Canada has something that neither the United Kingdom nor Germany has: an exit tax. Leaving Canada means "deemed disposition" of most assets at market prices – and those who are unaware find out through a letter from CRA. This guide (an addition to our basic guide on CRA, TFSA, and RRSP) focuses on cross-border issues: what MLI has really changed in the Polish-Canadian treaty, how to navigate the departure tax without double taxation (there's a little-known loophole in the treaty!), what to do with RRSP and TFSA after returning to Poland, and how to manage Canadian rental property from Poland. Facts from the treaty text and CRA pages – plus 2026 parameters with a reduced federal rate of 14%.
2012 Treaty + MLI: Credit Method (yes, for Canada too)
- MLI changed the method for Canada – in the official synthetic text from the Ministry of Finance, the former Article 21 (exemption from progression) is directly "REPLACED by Article 5(6) of the MLI Convention": Poland applies proportional deduction (in practice from the settlements for 2021). A Polish resident with Canadian income files PIT-36 with ZG and may have a supplement, mitigated by the abatement relief (limit 1360 PLN – and only for work/business, not for rental or dividends).
- Withholding rates from the treaty: dividends 15%, interest 10%, and periodic pension payments – a maximum of 15% (key for RRIF, see below); one-time payments do not fall under this limit.
- Remote work from Poland for a Canadian company: Article 14 – salary taxed only where the work is physically performed; sitting in Poland, you do not pay Canadian tax (all in Poland + ZUS – mechanics in the guide on remote work from Poland).
Departure Tax: Deemed Sale Upon Departure
How it works: on the day you lose Canadian residency, CRA treats you as if you sold most of your assets at market value – stocks, funds, as well as foreign assets – and immediately repurchased them. You pay tax on the "paper" gain. Exceptions: Canadian real estate, permanent establishment assets, registered plans (RRSP, RRIF, TFSA, RESP, FHSA…) and "short stay" (assets held upon entry if you were a resident for ≤60 months in the last 10 years). Forms: T1161 (asset list, mandatory above 25,000 CAD in total – penalty 25 CAD/day up to 2500), T1243 (gain calculation); tax can be deferred without interest until actual sale (T1244, until April 30 of the year after departure; security required above 16,500 CAD in tax).
Loophole from the treaty itself – Article 13(7): after paying the Canadian departure tax, you can choose a "step-up" in Poland: for Polish settlements, it is assumed that you acquired the assets at market value on the day of departure. Effect: Poland will only tax the increase in value after the move – without double taxation of the same gains. Few advisors remember this; keep valuations from the day of departure in your documents. (Symmetrical note: Article 13(6) allows Canada to tax the gains of a former resident for another 5 years after departure.)
CRA Residency and Departure Moment
Canadian residency is determined by "significant ties": home, spouse, and dependents in Canada (plus secondary ties: accounts, driver's license, health card). You become a non-resident on the latest of the dates: your departure, your family's departure, or obtaining residency in a new country. Form NR73 is an optional request for CRA's opinion – not a requirement (file it wisely). In the year of departure: file in the province where you lived on the day of departure; worldwide income only for the residential portion; federal credits proportionally; report the departure date to CRA immediately – CCB and GST credit are not available to non-residents (overpayments must be refunded).
RRSP, TFSA, FHSA, RESP – What to Do After Departure
| Account | Strategy After Moving to Poland |
|---|---|
| RRSP | Leave it – it continues to grow with deferral. Withdrawals for non-residents: flat withholding 25% (final). A trick worth thousands: conversion to RRIF and periodic withdrawals (to the higher of: 2× minimum or 10% of value annually) = treaty 15% instead of 25%. In Poland, the withdrawal is included in PIT with a credit for Canadian tax. |
| TFSA | You can keep it (Canada still does not tax it), but: zero new contributions as a non-resident (penalty 1%/month on the contributed amount!) – and a mirror trap to the UK ISA: Poland does not see the “wrapper” – income in TFSA for a Polish resident is subject to Polish tax of 19%. Consider organizing before departure. |
| FHSA | Practically useless abroad: a "housing" withdrawal without tax requires residency and a home in Canada; regular withdrawal for non-residents – 25% withholding. Use or transfer to RRSP before departure. |
| RESP | Contributions and grants (CESG) require the beneficiary's residency in Canada; withdrawal of growth to the subscriber (AIP) – residency of the subscriber + 20% additional tax. The educational plan does not handle the emigration of the entire family well – think it over before departure. |
Canadian Property Held from Poland
- Rental: by default 25% on gross income (final tax). A profitable alternative: election under section 216 (T1159 return – tax on net income; with form NR6 submitted before the season, the agent withholds 25% from net amounts, and you file by June 30). In Poland, you report rental income in parallel with a tax credit.
- Sale: non-residents must report the transaction to CRA within 10 days (form T2062) and obtain a compliance certificate – without it, the buyer withholds 25% of the gross price (for some properties 50%). CRA may withhold the certificate if you are in arrears on vacant property tax (UHT). On the Polish side, remember the national 5-year rule for properties.
Returning to Poland: Bonuses and Formalities
- Return Relief: exemption up to 85,528 PLN annually for 4 years – Polish citizenship is sufficient, and Canada is also on the list of countries qualifying for 3 years of documented residency (important for a non-Polish spouse). Details in the guide on returning to Poland.
- CAD Transfers: banks report international transfers over 10,000 CAD to FINTRAC/CRA – this is reporting, not tax; for large amounts, keep source documents. Donations to immediate family in Poland: SD-Z2 within 6 months + transfer to the recipient's account (guide on donations).
- If you return to Canada: the law provides for "unwinding" the departure tax for returning residents who still hold assets – the security is returned.
Canadian Parameters 2026 – Quick Overview
- Federal rates: 14% up to 58,523 CAD (reduction from 15% – "middle-class tax cut"), then 20.5% / 26% / 29% / 33% from 258,482 CAD; basic amount (BPA) up to 16,452 CAD.
- TFSA limit 2026: 7,000 CAD; capital gains – inclusion of 50% (planned increase to 2/3 was postponed and then withdrawn).
- Basics of national settlement (TFSA/RRSP for residents in Canada, CRA deadlines) – in our guide on CRA and taxes in Canada.
Departure Plan (12 months before returning to Poland): (1) inventory of assets + valuations – estimate departure tax and consider deferring T1244; (2) plan RRSP→RRIF under 15% treaty; (3) decide on TFSA/FHSA before changing residency; (4) rental property: agent + NR6 before the first rent; (5) upon arrival in Poland: apply for step-up under Article 13(7) when settling future sales and include return relief; (6) practice the entire operation with an advisor familiar with both systems – this is one of the most "technical" tax relocations in the world.
Comments (0)
No comments yet. Be the first!