Canadian Non Residency

This List must be considered incomplete and should not be relied upon for tax purposes. It is a General Guide of a practical nature. CRA may still consider you a resident if you have ties to Canada.
CAUTION: This review does not cover everything that may apply to any one individual. Everyone has a different situation. Also, many of the forms and steps outlined here must be done in a certain sequence. Failure to do so may result in unnecessary taxation, inadvertent tax evasion on your part, or denied non-residency. It happens.
The following information is not intended to cover all the things you need to know; it is intended to introduce some of the practical aspects of establishing Canadian Non-Residency. The list has been compiled by a Certified Financial Planner (CFP) who assists Canadians who are considering Mexico for a permanent home or as a snowbird destination. His extensive experience has helped 100's of Canadians move to Mexico since 1999. If you need advice or have questions, please contact our office for a no-cost consultation.

Things To Do When Leaving Canada

Last Revised: January 30, 2016

Establishing Canadian Non-Residency requires that you sever your residential ties with Canada and establish residential ties with your new country of residence. The residential ties with Canada can be broken into categories... Significant, Secondary and Other. It should be apparent that you will need to severe all Significant ties such as your home, for example. However, even the home, may be retained under certain circumstances. Conversely, maintaining even insignificant ties such as a safety deposit box may result in denial of non-residency status. Such seemingly insignificant ties are evaluated in view of all other ties that you may have and could become a problem. The best advice is to be careful and get sound advice.

For a description of Residential Ties and how they are rated by CRA, go to the Residential Ties With Canada page.

Date of Departure - Documentation

You must gather and retain proof of the date you left Canada. You may require this should your non-residency ever be challenged by CRA. 

CAUTION: Failure to have proper departure documentation can result in denial of OAS for Canadians who leave Canada prior to age 65 (or your Age of OAS Eligibility for those born after 1957). It happens.

CAUTION: CRA has the option of requesting an audit of your departure date to confirm your eligibility for treaty tax rates. This can happen years after departure. You will be asked for proof of departure.

You will be asked to provide this documentation when you apply for OAS (Old Age Security) and/or Canada Pension Plan (CPP), if you are not already receiving it. When applying for OAS, one of the questions on the application  asks for dates when you lived outside of Canada, so you need to retain documents to prove those dates, and that includes dates when you might have lived outside of Canada even years ago (for example, if you lived and worked in the USA for a few years).

Any documentation needs to be original or certified copies of originals. Contact us if you need advice.

Non-Residency Validation – NR73

NR73 is a CRA questionnaire used to confirm or deny your non-residency status. For a copy and more information, refer to our CRA Forms page.

For a discussion of the pro's and con's of filing, go to NR73 - to File or Not File.

CAUTION: Frequently this form is improperly completed or poorly timed. Some individuals have declared non-residents prematurely resulting in significant tax consequences.

  • Submission of this questionnaire is voluntary, not a requirement for non-residency; However, CRA is increasingly challenging non-residency status of individuals.  We suggest that you complete the questionnaire but do NOT submit it without having it reviewed by someone who understands the implications of your answers. In other words, what may seem like an innocent reply to a simple question can result in CRA determining that you are in fact still a resident of Canada for tax purposes.
  • We can arrange for a review of your NR73 before it is submitted to CRA. Some of the questions are tricky and are frequently answered incorrectly resulting in denial of non-residency status.
Banking and Credit Cards

Yes, you can retain your bank accounts, but these must be registered as non-resident accounts using your Mexican address, and the NR301E filed.  You can also retain most credit cards provided the credit card company will accept you with your Mexican address.

CAUTION:  You must sign a “Telephone-FAX Agreement” with your bank before you set up the account as a non-resident account.  If you do not, your bank may refuse to wire transfer funds to Mexico or any other destination at a later date.  Some Canadian banks have refused to wire funds unless the client showed up in person at the bank. This is critical. At least one bank (CIBC) refused to allow one of our clients to sign a Telephone-FAX Agreement because the client was already a non-resident in their system. Do it before you leave.

