Are there any consequences when a corporation leaves Canada and takes up residence in a new country?
Generally, a corporation is a resident of Canada if its central management and control is exercised from Canada. When this stops occurring, the corporation is considered to be a non-resident of Canada, regardless if initially incorporated in Canada or not. This can result in taxes owing.
When an individual, who was resident in Canada for tax purposes, ceases to be resident in Canada, there is generally a deemed disposition of assets owned by that individual at their fair market value. Any resulting deemed gain must be reported on the final tax return filed as a resident.
This is commonly called “departure tax”. However, unlike the kind of “departure tax” that is levied at some airports, there is no tax official in Canada waiting to collect it when the Canadian expat leaves. Rather, it is calculated and payable as part of the normal income tax filing.
This article will provide an outline of the key points in relation to the “Departure Tax”. Read More