Retiring Abroad: Can Canadians Keep Their Investment Accounts?

How non-resident retirees are taxed in Canada and abroad

Canadian residents pay tax on worldwide income. If you leave Canada and establish your main home elsewhere, the Canada Revenue Agency may consider you a non-resident and tax only specific Canadian-source income. Whether you become a non-resident depends largely on your residential ties to Canada.

Key residential ties include:

• Owning or maintaining a home in Canada
• Having a spouse or common-law partner who remains in Canada
• Having dependents who live in Canada

If you are only temporarily absent—working, studying, commuting, or vacationing abroad—you may remain a factual resident and continue to be taxed on worldwide income. But if you permanently relocate to Europe to retire and establish new ties there, you will likely be considered a non-resident for Canadian tax purposes.

Below is a concise overview of how various Canadian accounts are treated when you live abroad and how foreign tax rules can interact with Canadian withholding taxes.

Should Canadian non-residents keep their RRSPs?

Registered Retirement Savings Plans (RRSPs) continue to be tax-deferred in Canada after you become a non-resident. Other countries generally do not tax the account annually while it remains an RRSP, but withdrawals are subject to tax consequences.

If you take a lump-sum withdrawal as a non-resident, Canadian financial institutions generally withhold 25% tax. Converting an RRSP to a Registered Retirement Income Fund (RRIF) and taking periodic payments can reduce that withholding—sometimes to about 15%—depending on whether a tax treaty between Canada and your new country specifies a lower rate.

How foreign countries tax Canadian income

Countries differ in how they tax foreign income. Some tax residents on worldwide income; others exempt foreign income under certain rules or provide special regimes for newcomers that reduce or defer taxation on foreign earnings.

Many Canadians who emigrate leave RRSPs and RRIFs in Canada and take withdrawals in retirement. For non-residents, the main Canadian tax on these plans is the withholding tax applied by the financial institution. Typically, this withholding is the final Canadian tax for that income, and non-residents usually do not need to file a Canadian tax return for those withdrawals.

Should Canadian non-residents keep their TFSAs?

Tax-Free Savings Accounts (TFSAs) remain tax-free from a Canadian perspective even if you become a non-resident. However, whether a TFSA is advantageous depends on your new country’s rules.

If your country of residence taxes worldwide income, TFSA earnings—interest, dividends or capital gains—may be taxable there, eliminating the Canadian tax benefit. Because of that, many non-residents withdraw TFSA funds and transfer them abroad. On the other hand, if you plan to return to Canada, letting a TFSA grow tax-free while you’re away can be beneficial: the account’s growth remains sheltered in Canada and you regain full access when you re-establish Canadian residency.

What to do with non-registered accounts

When you leave Canada, taxable non-registered accounts are generally treated as if all holdings were sold on the date you depart—a deemed disposition that triggers tax on accrued capital gains. You must report this on your final Canadian tax return.

If the federal tax owing on that deemed disposition exceeds $16,500, you can elect to defer payment by filing Form T1244, which allows deferral of tax on the deemed disposition under certain conditions.

Because there is usually no tax advantage to keeping non-registered investments in Canada, many emigrants liquidate these accounts and reopen investments in their new country. Others keep them because they have linked accounts that are harder to unwind or because they prefer Canada’s regulatory environment.

Withholding tax on non-registered accounts

If you keep non-registered accounts in Canada, financial institutions will typically withhold tax at source on interest, dividends and mutual fund or ETF distributions. Withholding rates generally range from 15% to 25%, depending on the tax treaty between Canada and your country of residence. This withholding usually satisfies your Canadian tax obligation for that income.

Capital gains on securities are not typically subject to Canadian withholding tax for non-residents. However, capital gains from real estate and certain other assets can trigger withholding and may require filing a Canadian tax return.

Investment restrictions for emigrant retirees

Before you move, notify your financial institution of your change of address and residency. They will use that information to apply the correct withholding tax and meet compliance requirements.

Non-residents often cannot buy new Canadian mutual funds, though they can typically hold existing fund holdings. Some institutions may impose additional restrictions on accounts for clients living abroad, so confirm any limits or required account changes while you are still a Canadian resident.

Foreign tax on Canadian investments in European countries

Most European countries tax residents on worldwide income, but rules and incentives vary by nation, so check the local tax system where you plan to live.

For example, Spain has offered special regimes for inbound expatriates that can exempt foreign-source income for a limited number of years. Malta has retirement and returned-migrant schemes that can apply preferential rates to foreign income, subject to minimum tax liabilities. Italy offers a flat tax regime for some high-net-worth individuals who opt to pay a fixed annual amount on foreign income for an extended period. To avoid double taxation, many countries allow a foreign tax credit for Canadian tax already withheld.

Should you keep your Canadian accounts when retiring abroad?

Moving overseas adds complexity to the taxation of your Canadian investments but does not automatically make you a Canadian tax resident nor force you to file a Canadian return for every account you own abroad. RRSP/RRIF withdrawals and non-registered interest, dividends and fund distributions are typically subject to 15%–25% withholding in Canada. TFSAs remain tax-free in Canada, though foreign tax rules may apply in your new country.

In practice, emigrants more commonly cash out non-registered and TFSA accounts while leaving RRSPs and RRIFs in place. Before you move, confirm any investment restrictions and withholding rules with your financial institution, and consult a cross-border tax advisor to align your withdrawal strategy with both Canadian and foreign tax laws.

Read more from Jason Heath:

• The tax implications for Canadians selling foreign real estate

• What to know about withholding tax in retirement

• Where do we pay income tax if we retire abroad?
• The tax implications of working abroad for residents and non-residents of Canada