  • Some financial institutions (President’s Choice, for example) will not allow you to keep your account as a non-resident. You will need to close those accounts.  Please check with all of your financial institutions. You cannot keep bank accounts with a Canadian address if you are a non-resident. If you do not have a bank that allows non-resident customers with a Mexico address, then find a bank that does before you leave.
  • Change all of your bank accounts to “non-resident” status using your Mexico mailing address. Visit your bank to do this. Give them you Mexico mailing address. If you forgot to do this before you left, it can be done from Mexico in writing. Note: You can have more than one bank account if necessary in Canada; however, they all need to be changed to non-residency status. For couples, I suggest one bank account only be retained; a joint chequing account, only for the sake of simplifying your life.
  • Both names should appear on your cheques for joint accounts. Important: The names should be written as “John Smith or Mary Smith”. Do not accept cheques with “John Smith AND Mary Smith”. If you write a cheque that contains “and” between the names, some companies and financial institutions will not accept it unless both people sign. Some companies will even require that both parties sign all contracts and other documents in order to arrange automatic debits from their bank account, if the names are joined by “and”.
  • Do not have your address printed on the cheques, not even your Mexican address.  This information tells everyone (even those who may want to steal from you) where you live.
  • For couples, obtain 2 debit cards, one for each of you. 
  • Request that you retain use of your credit cards while in Mexico.  
  • You should use a credit card of the bank where you have your non-resident bank account. If you have credit cards with other financial institutions and want to retain them, then you must change your address with them.  Our information is that VISA will allow non-residents living in Mexican to retain and use the VISA card, but please check with VISA.
  • Lines of Credit – a number of clients have moved to Mexico and retained their outstanding balances on their existing line of credit at their bank.  The bank simply wanted to have automatic debiting set up for the monthly payments.  Check with your bank if this applies to you.
Health Insurance

You will no longer have Canadian provincial health care once you have become non-resident and may wish to investigate private health insurance.

CAUTION:  Some "Clubs" or "Groups" offer discounted health insurance programs at lower costs. Most of these "Club" programs offer significantly less coverage than full policies. In the past, clients have found themselves without insurance when the "club" ceased operation and the insurance company canceled policies or insisted that new medicals be obtained to transfer from the "Club" program to a licenced insurance broker. Sometimes the client fails to pass the medical, or finds that they now pay higher premiums at the rate for their new age at the time of transfer.

Be aware that discounted "Club" programs often provide significantly lower coverage which may be insufficient, particularly if you travel outside of Mexico.

  • Many pension plans offer retirees the option of retaining health insurance plans in retirement. These are OK to retain if the plan covers you as a non resident living in Mexico. However, you should not retain this coverage if it only covers you as a Canadian resident. 
  • IMSS is the Mexico public health care system and can be thought of as a replacement for provincial coverage. Remember that IMSS is not the same as your provincial plan and will not cover you while outside of Mexico, and there are some restrictions on usage. Mexico has a two-tier system and IMMS restricts you to using the approved list of clinics, doctors and hospitals. Please note that Mexico is changing their health and immigration visa systems at the time of this writing, and this information may soon be out of date.
  • TioCorp can provide you with private health insurance that will cover you in Mexico and globally if you wish. One of the popular options is our Best Doctors catastrophic coverage. You can read more about Health Insurance options on the health insurance page.
  • We can also arrange for temporary health insurance while you visit Canada as a non-resident. You can arrange travel and global health coverage through a variety of companies depending upon your age and needs.
Automobile Insurance

If you are bringing your Canadian plated vehicle to Mexico and intend to drive it there with your Canadian plates, you will need to purchase "Visitor" insurance...that just means the vehicle has foreign (not Mexican) plates. Visitor Automobile Insurance for Mexico can be purchased online before you leave Canada, and that will be your cheapest option. But be careful. For more information on the risks of buying automobile insurance for Mexico, go to our Mexico Auto Insurance Page.

