Tax nomad® – International tax for mobile Canadians Emigrating from Canada is often a well-defined project: saying goodbye to winters that seem to never end, enjoying a better climate, a more affordable cost of living… and, let’s be honest, pay less tax. Plane ticket in your pocket, new country in sight, credit card ready to heat up — everything seems to be settled. But here’s the question that too many Canadians forget to ask: Have you really left the Canadian tax system… Or only the territory? Because if you don’t do things right, the Canada Revenue Agency (CRA) doesn’t “lose” sight of you. And contrary to what we think, she has a long memory… and formidably effective tools. Here are the 7 most common tax mistakes I see among Canadians who want to go nomadic, along with ways to avoid them. Mistake No. 1: Not understanding your tax residency Canada does not tax based on your passport, but on your tax residence. In other words, you can live abroad and continue to be taxed in Canada on your worldwide income. Many think that leaving = non-resident. False. There are several possible tax statuses:

• Factual resident: You live mostly in Canada, where you maintain significant ties
• Tax emigrant: You leave Canada permanently and cut your ties
• Non-resident: you live abroad and no longer have significant ties
• Deemed non-resident: a tax treaty gives you residency elsewhere

The classic trap: believing that the number of days is enough. Connections matter as much as physical presence. Mistake No. 2: Forgetting the exit tax Leaving Canada can trigger immediate taxation, even without selling anything. When you leave, certain assets are deemed to be sold at fair market value: Non-registered stocks and ETFs, Shares of private companies, Foreign real estate Personal Canadian home (taxed only on sale), RRSPs, TFSAs, pension plans (but no more contributions after departure) The result is a taxable capital gain on paper, payable now. The good news? There are strategies to reduce, postpone, or plan for this tax, but only if it is done before you leave. Mistake 3: Completing Form NR73 This one surprises many people. Form NR73 allows you to ask the CRA if they still consider you a resident. On paper, it seems reassuring. In practice, this is often a mistake. Why? Because you voluntarily invite the CRA to rule against you. NR73 is not mandatory. An unfavorable response can stick with you for years. In most cases, it’s better to let the facts speak: cut the links, declare your departure date, file the final return… and move forward. Mistake No. 4: Ignoring tax treaties You can be considered a tax resident of two countries simultaneously. This is where tax treaties come into play. They use tie-breaker rules, including:

1. Where is your permanent residence?
2. Where is your center of vital interests (family, finances)?
3. Where is your usual place to live?
4. Nationality (as a last resort)

A classic example: working in the U.S. for more than 183 days but keeping your family and home in Canada.Result: tax resident of Canada under the treaty, despite being physically present in the U.S. Ignoring these rules can lead to unnecessary double taxation. Mistake No. 5: Keeping too many ties to Canada The CRA loves connections. Primary links (very heavy):

• Home in Canada
• Spouse or children in Canada

Secondary links (cumulative effect):

• Active bank accounts
• Credit cards
• Driver’s license
• Health insurance
• Clubs, associations, mailing address

No secondary link alone is fatal. Several sets may be enough to requalify you as a resident. Cutting ties is not symbolic. It’s strategic. Mistake No. 6: Mismanaging Canadian revenues after departure Even if you are a non-resident, certain income remains taxable in Canada:

• CPP/OAS: standard 25% withholding (often reduced per treaty)
• RRSP: 25% at source
• Rental income: 25% on gross (!)

Fortunately, there are solutions:

• Election 216: being taxed on the rental net
• Form NR5: Reducing Withholding Tax
• Tax treaties: reduced rates depending on the country

Without planning, Canadian taxation quickly becomes a reality. Heavy to manage remotely. Mistake No. 7: Not establishing tax residency elsewhere Leaving Canada without becoming a tax resident somewhere is risky. Without a clear status elsewhere, the CRA can say, “All right, you’re still with us.” To solidify your departure:

• Visa or legal residency
• Accommodation
• Bank account
• Local ID card
• Tax Returns in the New Country

