Before you pack your bags, seek the advice of someone with expertise, as it’s a complex situation. It’s not just about understanding the ramifications of departing Canada, it’s equally important to understand the rules and regulations of your destination Country.
Some important considerations while assessing your Canadian residency:
Qualifying for Non-residency – To qualify as a non-resident you will need to relinquish a number of ties to Canada. This is actually one of the most difficult pieces for most when considering leaving the country. It is a myth that you must give up all ties to qualify as a non-resident, as there is no hard and fast rule. There are many variables, unique circumstances and case laws that support successful Non-residency stress tests. Many believe that the number of days either in or out of Canada dictates whether or not you qualify; however, an individual’s residency status will rarely be solely determined by using the 183-day rule. Residency determination is based on “factual residency” or being “ordinary resident”. We know that you don’t want to find yourself in a lengthy and expensive court battle, so we recommend you take the time to understand this “Grey” area.
Tax - From a tax perspective, the goal is to minimize departure taxes as well as taxes in your new destination country. If taxes are a motivating factor, (and they usually are, particularly as Canada ponders higher taxes) you need to ensure there are no surprises either leaving Canada or entering your destination country. One area of concern may be which assets are subject to the departure tax, as this tax is not triggered by all assets. There has been much on-going debate over whether or not you can be a “permanent traveller” or if you should seek a jurisdiction with little to no tax (but I’ll save that for another conversation).
Estate Planning – This subject is often overlooked or minimized. It is crucial to review and perhaps re-draft your estate planning documents since you do not want to assume that Canadian documents are valid or executable in other jurisdictions. I have known individuals leaving Canada who delayed estate planning or viewed it as a low priority. You should avoid making this mistake, as the failure of your Canadian estate plan could be devastating in the event of an untimely death.
I have touched on some of the key issues but there are many others to contemplate before you pull up stakes. If you are considering the option of becoming a Canadian Non-resident, please don’t hesitate to contact me.
Jason N. Vincent, PFP, TEP
President, Chief Operating Officer & Investment Counsellor
Founded in 2006 to manage and service seven family offices, today Matco offers the benefits of our extensive investment management experience to individual investors, foundations, endowments, condominium corporations, trusts, corporations and not-for-profit organizations.
Our mission is to simplify the investment world for our clients by understanding their needs and providing exceptional investment solutions that preserve and grow capital.