Canada individual tax residence: factual residence and residential ties, the sojourner deemed-residence rule, treaty tie-breakers and deemed non-residence, arriving and leaving part way through the year, departure tax and its reporting and deferral forms, Part XIII withholding, the section 216 and 217 elections, and residency opinion forms NR73 and NR74.
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| Status | Test | How taxed |
|---|---|---|
| Factual resident | Ordinarily resident in Canada; keeps significant residential ties | Worldwide income, federal plus provincial tax |
| Deemed resident | Not a factual resident, but caught by s.250(1), e.g. sojourned 183 days or more in the calendar year | Worldwide income for the whole year; federal tax plus federal surtax instead of provincial tax |
| Deemed non-resident | Resident under the ITA, but resident of the other country under a treaty tie-breaker (s.250(5)) | Like a non-resident: Canadian-source income only |
| Non-resident | No significant ties, not deemed resident | Canadian-source income only: Part XIII withholding or a Canadian return |
| Part-year resident | Arrived or left during the year | Resident rules for the resident period, non-resident rules for the rest |
This Guide explains how to decide whether an individual is resident in Canada for federal income tax purposes, and what follows from the answer. It is written for tax year 2026 (the calendar year 2026, returns filed in 2027), with a dated section for 2025 returns that are being filed and assessed now. The residence rules come from the Income Tax Act (ITA) and CRA's Folio S5-F1-C1; they are not indexed and did not change for 2026. CRA's web pages were still written for the 2025 return when this Guide was prepared (25 September 2026), so where a date is quoted for 2025 the 2026 equivalent is shown next to it and worked out from the statutory rule.
It covers:
It does not cover residence of corporations or trusts, Quebec provincial rules (Revenu Québec runs its own), foreign tax law in the other country, or detailed computation of capital gains. Residence is a question of fact decided on all the circumstances; this Guide gives the method and the CRA's stated positions, not a ruling. See "When to refuse or refer".
Why residence matters. "An individual who is resident in Canada during a tax year is subject to Canadian income tax on his or her worldwide income from all sources." A non-resident "is only subject to Canadian income tax on income from sources inside Canada" (Folio ¶1.1). A person who is resident for only part of the year is taxed on worldwide income for the resident part and as a non-resident for the rest (Folio ¶1.1; ITA s.114).
Provincial residence. Provincial or territorial tax generally follows the province where the individual resides on December 31. If an individual is resident in more than one province on that date, they are resident only in the one where they have the most significant residential ties (Folio ¶1.2-1.3). For the year you leave Canada, use the tax package for the province or territory where you lived on the date you left (CRA: Leaving Canada).
The five possible statuses
| Status | Test | How taxed |
|---|---|---|
| Factual resident | Ordinarily resident in Canada; keeps significant residential ties | Worldwide income, federal plus provincial tax |
| Deemed resident | Not a factual resident, but caught by s.250(1), e.g. sojourned 183 days or more in the calendar year | Worldwide income for the whole year; federal tax plus federal surtax instead of provincial tax |
| Deemed non-resident | Resident under the ITA, but resident of the other country under a treaty tie-breaker (s.250(5)) | Like a non-resident: Canadian-source income only |
| Non-resident | No significant ties, not deemed resident | Canadian-source income only: Part XIII withholding or a Canadian return |
| Part-year resident | Arrived or left during the year | Resident rules for the resident period, non-resident rules for the rest |
Work through the steps in order. Each step only applies if the earlier one did not settle the question.
None of these amounts is indexed. Sources are linked in each row.