Taxation follows real life, not intention. Tax nomad: starting cleanly, not half Leaving Canada can be a great financial and personal decision. But poorly planned, it can cost tens of thousands of dollars… for nothing. International taxation is not a matter of tinkering. It’s architecture. Nomad Fiscal®, that’s exactly it: putting taxation at the service of your freedom of movement, without blind spots. Because leaving is good. Starting cleanly is better. In addition to the seven common mistakes already known, there are other, less obvious pitfalls in the taxation of leaving Canada. Here are three more mistakes that many Canadian expats make, with a concrete explanation for each, to make your tax expatriation more successful. Mistake No. 8: Not Planning for the Fate of Your Canadian Business Description: Entrepreneurs who go abroad sometimes forget to reorganize or plan for the future of their Canadian company. This is a costly mistake. Indeed, if you remain a majority shareholder of a company in Canada by becoming a non-resident, your corporation could lose its status as a “Canadian-controlled private corporation” (CCPC) and the tax benefits associated with it In concrete terms, this often means the end of the reduced tax rate for small businesses and even the automatic closure of the tax year at the time of the change of status, which can lead to additional tax on part of the income. In addition, maintaining a significant stake in a Canadian company is an economic link to Canada that may raise tax residency questions. Practical information: Before leaving the country, a business owner should consider transferring control of their company, liquidating or restructuring their assets, or seeking advice from a tax professional. Without this planning, you risk unforeseen taxation and administrative complications related to your company remaining in Canada Mistake No. 9: Storing Canadian bank accounts without precautions. Description: Underestimating the importance of your Canadian bank accounts and investments after leaving is a common mistake. Forgetting to notify your banks, brokers, and other payers of your change in tax status can lead to problems. For example, if you continue to hold accounts that generate interest, dividends, or other passive income, you must inform your financial institutions that you have become a non-resident Without this notification, they may continue to treat you as a Canadian resident or apply inappropriate withholding taxes. This can either result in insufficient withholdings (and a tax bill later) or excessive withholdings that are difficult to recover. In addition, maintaining multiple active accounts in Canada (bank accounts, credit cards, investments) without converting them to non-resident status, or without a valid reason, may be seen as an indication of ties to Canada and can make it difficult to prove your non-residency. In practice: Inform each bank, insurance company, investment fund, and payer of income (rentals, pensions, etc.) of your new address and tax status as soon as you leave Make sure they apply non-resident withholding when required by law. This will help you avoid unpleasant surprises and stay in good standing with the Canada Revenue Agency. Mistake n°10: Believing that an offshore company or account is enough to erase the tax Description: Attracted by the idea of tax havens, some expats believe that opening an offshore company or transferring money abroad is enough to avoid Canadian taxes. This is a dangerous mistake. On the one hand, if your tax departure is not clearly established (for example, if you have maintained significant ties to Canada), your worldwide income remains taxable by Canada despite the fact that it transits abroad. On the other hand, even for non-residents, a poorly designed offshore arrangement may fall under Canadian law. For example, if you set up a company in a tax haven, but continue to manage it from Canada, this company may be considered a Canadian resident in the eyes of the tax authorities and be taxed as such The CRA actively monitors international tax avoidance schemes and will not hesitate to apply the anti-avoidance rules if an offshore structure is only used to hide taxable income In practice: Don’t think that a foreign bank account or shell company automatically protects you. These tools are only effective as part of legal and transparent planning, once your non-residency is indisputably established. It is strongly advised to seek professional advice before resorting to offshore structures to avoid legal and tax issues. In short, it is better to remain fully compliant and optimise your tax system with legal provisions (tax treaties, tax choices, etc.) rather than risk an adjustment by relying on opacity. Each tax expatriation situation is unique. By avoiding these lesser-known mistakes – whether it’s your business, your financial accounts, or the use of offshore entities – you can make your departure from Canada more secure. Careful preparation, sound advice, and compliance with tax obligations will allow you to enjoy your new life abroad with peace of mind, free from the unwanted tax legacy of Canada’s past. After reviewing the top ten tax mistakes made by expatriate Canadians, here are seven other common pitfalls that are just as important. Whether you are a worker, entrepreneur, investor, or retiree, these mistakes – whether legal, tax, administrative, or strategic – can cost you dearly if you do not anticipate them. Each one is documented in expert guidance or tax legislation and warrants your attention before departure. Mistake #11: Not declaring your belongings when leaving Canada Many prospective expats forget that when they leave Canada, they must declare the assets they own on the date of their departure. If the fair market value of all your property exceeds $25,000, the Canada Revenue Agency (CRA) requires Form