watching Canadians either overpay for professional advice or make expensive mistakes because the information was inaccessible. So we built the tools that should have existed all along:

• Departure Tax Calculator: See exactly what you'll owe when you leave, based on your actual assets and situation.

• Tax Treaty Database: Understand withholding rates, pension treatment, and treaty benefits for 90+ countries—without reading 200-page legal documents.

• AI-Powered Planning Assistance: Ask specific questions about your situation and get answers that actually apply to you.

• Educational Guides: Everything from residency rules to registered account treatment, written for real people making real decisions.

The goal: You should understand your own financial situation well enough to make informed decisions. Not because someone told you what to do, but because you actually understand the implications.

Leaving Canada can be one of the best financial decisions you ever make—lower taxes, lower cost of living, better lifestyle for the same money. Or it can be an expensive mistake that haunts you for decades.

The difference is entirely in understanding what you're doing before you do it.

Ready to understand your departure tax exposure? Start with our free calculator and see what leaving Canada actually looks like for your situation.

This article is for educational purposes only and does not constitute tax, legal, or financial advice. Tax laws are complex and change frequently. Always consult qualified professionals for advice specific to your situation.