TioCorp Guarantees the Lowest Insurance Cost for policies purchased online for foreign plated vehicles in Mexico. For most Visitor Automobile Insurance we recommend the Qualitas Insurance company for full comprehensive coverage. They provide more insurance coverage in Mexico than any other company.

And, of course, we insure Mexican plated vehicles as well. Check out our Mexico Auto Insurance page. However, there are some things you need to do before leaving Canada and before cancelling your existing Canadian policies.

CAUTION:  Avoid purchasing Mexico Auto Insurance at the Mexican border. This is the most expensive option.  Purchase your Mexico Auto Insurance online before you leave Canada by going to our website.  Or you can contact us toll free from Canada or the USA at 1-888-712-7023

  • Contact your Canadian insurer and insist that they provide you with a letter of “Record of Insurance” or “Claims Experience” so that you can be insured should you ever decide to return to Canada.  You may require this letter should you ever want insurance outside of Mexico, for example in the USA. Without this letter, you may find that you are considered a new driver and will have to pay the high rates of a beginner. 
  • If you purchase your Mexico Auto insurance online or through just any Canadian or USA broker may not be to your advantage. In the event of a claim in Mexico, attempting to deal over the internet with a broker/agent who is not in Mexico can be a nightmare. You can arrange proper automobile insurance online for Mexico with TioCorp Insurance as well. They deal with only large insurance providers with a country-wide network of agents, adjusters, lawyers and translators....the TioCorp offices and licenced agents are located in Mexico...and the premium for online policies is Guaranteed to be the Lowest Premium for the same policies you can purchase from any of the online companies.
Automobile Ownership and Licencing

You have the option of driving your Canadian vehicle to Mexico with your Canadian licence plates. You can continue to drive it with your Canadian plates and stickers as long as you have Residenté Temporal status.

CAUTION: If you keep your Canadian car and take it to Mexico, you will NOT be able to sell the car in Mexico. A Canadian vehicle can not be sold in the USA either. If you want a replacement vehicle, you will have to take your Canadian car out of Mexico (or prove to the Mexican Customs that the car was destroyed in an accident, or was scrapped for some reason). One other solution is to convert your vehicle to Mexican licence plates… this may or may not be possible depending upon the year, make, model and place of manufacture of your vehicle. For more information, check out the Vehicle Importing page.

  • If you are moving to Mexico and want to stay more than 180 days, the immigration rules have change dramatically in 2012. You can only remain a Residenté Temporal for a few years, and then must convert to Residenté Permanenté.
  • The rules for vehicle ownership have changed and Residenté Permanenté can no longer drive a vehicle with foreign plates.  If you have a Residenté Temporal card, you can drive a foreign plated vehicle, but you cannot do so with a Permanenté card.  For more information on importing vehicles, go to our page on Importing Vehicles.
  • As a VISITOR, you can retain your vehicle and drive it into Mexico. You will get a sticker on the windshield when you get your visitor’s permit as you cross the border into Mexico. The Tourist permit is only valid for a maximum of 6 months and you need to drive your vehicle out of Mexico before it expires, unless you have your Residenté Temporal card.
  • You cannot bring a leased vehicle into Mexico without a letter of permission from the leasing company. You may or may not be asked at the border to produce this letter. However, we caution you that producing such a letter may result in refusal to allow entry depending upon the individual border agent you encounter. We suggest you do not offer the letter unless requested...and we know of no one who has been asked to produce it.
Drivers Licence

You should consider retaining your Canadian driver's licence.

CAUTION: If you allow you Canadian driver's licence to expire, you may have to take the driver's test to regain a driver's licence should you ever return to Canada to live. Your insurance company will probably charge new driver rates...ouch!

For more information about regaining your driver's licence, see our Returning to Canada page.