T1161 listing these assets, or face a fine of up to $2,500 This return includes your significant assets (non-registered investments, rental property, private company shares, artwork, etc.), even if they are not sold. Certain assets are excluded from this mandatory list, including cash, registered plans (RRSPs, RRIFs, etc.), and personal assets under $10,000. Failing to complete this formality is a costly administrative error: in addition to the fine, you risk attracting the attention of the CRA by omitting elements of assets. It is therefore better to make an inventory of your belongings before the big departure and send the required information, to be in order Mistake #12: Neglecting the declaration of departure and the notice to the CRA. Underestimating the importance of the final tax return when you become a non-tax resident is a common mistake. Some people think that if they no longer have Canadian income, they don’t need to file a return in the year they leave. However, it is essential to indicate your date of exit from Canada on your last return so that the CRA can officially record your change of status This initial return allows you to report your taxable capital gains at the time of departure (the “departure tax”) and to choose the appropriate tax options, for example, by deferring the payment of the starting tax by providing guarantees to the CRA. If you are not required to file a return (no tax owing), it is still recommended that you inform the CRA as soon as possible of your departure date. Failure to do so can lead to unpleasant surprises: the CRA may mistakenly consider you a resident (and tax you on your worldwide income) until they have proof to the contrary. In addition, without a final return, you could miss out on potential tax refunds or the recovery of excess source deductions. In summary, always file a tax return in the year of your expatriation, even if your income is low, to properly formalize your tax emigration Mistake #13: Not notifying your payers and financial institutions Many Canadians who travel abroad forget to inform their financial institutions, employers, or other payers of their change of tax residence. This may seem like a benign omission, but it has concrete consequences. Indeed, once you are a non-resident, your Canadian-source income (bank interest, dividends, pensions, etc.) must generally be subject to specific withholding tax for non-residents (often a flat rate of 25%, unless reduced by tax treaty) If you don’t report your status, your payors will continue to treat you like a resident: they may not make the correct deductions, or issue the wrong tax slips. For example, a bank that ignores your expatriation might not levy non-resident tax on your interest, leaving you later with a surprise tax bill to pay. The solution? Inform all your Canadian payers (bank, mutual fund company, pension plan, tenant, etc.) of your new non-resident status before you leave This will allow them to apply the correct tax deductions and issue NR4 slips instead of the usual T5/T4. It’s a simple administrative formality that will help you avoid CRA tax compliance issues and ensure you pay the correct amount of tax upfront, with no double taxation or late payment penalties. Mistake #14: Forgetting to repay the HBP (Home Buyers’ Plan) balance Among the unforeseen tax events related to departure, the fate of the RAP is often neglected. The HBP allowed you to withdraw funds from your RRSP to buy your first home, as long as you paid them off gradually. However, if you become a non-resident, the law requires the accelerated repayment of any outstanding HBP balance, it will be added to your taxable income in the year of departure In other words, the amount you have not repaid to your RRSP becomes taxable immediately if you do not repay it before leaving Canada. For example, if you still had $10,000 to repay, that $10,000 will be considered a taxable RRSP withdrawal on your last Canadian return. This rule also applies to the Lifelong Learning Plan (LLP) under the same conditions. To avoid this costly mistake, it is recommended that you pay off the balance owing before you leave (ideally by making an equivalent RRSP contribution) If not, be prepared to pay tax on this amount on your departure return. Good to know: making this refund before you leave can even reduce your final tax by generating an RRSP deduction for the current year. In short, don’t let an RAP stand by without action – otherwise, your expatriation dream will turn into a hefty tax bill. Mistake #15: Mismanaging your registered savings accounts as a non-resident Some expats continue to use their Canadian savings accounts (TFSAs, RRSPs, etc.) as if nothing had happened, while the rules change as soon as you become a non-resident. The TFSA (Tax-Free Savings Account), for example, is tax-exempt in Canada, but as soon as you leave, you don’t have to contribute to it anymore. No new contributions are allowed if you are a non-resident, and your contribution room is frozen during years of absence If you do make deposits, expect a penalty of 1% per month on each contribution made illegally. This means that a $5,000 contribution made while you are a non-resident could incur a $50 monthly penalty ($600 per year) until the amount is withdrawn. In addition, many Canadians are unaware that the TFSA can lose its tax advantage abroad. For example, in the U.S., a TFSA is not recognized as an exempt vehicle; it is treated as a taxable foreign trust, resulting in the taxation of complex gains and returns. Many expats have been unpleasantly surprised to see their TFSA interest and earnings taxed by the US IRS, even though they believed this income was tax-free. When it comes to RRSPs and RRIFs, there are no Canadian tax provisions that prevent you from keeping them non-residential (they are exempt from starting tax and continue to grow tax-free in