| Item | Figure or rule | Source |
|---|---|---|
| Sojourner test | 183 days or more in the calendar year (any part day counts) | ITA s.250(1); Folio ¶1.33 |
| Short-term resident exception to departure tax | Resident in Canada for not more than 60 months in the 120 months before leaving | ITA s.128.1(4)(b)(iv) |
| Form T1161 required | Total FMV of reportable property more than $25,000 | CRA: Dispositions of property; ITA s.128.1(9) |
| Personal-use items left out of T1161 | Each item with FMV less than $10,000 | CRA: Dispositions of property |
| Late T1161 penalty | $25 per day late, minimum $100, maximum $2,500 | CRA: Dispositions of property |
| Security needed for T1244 deferral | Federal tax on the deemed disposition more than $16,500 (more than $13,777.50 for former Quebec residents) | CRA: Dispositions of property |
| T1244 election deadline | April 30 of the year after the year you emigrate (2026 emigrant: April 30, 2027) | CRA: Dispositions of property |
| Part XIII withholding, default rate | 25% of the gross amount | ITA s.212(1); CRA T4058 |
| Canada-US treaty: portfolio dividends | Not more than 15% of the gross dividend (10% for a company owning at least 10% of the voting stock) | Canada-US Convention Art. X |
| Canada-US treaty: periodic pension payments | Not more than 15% of the gross payment | Canada-US Convention Art. XVIII |
| NR7-R refund of excess Part XIII tax | Within 2 years after the end of the calendar year the payer remitted the tax (longer under some treaties) | CRA T4058 |
| Section 216 return (rent) | Within 2 years after year end; within 6 months if an NR6 undertaking was filed (2026 rent: December 31, 2028, or June 30, 2027 with an approved NR6) | ITA s.216(1); CRA: When to file |
| Section 217 return (pensions, benefits) | Within 6 months after year end, so by June 30; balance due April 30 (2026 income: June 30, 2027 and April 30, 2027); the filing date may differ if employment, business or taxable Canadian property income is also reported | ITA s.217(2); CRA: section 217 due dates |
A treaty only helps someone who is resident of both countries under paragraph 1 of the Residence article, which usually turns on being "liable to tax" there. The CRA's view is that this means being subject to "the most comprehensive form of taxation as exists in the relevant country", for Canada generally tax on worldwide income; the onus is on the individual to show it (Folio ¶1.41, 1.43). A person need not actually pay tax in the other country, but an abusive "resident of convenience" arrangement is not accepted (Folio ¶1.42). The courts have held that a US green card holder is resident in the US for Article IV(1) of the Canada-US treaty (Folio ¶1.44).
Tie-breakers are in paragraph 2 of the Residence article of most of Canada's treaties (Folio ¶1.46), but wording and order differ between treaties: always read the treaty for the other country. The Canada-US treaty, Article IV(2), is typical:
If the tie-breaker makes the person resident of the other country, ITA s.250(5) deems them "not to be resident in Canada". From that time the departure rules (deemed disposition) and Part XIII withholding apply (Folio ¶1.38). Section 250(5) does not apply to an individual who was a treaty resident of the other country but otherwise resident in Canada on February 24, 1998, as long as that dual status has continued without a break since then (Folio ¶1.38).
You are generally an emigrant if you leave Canada to live in another country and sever your residential ties. If you leave but keep residential ties, you are usually still a factual resident, unless a treaty makes you a deemed non-resident, in which case the same rules apply as for emigrants (CRA: Leaving Canada). Someone working, studying or wintering abroad who keeps ties stays a factual resident and is taxed "as if you never left Canada" (CRA: Factual residents temporarily outside Canada).
The departure-year return. File a return if you owe tax or want a refund. Enter the date of departure in the "Residence Information" area on page 1 and your spouse's or common-law partner's net world income. Report worldwide income up to the departure date and Canadian-source income after it (s.114). Certain federal non-refundable credits are limited for the non-resident part of the year. If you decide you do not have to file, "you should let the CRA know the date you left Canada as soon as possible". Tell Canadian payers and financial institutions that you are no longer resident, so they withhold Part XIII tax (CRA: Leaving Canada).
After you leave. You can keep a TFSA and its exemption, but you cannot contribute while non-resident and your room does not grow. You are generally not eligible for the Canada child benefit or the Canada Groceries and Essentials Benefit as a non-resident; tell the CRA your departure date (CRA: Leaving Canada).
The rule. When an individual ceases to be resident, ITA s.128.1(4)(b) deems them to have disposed of each property they own, immediately before leaving, "for proceeds equal to its fair market value", and to have reacquired it at the same amount. Any gain is reported on the departure-year return: calculate it on Form T1243 and carry it to Schedule 3.
Property that is not deemed disposed of (s.128.1(4)(b) and CRA):
An emigrant may elect under s.128.1(4)(b)(v) and CRA Form T2061A to include Canadian real property or Canadian business property in the deemed disposition.
Form T1161 (list of properties). If the total FMV of all "reportable property" owned when you left was more than $25,000, file Form T1161 listing properties inside and outside Canada, with the departure-year return (ITA s.128.1(9)). Leave out: cash and bank deposits; the registered plans and other excluded rights listed above, except employee security options, interests in Canadian-resident personal trusts and interests in Canadian life insurance policies, which must still be listed (s.128.1(10) "reportable property" para (b) reads the excluded-rights definition "without reference to paragraphs (c), (j) and (l)"), so they count towards the more-than-$25,000 test; for a short-term resident, property owned on arrival that is not taxable Canadian property; and each personal-use item (household effects, clothing, cars, collectibles) with FMV of less than $10,000. T1161 is due by your filing due date "even if you do not have to file a return". The late-filing penalty is $25 for each day late, minimum $100, maximum $2,500.
Deferring the tax (Form T1244). You can elect under ITA s.220(4.5) to defer paying the departure tax, "regardless of the amount", and pay it "without interest" when you actually sell or otherwise dispose of the property. Conditions:
Returning to Canada ("unwinding"). If you left after October 1, 1996 and become resident again while still owning property that was deemed disposed of, you can elect in writing, by your filing due date for the year you return, to adjust the departure deemed disposition (ITA s.128.1(6)). For taxable Canadian property, you reduce the gain reported in the emigration year by an amount you choose, up to that gain. For other property, you reduce the proceeds reported in the emigration year by the least of: the gain reported that year; the FMV of the property on the date you returned; and any other amount you choose, up to the lesser of those two. Include a list of the properties and the FMV of each. Security you gave may then be returned. If you had deferred departure tax, you may have to pay it when you come back (CRA: Dispositions of property).
Selling taxable Canadian property later. After emigrating, disposing of taxable Canadian property (for example Canadian real property or unlisted shares of Canadian corporations) may bring "additional reporting requirements" under section 116; see Information Circular IC72-17R6. This Guide does not cover section 116.
When residence starts. The same ties apply in reverse (Folio ¶1.25). A home, spouse or common-law partner, or dependants in Canada will almost always be significant ties. The CRA also treats landed immigrant (permanent resident) status plus provincial health coverage as usually significant, so that, "except in exceptional circumstances", the person is resident (Folio ¶1.25). Residence generally starts on the date of entry (Folio ¶1.28). A dwelling bought in Canada for future use and leased to a third party is not a significant tie on its own (Folio ¶1.26-1.27).
Deemed acquisition at FMV. On becoming resident, ITA s.128.1(1) deems the individual to have disposed of and reacquired most property at FMV. The CRA says: "the CRA considers you to have sold the property and to have immediately reacquired it at a cost equal to the fair market value (FMV) on the date that you became a resident of Canada." That FMV becomes the Canadian cost base, so keep a record of values on arrival. The step-up does not apply to taxable Canadian property, inventory and Class 14.1 property of a business carried on in Canada, and most excluded rights or interests (s.128.1(1)(b)).
The arrival-year return. Worldwide income is taxed from the date of arrival; income earned outside Canada before you became resident is not taxed in Canada, and credits are limited for the non-resident part (s.114). To receive benefits, newcomers report world income for up to two years before arrival (CRA: Newcomers to Canada).
Short visits without ties. A person without ties who sojourns 183 days or more in 2026 is a deemed resident for all of 2026 and taxed on worldwide income for the whole year, unlike a factual resident who arrives or leaves part way through and is taxed on worldwide income only for the resident part (Folio ¶1.32). A deemed resident is not resident in any province, so pays the federal surtax instead of provincial tax and gets no provincial credits (Folio ¶1.30). Exception: someone who lived in Quebec just before leaving and is a deemed resident may be treated as a Quebec resident under Quebec law; if they owe both Quebec tax and the federal surtax, they can ask the CRA for relief from the surtax when filing (Folio ¶1.31). Refer these cases. CRA's T4058 notes that a person who "left or entered Canada permanently in the year" may not be a deemed resident; the part-year rules apply instead.
A non-resident (or deemed non-resident) pays Canadian tax only on Canadian-source income, by one of two methods.
Method 1: Part XIII withholding. Under ITA s.212(1), "Every non-resident person shall pay an income tax of 25%" on listed amounts paid or credited by a Canadian resident. The payer withholds it. Common types: dividends, rent, pensions, OAS, CPP/QPP benefits, retiring allowances, RRSP, RRIF, FHSA and PRPP payments, annuities, royalties, estate or trust income, and interest paid to a non-arm's-length person (interest paid at arm's length is generally exempt). The withheld tax "is your final tax obligation to Canada on this income" and is not reported on a Canadian return (T4058).
Method 2: a Canadian return. Employment income in Canada, business income from carrying on business in Canada, taxable scholarships, and taxable capital gains from disposing of taxable Canadian property are taxed on a Canadian return under Part I (ITA s.2(3)), subject to any treaty relief.
