Becoming a non-resident of Canada will generally not affect you citizenship status in Canada. However, your change in residency status will significantly change the manner in which you are taxed by Canada.
How?
For starters, Canadian residents are taxed on their worldwide income while non-residents are taxed only on their Canadian-source income.
Generally, the Canada Revenue Agency (CRA) considers a non-resident to be someone who moves out of Canada without contemplating coming back. For your move to be considered permanent you should be establishing ties outside of Canada. Visits to Canada should be short and for infrequent periods of time. And they should not be routine.
It is important to note that under Canadian law everyone must be a tax resident somewhere. Once you have established that you are a non-resident of Canada, you will still be subject to Canadian tax for certain Canada-related activities.
If you are an active or retired partner of a professional partnership and you are leaving Canada, there are specific tax implications for you.
For more people there are RRSPs, life insurance and other investments to consider. If you do not sell your house it must be planned for as well.
It is important to remember that once you become a non-resident of Canada, you will not qualify to buy Canadian life insurance products. Canadian life insurance products are known to be among the most competitively priced and flexible policies available.
Also, the availability of many Canadian structures does not exist outside of Canada. For example, the most popular permanent insurance policy in many provinces in Universal Life policies which are not available in Israel.
Many steps can be taken to reduce and sometimes eliminate departure taxes. Proper planning before you leave is critical for wealth preservation.
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