departure-tax-planning

name	departure-tax-planning
description	Canada exit strategy execution — departure tax calculation, tie severing, treaty optimization, Crown Dependencies setup
triggers	["departure tax","leave Canada","emigrate","non-resident","exit strategy","Crown Dependencies","move abroad","cease residency","Isle of Man","Guernsey","Ireland"]
tier	advanced
dependencies	["tax-optimization","quarterly-tax-review"]

Departure Tax Planning

Overview

When CC ceases Canadian tax residency, CRA deems all assets sold at FMV (s.128.1). This skill manages the exit to minimize departure tax and maximize post-departure savings.

When to Use

• CC is seriously considering leaving Canada (income > $120K+)
• Quarterly departure tax snapshots (when international planning is active)
• CC asks about moving to Crown Dependencies, Ireland, or UK
• Major asset appreciation makes timing critical

The Process

Phase 1: Departure Tax Calculation

1. List ALL assets subject to deemed disposition:
   • Crypto portfolio (all exchanges + wallets)
   • OANDA positions
   • Non-registered investments
   • OASIS shares (if incorporated)
   • Other property (excluding registered accounts and principal residence)
2. Calculate unrealized gain per asset: FMV - ACB
3. Apply inclusion rate: 50% on first $250K, 66.67% above
4. Calculate tax at marginal rates
5. Total departure tax = sum of all taxes

Phase 2: Timing Optimization

1. Ideal exit timing: When unrealized gains are LOWEST
   • After a crypto bear market
   • After realizing losses (harvest before departure)
   • Before OASIS appreciates significantly (pre-incorporation or early-stage)
2. Avoid exiting: During a bull market peak (maximum departure tax)
3. Security posting option (s.220(4.5)): Instead of paying, post security and defer

Phase 3: Pre-Departure Checklist

Tax preparation:

• File final T1 for year of departure (report worldwide income to departure date)
• Prepare T1161 (List of Properties by an Emigrant)
• Prepare T1243 (Deemed Disposition of Property)
• Harvest all available losses before departure date
• LCGE election on QSBC shares if applicable
• RRSP: decide — leave in Canada or collapse (treaty implications)
• TFSA: no departure tax, but consider future non-resident withholding
• FHSA: must use within 15 years of opening or convert to RRSP

Residency severance (must be thorough):

• Cancel OHIP card
• Cancel Ontario driver's license (or convert to new jurisdiction)
• Close or convert Canadian bank accounts (keep one if needed for rental income)
• Sell or rent out Canadian home (principal residence exemption on sale)
• Cancel Canadian credit cards (or convert to non-resident cards)
• Update mailing address with all institutions
• Cancel gym memberships, club memberships, subscriptions
• Update wills and POA to new jurisdiction
• Notify employer (Nicky's) of departure
• Cancel Canadian cell phone plan
• Remove personal belongings from Canada

Establish new residency:

• Secure accommodation in destination (IOM/Guernsey/Ireland)
• Register with local tax authority
• Open local bank account
• Obtain local health insurance
• Register business in new jurisdiction (if incorporating)
• Set up local phone/internet
• Update passport address

Phase 4: Post-Departure Obligations

1. Final Canadian return: File for period up to departure date
2. Non-resident withholding (Part XIII): 25% on Canadian-source income (reduced by treaty)
   • Canada-UK treaty: 15% dividends, 10% interest, 0-10% royalties
   • Rental income: file s.216 election for net income taxation
3. RRSP/RRIF: Remain in Canada. Withdrawals subject to 25% withholding (15% under treaty)
4. TFSA: Non-resident = no new contributions. Existing holdings remain tax-free
5. Canadian real property: Notify CRA before selling (s.116 clearance certificate)
6. Annual non-resident return: Only if Canadian-source income exists

Phase 5: Breakeven Analysis

Calculate:

• Annual tax savings = (Canadian tax at current income) - (new jurisdiction tax)
• Breakeven = departure tax ÷ annual tax savings
• If breakeven < 24 months: strong case for exit
• If breakeven > 36 months: likely not worth it yet (unless income is accelerating)

Key Decision Factors

Factor	Stay in Canada	Leave Canada
Income < $80K	Stay — low tax, use SBD	Not worth the disruption
Income $80K-$120K	Incorporate, SBD, SR&ED	Marginal, depends on growth
Income $120K-$200K	33-46% marginal	IOM: 20% flat, 0% CGT
Income $200K+	46-53% marginal	IOM: 20% capped at £200K
Crypto gains significant	26-33% effective CGT	Crown Dependencies: 0% CGT
Most revenue non-Canadian	Paying Canadian tax on global income	No Canadian tax on foreign income

Document References

• ATLAS_UK_CROWN_DEPENDENCIES_STRATEGY.md — Full jurisdiction analysis
• ATLAS_TREATY_FIRE_STRATEGY.md — Treaty network, departure tax mechanics
• ATLAS_FOREIGN_REPORTING.md — T1135, T1134, transfer pricing
• ATLAS_INCOME_SCALING_PLAYBOOK.md — Income tier triggers