Canada). However, RRSP contributions are generally no longer possible (unless you still have eligible Canadian income and unused room), and withdrawals will be subject to a 25% withholding tax, unless reduced by tax treaty. What to do then? Experts often advise cleaning up these accounts before leaving. In the case of the TFSA, it may be wise to close it and withdraw your funds before expatriation, thus locking in your earnings tax-free and avoiding any foreign headaches. For RRSPs, consider maximizing your allowable contributions in the year of departure (to reduce your final taxable income) and then let it grow, knowing that any future withdrawals will be taxed under the non-resident rules In short, don’t treat your savings accounts as before: find out about the new rules that govern them and your host country’s attitude towards these accounts, otherwise you will be surprised. Mistake #16: Neglecting the taxation of real estate kept in Canada (rent or sale) Many expats choose to keep their home or condo in Canada, either to rent it out or to sell it later. Mismanaging the tax treatment of these properties as a non-resident is a common mistake that can be costly. First, if you rent out a property in Canada after you leave, the CRA imposes a clear rule: a 25% withholding tax on the gross rent must be remitted to the tax authorities each month In concrete terms, the tenant or real estate agent who is supposed to collect your rent must withhold 25% of each payment and send it to the CRA. If nothing is done and you collect your rent without withholding, you become in default: the CRA can claim this amount with a penalty of up to 10% of the amount not withheld. Be aware that there are mechanisms to reduce this tax (for example, filing Form NR6 to be taxed on net rent after expenses, and then filing a Section 216 return). However, they require proactivity and respect for deadlines. Failing to take care of it means paying 25% tax on your gross rental income, with no deduction for mortgage interest or maintenance, which is often much more than the tax due on the net profit. Then, in the event of a sale of Canadian real estate by a non-resident, another crucial rule applies: a tax compliance certificate must be obtained from the CRA (and Revenu Québec, if applicable) to avoid a significant withholding tax on the sale price. The application for a certificate must be made within 10 days of the sale. If you neglect this step, the buyer (or his notary) is legally obliged to withhold 25% of the proceeds of the sale (after deduction of the initial purchase price) and send it to the federal tax authorities until your situation is regularised. In other words, a quarter of the sale price could be temporarily blocked (or even permanently if no application is made), which can jeopardize the transaction, especially if you have a mortgage to repay on the property Only after the fact, once the certificate has been obtained and the capital gains tax has been paid, will the balance withheld be returned to you. In summary, failing to comply with tax obligations on your remaining real estate is one of the biggest mistakes. To avoid this, make sure, as soon as you leave, to mandate a paying agent or a notary informed of the rules for your rental income, and to plan the procedure for the certificate of compliance as soon as you plan to sell. It’s better to comply with these requirements than to face surprise holdbacks, penalties, or delays in your real estate transactions. Mistake #17: Expatriating without professional tax advice (or following bad advice) Finally, the worst cross-cutting mistake is going blind without serious tax planning. Tax expatriation is a complex field where Canadian and foreign rules intersect, and each situation (family profile, type of income, country of destination) presents its own pitfalls. Believing that all you have to do is take your plane ticket to avoid paying taxes or relying on information gleaned from the Internet can lead you to disaster. So-called “gurus” of tax expatriation abound online, promising wonders without mastering the law There are countless examples of poorly advised taxpayers who have had serious problems with the tax authorities for following risky strategies. Legitimate experts, on the other hand, insist on the importance of planning well before packing your bags. It is strongly recommended that you consult a tax specialist or a specialized accountant to assess all the consequences of your departure, optimize the transition, and avoid the mistakes mentioned above. As one wealth management advisor reminds us, “it is very important to speak to a tax professional before moving.” Ideally, this planning should be holistic, covering not only Canadian taxes (departure, residential ties, withholding taxes, etc.) but also taxes in the host country, your assets abroad, your pension plans, and any other wealth-related aspects. Don’t seek advice after the fact by saying, “Why didn’t I hear that?” warns an expert. You have to do it before you make the decision. In short, surrounding yourself with competent professionals and being wary of miracle recipes is the key to a successful tax expatriation. This will allow you to sleep peacefully abroad, knowing that you have met your obligations and minimized your taxes in a legal and strategic way. In conclusion, expatriation offers attractive opportunities but also presents significant tax pitfalls. By avoiding these seven mistakes – in addition to the first ten already identified – you will put all the chances on your side to succeed in your departure from a tax point of view. The golden rule is to be well-informed, plan ahead, and stay compliant with Canadian and international laws. With careful planning and sound recommendations, you can approach your experience living abroad with confidence and avoid tax issues that could ruin your travel.  

