When a person ceases to be a Canadian resident for for tax purposes, that person will no longer be subject Canadian tax on that person's world income. Rather, after that time, that person will generally only be subject to Canadian tax on Canadian-source income. This will be true even if that person is an individual who maintains Canadian citizenship-unlike the United States, Canada does not tax based upon citizenship.

In the case of an individual, the taxation year of emigration is, in effect, divided into two parts: the part during which the individual was a Canadian resident; and the part during which the individual was a non-resident. It is only the worldwide income that is earned during the first part that is subject to Canadian tax. Income earned during the second part of that year will generally only be subject to Canadian tax if it is derived from Canadian sources.

During the year of emigration, normal personal tax credits allowed ("personal amounts") are pro-rated based upon the portion of the calendar year during which the individual was resident in Canada.

Capital property owned at the time of emigration is generally deemed to have been disposed of at fair market value. This deemed disposition will generally apply to all forms of property other than direct interests in Canadian real property. Emigrants may be allowed to post security, in lieu of payment of tax, to cover the tax liability resulting from such deemed disposition.

For Canadian residents with significant wealth and/or sources of income it is generally advisable to seek Canadian tax advice before emigration from Canada in order to take steps to minimize the impact of Canadian taxation resulting from or arising after emigration.

A former Canadian resident may be subject to Canadian tax on capital gains realized on the disposition of "Taxable Canadian Property" ("TCP") after emigration from Canada.

The most common forms of TCP are:

• Interests in Canadian real property,
• Shares in corporations resident in Canada that are not listed on a prescribed stock exchange, and
• Other property with respect to which an election was filed to avoid a deemed disposition, where emigration occurred before October 2, 1996.

In this regard, even if the Canadian resident emigrates to a country with respect to which Canada has a tax treaty, such treaty may not provide protection from Canadian taxation of post-emigration capital gains.

In connection with capital gains derived from the disposition of interests in Canadian real property (including indirect interests held through corporations, partnerships, or trusts) such treaties generally provide no protection from Canadian taxation.

In connection with gains from the dispositions of most other forms of capital property, Canada's right to tax former residents is preserved under such treaties for limited periods of time providing requisite previous residency requirements were met.

The rules in this respect are summarized below in relation to several major countries: