For some people, Canada has become unrecognizable in recent years and many citizens can no longer tolerate living there for a host of reasons ranging from housing affordability to climate to political reasons.
There is a surge of Canadian emigration taking place as citizens seek more reasonable and free lives elsewhere.
If you are a Canadian resident contemplating parting ways with the place, you should first weigh the benefits and downsides to see whether you will really come out ahead financially and spiritually living in the alternative destination you’re considering.
Table of Contents
Pros of Leaving Canada
1. Stop paying high Canadian taxes
Canada has extensive social services that are becoming more and more bloated, meaning Canadians will face ever increasing tax burdens as time goes on.
Depending on how your income is structured and with proper planning, you can lower your tax obligations substantially upon leaving Canada. Many countries offer low-tax, or territorial tax regimes, or incentives that will allow you to retain more of your income, if not all of it.
2. Experience more personal freedoms
Canada traditionally has ranked very high in indices that track human rights and freedoms around the world. However, Canada has been gradually slipping down the list as the new government finds creative ways to restrain the will of its citizens. Do not forget that just four years ago, Canada didn’t even permit its citizens to leave the country because of Covid.
Freedom of digital expression has been repeatedly dampened by legislation like the Online Harms Act, Online News Act and Online Streaming Act. These laws have resulted in expanded censorship powers, limiting Canadians’ access to information. They have also broadened punitive measures against people guilty of “hate speech,” which we all know can be interpreted as any speech the government finds inconvenient.
3. Get superior healthcare abroad (stop overpaying for Medicare)
Canada has among the most expensive public health systems in the world, spending more than any other country relative to the size of its economy. This is the main way Canadians may justify paying such onerous tax rates versus their neighbors in the U.S.
But if you consult users of the system and the many studies scrutinizing its performance, you will find that Canadian Medicare is anything but outstanding. Availability of physicians, MRI machines, hospital beds and other critical medical infrastructure is middling at best, complicating timely access to procedures.
You may think your health care is “free,” but by most accounts Canadians are getting a raw deal on healthcare.
You will likely find that even when paying out of pocket for private healthcare in other countries, you come out ahead financially and in terms of satisfaction. Many countries in Latin America, Europe, Asia, and the Middle East have robust and affordable private hospitals and clinics, where you will have ample and timely access to consultations and treatment.
4. Enjoy a better climate
It is no secret that Canada is among the coldest countries in the world, with average temperatures even more frigid than Russia. You can move pretty much anywhere else and see more sunshine, and take advantage of all of the lifestyle benefits that come with it.
5. Avoid the increasingly unstable Canadian society
While still overall a safe country, Canada has seen substantial increases in violent crime and property crime in the last decade. This has left many residents to perceive a fundamental decrease in security over the last handful of years.
It certainly makes the argument for moving to Latin America much stronger, where crime rates in some areas are trending lower.
6. Reduce your overall cost of living
Canada is among the top 15 most expensive countries to live in and if you don’t need to live there to make your money you should seriously ask yourself if your desire to stay there is worth the cost.
Combine Canada’s unaffordability with its exorbitant tax rates, and you will quickly realize you can be holding on to way more money living elsewhere.
Your savings and investment accounts will thank you for departing.
7. Maintain your Tax-Free Savings Account
You are permitted to keep your TFSA upon leaving Canada, but you will no longer accrue contributions. This means you won’t be taxed in Canada on any income generated by your TFSA or on any withdrawals in Canada, but no contribution room will accrue during the years you live outside of the country.
Your withdrawals during the non-resident period can be added back as contribution room upon return to Canada, provided you become a tax-resident again.
It is worth noting that your earnings and withdrawals may be taxable in your new country of tax residency.
8. Stop filing Canadian tax returns
Provided you do not have Canada sourced income, you will no longer have to file Canadian tax returns upon leaving. This represents a helpful simplification of your duties to the tax authorities.
Cons of leaving Canada
1. Disclosure requirements
You must disclose all Canadian properties worth $25,000 CAD or more to the government.
2. Deemed disposition rules and departure tax
As a non-resident of Canada you are deemed to dispose of your property at its fair market value. Even if you haven’t sold your property, you are expected to pay unrealized capital gains on its fair market value when you depart as part of the departure tax.
This includes non-Canadian real estate, shares in private corporations, foreign trusts, precious possessions like art and jewelry and any non-registered investments.
3. No longer accrue TFSA contributions – only a problem if you move to a higher tax country
In the event you depart Canada for a 0% tax country, this should be of minimal concern to you. You will be able to create your own tax-free savings account in such a jurisdiction, while still maintaining your TFSA.
However, if you move to a country that taxes you at rates higher than Canada would, you may find that losing access to your contribution space puts you at a noticeable disadvantage. That is unless your new home country offers a comparable product.
4. Loss of deductions and tax credits
Leaving Canada’s tax system means you will lose access to various deductions and tax credits, including the Canada Child Benefit, GST/HST tax credits and RRSP contribution deductions. Losing these benefits can have a material effect on your overall income.
5. Lose access to Canadian health-care system
While many countries offer comprehensive and affordable private healthcare, you will need to carefully evaluate your own situation. At the end of the day, care in Canada is still better than many places and as a taxpaying resident you are entitled to free treatment. If you are elderly, or have a chronic condition, getting consistent care abroad can be an expensive proposition.
You must make a personal evaluation to see if the quality, price and scope of care in your new country is sustainable for you and your family.
6. Must sell or rent your existing real estate
To become a non-tax resident of Canada, you cannot have property in Canada that is readily available for you to move in. This means you must either sell or ren out your existing house.
7. Distance from your friends, family and community
Especially for older folks, this can be a difficult thing to deal with. It takes time to build ties in a new place, but keep in mind that almost every corner of the world these days offers a vibrant expat community.
Despite the myriad financial benefits of leaving the Canadian tax net, and the lifestyle benefits of living in other countries, you may find that your emotional and fraternal ties to Canada are priceless. This is a crucial evaluation you must make before jumping through the net.
8. Access to banking
You can keep your Canadian bank accounts, but they should not be your “main bank accounts” or else this could be interpreted by the Canarian Revenue Agency as a tax link. In many jurisdictions you can get good local banking (USA, Panama, Europe, etc), but in others banking may not be suitable apart for local matters. In such cases, opening an international bank account becomes a must.
Which countries are Canadian’s relocating to?
Some of the preferred destinations of Canadians include the US, Mexico, Panama, Italy, Portugal, Montenegro, Greece, the Philippines, Malaysia, Paraguay, etc.
One of the biggest questions is where to go when leaving Canada. The world is your oyster, but it also depends on which immigration programs are available for you. You may not necessarily qualify to move there.
Should I leave Canada?
You must carefully weigh the pros and the cons of leaving Canada, as each person has a unique set of personal and tax circumstances.
If you would like a plan to know where to move to, how to structure things, how to get good international banking, and to understand the tax consequences of leaving Canada, we can help you with our Leave Canada program.
Subscribe to the PRIVATE LIST below to not miss out on future investment posts, and follow me on Instagram, X, LinkedIn, Telegram, Youtube, Facebook, and Rumble.
My favourite brokerage to invest in international stocks is IB. To find out more about this low-fee option with access to plenty of markets, click here.
If you want to discuss your internationalization and diversification plans, book a consulting session or send me an email.