Section 216 election: rent from Canadian real property (ITA s.216; CRA: Electing under section 216)
Section 217 election: pensions and benefits (ITA s.217; CRA: Electing under section 217)
| Situation | Result | Authority |
|---|---|---|
| Leaves Canada, keeps a home available and family in Canada | Still a factual resident | Folio ¶1.10-1.13 |
| Leaves, home let at arm's length, no other significant ties | Home may not be a significant tie on its own | Folio ¶1.12 |
| Only secondary ties remain (bank account, licence) | Unusual for these alone to make someone resident | Folio ¶1.14 |
| Intends to return but has no ties | Intention alone is not enough | Folio ¶1.16 |
| Not a factual resident; in Canada 183 days or more in the year | Deemed resident for the whole year | ITA s.250(1)(a) |
| Commutes daily from the US to work in Canada | Commuting days do not count as sojourning | Folio ¶1.33; T4058 |
| Dual resident; treaty tie-breaker favours the other country | Deemed non-resident (s.250(5)); departure rules apply from that time | Folio ¶1.37-1.38 |
| Resident 60 months or less in the 10 years before leaving | Property brought to Canada or inherited is not deemed disposed of | ITA s.128.1(4)(b)(iv) |
| Registered plans (RRSP, RRIF, TFSA) on departure | Not deemed disposed of; later payments face Part XIII | ITA s.128.1(10); T4058 |
| Section 216 or 217 return filed late | Election invalid; withholding is the final tax | ITA s.216(1), s.217(2) |
Case 1: departure with shares. Priya, resident in Canada since birth, emigrates to Australia on 15 August 2026 and sells her Toronto condo before she leaves. She keeps listed shares with a cost of $40,000 and FMV of $100,000 on the day she leaves, plus an RRSP and a TFSA. The shares are deemed disposed of at $100,000, so the capital gain is $100,000 minus $40,000, which is $60,000, reported on Form T1243 and Schedule 3 of her 2026 return. The RRSP and TFSA are excluded rights and are not deemed disposed of. Reportable property is more than $25,000, so she files Form T1161. She may file Form T1244 by April 30, 2027 to defer the tax without interest; security is needed only if federal tax on the gain is more than $16,500.
Case 2: T1161 penalty. A T1161 filed 30 days late: 30 days at $25 a day gives $750, which is between the $100 minimum and the $2,500 maximum, so $750. Filed 3 days late: 3 days at $25 gives $75, raised to the $100 minimum. Filed 120 days late: 120 days at $25 gives $3,000, capped at $2,500.
Case 3: short-term resident. Tom moved to Canada from the UK in March 2022, bringing UK shares, and left in February 2026. He was resident for not more than 60 months in the 120 months before leaving, so the UK shares he owned on arrival are not deemed disposed of (s.128.1(4)(b)(iv)). Shares he bought while in Canada are.
Case 4: sojourner (ITA s.250(1)). A US retiree with no Canadian home, family or other ties stays in Canada for 190 days in 2026, counting part days. She is a deemed resident for all of 2026, taxed on worldwide income with the federal surtax instead of provincial tax. A US resident who drives into Canada to work each day and goes home each night is not sojourning on those days.
Case 5: non-resident dividends (CRA T4058). A US-resident individual receives a $1,000 dividend from a Canadian listed company. Default Part XIII tax at 25% is $250. The Canada-US treaty caps it at 15%, so $150 if the payer applies the treaty. If the payer withheld $250, the $100 excess can be claimed on Form NR7-R within the 2-year window.
Case 6: rent (CRA: Electing under section 216). A non-resident receives $24,000 of gross Canadian rent in 2026. Without an election, 25% of gross is withheld: $6,000, final. With a section 216 return filed by December 31, 2028 (or June 30, 2027 if an NR6 was approved), tax is computed on net rent and the excess withholding is refunded.
2026 (the year this Guide targets). Dates are worked out from the statutory rules and CRA's 2025 pattern.
2025 returns (being filed and assessed now). The 2025 T1 was due April 30, 2026 (June 15, 2026 for the self-employed, with payment due April 30, 2026). A 2025 emigrant's T1244 election was due April 30, 2026. The 2025 section 217 return was due June 30, 2026. The 2025 section 216 return is due December 31, 2027, or was due June 30, 2026 with an approved NR6 (CRA T4058; CRA: section 216 due dates).
NR73 and NR74. Form NR73 (CRA: NR73) is for someone who has "left or are planning to leave Canada temporarily or permanently"; Form NR74 (CRA: NR74) for someone who "entered or stayed briefly in Canada". Both are optional. The CRA's opinion rests entirely on the facts given and is not binding (Folio ¶1.55).
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