  • Technically, a driver’s licence is a tie to Canada for residency determination and while we cannot recommend that you keep your licence, many people do just that. If you decide to keep your provincial driver’s licence, this is important: Visit your local licence office and tell them you are moving to Mexico for a few years and want to keep your drivers licence current.  Ask them to put your Mexican address on your licence. They may say that they can NOT do this. That is fine. However, they should be able to record that you have a permanent residential address in Mexico, and put a provincial mailing address on your licence.  In this way, you have a provincial drivers licence with your Mexico residential address recorded. This does not always work. Some provinces can not accommodate the Mexican address. Do the best you can. 
  • You will need to revisit Canada at time of renewal.
CPP and OAS; Company Pensions
  • You MUST write to CRA and Human Resources Development Canada requesting that they change your address to Mexico, and that they start withholding 15% Non Resident withholding taxes effective on your date of departure. There is a Change of Address Form to submit and it is available on the CRA website.
  • Similarly, write your pension administrator and advise them that you are a non resident.
  • Please note that you will have to file an NR301E with financial institutions and pension providers to ensure that they only take the 15% taxes.  You can read all about it on our CRA Forms page and you will find a link to download the form.
  • We prepare all of the above for our clients, including the non-resident tax return.
Tax Returns

You must file a Canadian Departure tax return by April 30th the following year, to cover the year of departure. If you were self-employed, you have until June 30th to file.

CAUTION: This return MUST be filed correctly and be recorded as a non-resident return. It must include a record of deemed dispositions (if any) and the T1161 must be attached. Failure to file deemed dispositions will result in a penalty of $25 per day.

  • You have the option of never filing again, that is unless CRA audits you or requests a return.
  • If your income is sufficiently low (say, under $40,000), it is generally to your advantage to file a non-resident tax return every year to get a refund of all or a portion of the 15% withholding taxes. TioCorp can arrange your non-resident tax return each year.
  • Contact us if you need someone to do your Canadian Income Tax Return.
Foreign Government Pensions
  • Moving to Mexico may result in higher pension payments (UK pensions for example). You must write the pension administrator in the source country and advise them of your new address. This pension will no longer be taxable in Canada.
Investments, RRSP’s and RRIF’s
  • Valuations are required for the date of departure from Canada, for reporting with your final tax return.
  • CAUTION: Many investment institutions will not permit you to make trades as a non-resident. Once you declare non-residency and provide your Mexican address, you may be advised that your accounts are frozen...or that they are being closed. Their brokers and advisors are not licenced to manage accounts for Mexican residents. You must change your address to Mexico to be a non-resident.
  • Contact your broker and ask if they can handle trades for you while you are out of the country. If not, we can refer you to Canadian Financial advisors who can set up accounts that will accommodate the need for rebalancing of portfolios.
  • You should crystallize your RRSP and RRIF book values before you leave Canada, in addition to your non-registered accounts.
  • As mentioned above, please note that you will have to file an NR301E with financial institutions to ensure that they only take the 15% taxes on your RRIF.  You can read all about it on our Canadian Non-Resident Taxation page.
Club Memberships
  • If you wish to retain some club memberships, you must write the club and give them your new address in Mexico and advise them that you are no longer a Canadian resident but wish to retain membership. Keep copies of all letters.
  • If the club does not accept non-resident members, you should relinquish your membership.
Life Insurance Policies 
  • Write the companies and advise them of your new address.
  • There is no need to cancel life insurance policies.
Frequent Flyer Points
  • Frequent Flyer point rules (Air Canada, for example) stipulate that you must be a resident of Canada. Some clients have given Air Canada a Canadian mailing address in order to keep their points program.  You need to be aware that this might be considered a tie to Canada by CRA.  I can not recommend that you do this, although some clients feel that this tie is not significant. The decision is yours with this one.
Returning to Canada

This may the last thing on your mind, but if you become a non-resident and at a later point wish to return to live in Canada, that is easily accomplished.  Simply come home!

  • If CRA perceives that you moved to Mexico only to avoid taxation in some way, and had intended to return, they may deem that you never left and charge you the taxes that you avoided while you were gone... so guide yourself accordingly.
  • You can bring your furniture and personal belongings home without paying import/customs taxes on them.
  • You normally do not pay any taxes on the tax savings you enjoyed while you were a non-resident.

For more information, go to our Returning to Canada page.

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