Non-Registered Investments and Departure Tax: What Canadians Need to Know Before Moving

When Canadians move to the United States, one of the most significant tax issues often involves non-registered investment accounts.

Unlike many registered accounts, non-registered investments are frequently subject to Canada’s departure tax rules.

The Impact of Deemed Disposition

Upon becoming a non-resident, Canada may apply a deemed disposition to certain non-registered investments.

This means the Canada Revenue Agency treats the investments as though they were sold at fair market value immediately before departure.

Even though no actual sale occurs, any unrealized gains may become taxable.

Many investors have accumulated substantial gains over time.

Stocks, ETFs, mutual funds, and other investments can carry significant unrealized appreciation.

Without proper planning, these gains may trigger a sizable departure tax bill.

Once you become a U.S. resident, future investment income generally becomes subject to U.S. taxation.

In addition, the United States applies different tax rates to short-term and long-term capital gains.

Understanding how the Canadian and U.S. systems interact is critical when evaluating whether to continue holding investments after your move.

There is no universal answer.

However, many taxpayers benefit from reviewing whether certain investments should be sold, restructured, or repositioned before departure.

The right approach depends on:

Canadians holding employee stock options, RSUs, or equity compensation should be especially careful.

These assets often create tax obligations in both countries and may involve:

Without proper planning, double taxation risks can arise.

Non-registered investments often represent one of the largest departure tax exposures for Canadians moving to the United States.

A pre-departure review can help identify risks, evaluate planning opportunities, and prevent costly surprises after your move.