A 2026 plain-English guide to departure tax and what happens to your Canadian accounts when you head south.

Moving from Canada to the United States is one of the most financially complicated moves you can make, and most of the cost is decided before you leave. The day you stop being a Canadian tax resident, Canada runs a set of rules on your assets, and the US starts applying its own to everything you own. Get the sequence right and it is manageable. Get it wrong and you can pay tax you never owed, or lose the tax shelter on accounts you spent years building.

Here is the checklist, and the reasoning behind each step, so nothing catches you off guard. (Moving the other direction, from the US to Canada? See our guide to what happens to your 401(k) when you move to Canada.)

The checklist at a glance

• Understand departure tax before you sell anything. Canada may treat you as having sold your investments the day you leave.
• Keep your RRSP. It stays sheltered under the treaty. File the right US election to keep it that way.
• Deal with your TFSA. It loses its magic in the US and becomes a reporting headache. Often best to collapse it before you go.
• Know what happens to your FHSA and RESP. The tax benefits largely disappear once you are a US resident.
• Sort out your investment accounts and timing before your move date, not after.

Departure tax: the rule that catches people

When you stop being a Canadian tax resident, Canada applies what is commonly called departure tax. Technically it is a deemed disposition: the law pretends you sold most of your capital property at fair market value on the day you left, and you pay Canadian tax on the gains, even though you did not actually sell anything. It is a way for Canada to tax the growth that happened while you lived there, before that growth leaves the country.

Not everything is caught. The important exemptions include:

• Registered accounts (RRSP, RRIF, TFSA, RESP, FHSA) and registered pension plans.
• Canadian real estate and property used in a business carried on in Canada.

What is caught is mostly your non-registered investments: stocks, ETFs, and mutual funds in a taxable account. If those hold large unrealized gains, departure tax can be a meaningful bill. Canada does let you elect to defer paying it until you actually sell, usually by posting security with the CRA, which is worth exploring if the amount is large. Expect to file Form T1161 (a list of your properties) and Form T1243 (the deemed disposition itself), with Form T1244 if you elect to defer.

Your registered accounts, one by one

This is where the biggest surprises live, because an account that is perfect in Canada can become a liability the moment you are a US resident.

Account	What happens when you move to the US	The move to make
RRSP / RRIF	Stays tax-deferred under the treaty. No departure tax. Withdrawals face 25% Canadian withholding, or 15% on periodic RRIF payments.	Keep it. File a US treaty election so the IRS does not tax the growth yearly.
TFSA	The US does not honour the tax-free status and may treat it as a foreign trust. Growth and income become US-taxable, with heavy reporting.	Usually collapse it before you leave. Room stops accruing while you are a non-resident.
FHSA	Loses the tax-free qualifying withdrawal. Withdrawals become taxable in Canada with 25% withholding.	Use it or wind it down before departure.
RESP	Grants (CESG) stop if the child is not a Canadian resident. The US taxes RESP income to the subscriber. No US tax shelter.	Plan withdrawals and grant timing before you go.
RPP / pension	Employer pensions generally continue; treaty rules govern how payments are taxed.	Confirm treaty treatment and withholding with your plan.

The RRSP is the good-news story: you keep it, it stays sheltered, and the treaty prevents the US from taxing the growth as long as you file the election. The TFSA is the opposite. It is tax-free in Canada but not to the IRS, and holding one as a US resident can turn a simple account into an annual reporting burden with real tax cost. For most people, collapsing the TFSA before leaving is the cleaner path.

Your non-registered investments

Your taxable brokerage account faces two issues at once: departure tax on the Canadian side, and access on the US side. On timing, remember that departure tax deems your holdings sold at fair market value on your exit date, which effectively resets your cost base. Selling a winner just before you leave versus just after can change which country taxes the gain and at what rate, so this is worth modelling rather than guessing.

On access, be aware that the mirror image of the US-brokerage problem applies: your Canadian investment firm may not be registered to serve you once you are a US resident, and US firms have their own rules about Canadian holdings. Line up where these assets will live before you move, and prefer in-kind transfers so you are not forced into a taxable sale just to relocate the account.

Your pre-move checklist by timeline

The best cross-border outcomes come from doing the right things in the right order, early.

• 12 months out: Confirm your intended US tax-residency date. Inventory every account and unrealized gain. Get a departure-tax estimate on your non-registered holdings.
• 6 months out: Decide what to do with the TFSA, FHSA and RESP. Choose where your RRSP and taxable accounts will be held and managed as a US resident.
• 3 months out: Execute TFSA and FHSA wind-downs if that is your plan. Realize or defer gains deliberately, with your exit date in mind. Arrange in-kind transfers.
• First year in the US: File your final Canadian departure return with Forms T1161 and T1243. File the RRSP treaty election on your US return. Set up US reporting for any remaining Canadian accounts.

Common questions

What is departure tax in Canada?

It is a deemed disposition. When you stop being a Canadian tax resident, Canada treats you as having sold most of your non-registered investments at fair market value that day and taxes the gains. Registered accounts and Canadian real estate are exempt. You can often elect to defer paying until you actually sell.

Do I lose my TFSA when I move to the US?

You do not lose the account, but you lose most of its value. The IRS does not treat it as tax-free and can tax the income and gains, with heavy reporting. Your contribution room also stops growing while you are a non-resident. Many people collapse the TFSA before leaving.

Can I keep my RRSP when I move to the US?

Yes. The RRSP stays tax-deferred under the Canada-US treaty and is not hit by departure tax. File the US treaty election so the IRS does not tax the growth annually. Withdrawals later face Canadian withholding of 25 percent, or 15 percent for periodic RRIF payments.

What happens to my RESP if my kids stay in Canada or move with me?

The education grants stop once the beneficiary is no longer a Canadian resident, and the US taxes the plan’s income to the subscriber. It keeps working as an investment account, but the tax shelter and grants that made it attractive largely go away.

When do I actually stop being a Canadian tax resident?

It is based on residential ties, not just your flight date, things like where your home, spouse and dependants are. Because departure tax and every account decision hinges on this date, it is worth confirming with a cross-border accountant rather than assuming.

The bottom line

Moving from Canada to the US rewards planning and punishes improvisation. Departure tax, the RRSP election, and the TFSA trap are all manageable, but only if you handle them before your residency changes. Keep the RRSP, deal with the TFSA, understand what you owe on your taxable investments, and set your exit date deliberately. The households that plan this six to twelve months out keep far more of what they built than the ones who sort it out after they land.

Planning a cross-border move or managing money in two countries?

If you are heading south, we can build your departure plan, handle the account decisions, and coordinate both sides of the border. Book a call with Sartorial Wealth, a dual-registered cross-border wealth manager: Book a call

This article is for informational purposes only and is not tax, legal, or investment advice. Cross-border rules change and depend on your personal situation. Consult a dual-registered cross-border advisor and a cross-border accountant before acting. Figures reflect 2026 rules current as of publication.