Does Canada Have an ‘Exit Tax’?

A traveller wheels his baggage through the Trudeau International Airport in Montreal, on Jan. 3, 2025. The Canadian Press/Graham Hughes

News Analysis

With a growing number of Canadians looking to emigrate, some have questioned whether Canada has an “exit tax” for those looking to move out of the country.

Canada has long had an issue with “brain drain,” particularly with citizens moving to the United States, and recent data shows a record 120,000 Canadians moved out of the country in 2025. The flow of emigrants prompted former Google CFO Patrick Pichette, who was born in Montreal, to suggest a $500,000 exit tax at the Liberal convention in April, stirring controversy among political commentators.

Now, Gad Saad, a well-known author and professor at Concordia University, has sparked debate about whether Canadians are already subject to a substantial exit tax. He said he plans to leave for the United States due to his opposition to federal immigration and tax policy but he faces steep costs in a form of “departure tax.”

Saad recounted in a post on X on June 18 that his accountant said he would face a substantial tax bill if he left the country.

While Canada has no formal exit tax, tax experts say people leaving the country are treated as if they have sold many of their capital assets at fair market value immediately before departure. This mechanism, known as a “deemed disposition,” can result in a large capital gains tax.

Saad says he would likely have to work for 10 years to “save the amount that is likely to be taken via the departure tax.” He also raised questions about “how much taxes are moral in a society where individuals are considered free.”

“The policy is quite simple,“ said Kim Moody, founder of Moody’s Private Client. ”If you have benefited from Canada during your residency time, then Canada wants this pound of flesh up until that time, especially if they can’t reach back to you when you’re a non-resident.”

David Rotfleisch, a founding lawyer at Taxpage.com, said this deemed disposition applies to all property, except for taxable Canadian property. He said Canadians with large stock or cryptocurrency portfolios will “pay tax on the appreciated value” of the assets, which could be substantial.

While other Western countries have similar deemed disposition taxes, Canada’s “departure tax” regime is stricter than in the United States, the United Kingdom, and several European countries.

The ‘Departure Tax’

Saad characterized Canada’s deemed disposition as the “theft of much of my accrued book royalties and other creative endeavours,” even though much of it was generated outside of Canada.

“Yet the provincial and federal governments felt that they are owed more than 55 percent of my earnings, even though my taxes on my professorial salary is already more than what most Canadians pay in taxes,” he said.

Moody said that for Saad, who is a “very high-profile” writer, he would likely have to pay a large sum for his assets.

However, Moody said most Canadians leaving Canada would not be subject to the departure tax because they don’t have “huge accrued gains.” Moody also said there are exemptions to the departure tax that many Canadians can use.

Assets that are not subject to deemed disposition include real estate in Canada, business properties, and registered plans like RRSPs and TFSAs, according to the CRA.

The CRA told The Epoch Times that there is no “current rule, policy, or requirement under Canadian tax law” obliging a person to pay “any fixed amount” before permanently leaving Canada. But it said Canada has a “departure tax” through deemed disposition, and “depending on the individual’s situation, this may result in a capital gain that must be reported.”

Moody said Canadians leaving the country can also post security to the CRA, meaning they will pay the departure tax later.

How Other Countries Compare

Rotfleisch said that, when it comes to departure taxes, the United States has a “completely different regime,” where they tax based on citizenship and not on tax residency. If someone renounces U.S. citizenship, he said, they would get “hit with taxes,” but an American becoming a Canadian resident would not.

Americans renouncing their citizenship and moving abroad would only face an expatriate departure tax if they have a net worth over US$2 million, an average annual net income tax liability of more than US$211,000, or have failed to certify taxes for five years.

Additionally, those renouncing U.S. citizenship and going through a deemed disposition have an exclusion amount of $910,000, meaning only net unrealized gains above that amount can be taxed. Canada, by contrast, has no general threshold below which gains are tax-free.

The United Kingdom has no formal departure tax or deemed disposition, but if someone was a UK resident for four of the seven years before departing and then returned within five years, the gains realized while they were a non-resident could be taxed. Italy, Belgium, and Portugal also have no departure taxes.

Australia has a similar departure tax to Canada, with most assets subject to a deemed disposal when people leave the country. Like Canada, real estate or business assets in the country are exempt from this.