Concerning the 17th Actuarial Report, of the Office of the Superintendent of Financial Institutions (OSFI), there is every reason to believe that the estimated cost of distributing old age pension (OAP) cheque benefits will be $74 B in 2023.  As we progress in time, the figures highlighted in the report will blow your mind: a creeping barrage of cost increases culminating at 116% in 20 years.

With that in mind, let’s take a few minutes to get used to the magnitude of these numbers.  As eluded, this year, it is estimated that we will cash $ 74 B worth of OAS, GIS/Allowance checks; for comparison purposes, the projected cost of Highway 413 is around $ 10 B; so, it’s like buying the equivalent of 7-8 Highway 413 every year!

More surprisingly, in 20 years, the estimated cost of OAP is $ 161 B.  In all these dimensions, the problem lies in the fact that our taxes pay for OAPs, so their net costs are a current federal government expense. In other words, we must pay the full spectrum of this bill without any contributory aid from our fellow citizens.

Moreover, starting from this premise, waiting 20 years before seeing the upward spiral of costs is unnecessary.  In the same OSFI report, actuaries concluded that there would be a projected expenditure increase of 117% between the 2022 and 2023 years, a projected expenditure increase of $ 12.7 B for the period between 2022 and 2026, finally; The number of beneficiaries utilizing OAP will increase quite markedly.

By this very fact, the cause of the meteoric acceleration of this expenditure is, invariably, the change in our society’s demographic landscape. With that in mind, let’s immediately fix one thing with OAPs:  their sustainability; their survival is at stake.  But, above all, it is unlikely that we can improve and amend the program for future generations.

As per Statistics Canada website; on a webpage called population projections for Canada (2021 to 2068), we don’t need an in-depth demonstration of analysis to figure out that as our population grows, so will the need for OAP check benefits. Indeed, these stats aren’t meant to be projections; however, where there is smoke, you know the rest…

Case-in-point: glance at the age structure of the Canadian population; it is unequivocal. The population growth of Canadians aged 65 years and older will accelerate rapidly. The Baby Boom Generation will transition to, what I call, the Retirement Boom Generation. It is estimated that by 2030, in 7 years to be precise, the proportion of the total population aged 65 years and over will increase by an average of 22%. So, naturally, this will further exacerbate OAP costs and may lead to necessary tax increases for the sole purpose of the program’s sustainability.

We have been discussing the viability of OAPs for years, years, and years. But, as indicated, we may, this time, be at an inflection point. As you know, silly season is every 3-5 years; therefore, politicians will naturally try to kick this one down the road.