Canadians planning to retire abroad are strongly encouraged to develop a defensive tax strategy.

Canadian taxes are based on residency; therefore it is crucial to sever tax residence ties to Canada prior to departure. This will decrease the risk of Revenue Canada later considering an individual to be a resident and thereby making them liable for retroactive income tax. Tax residency ties include houses, spouses, dependants, bank accounts and the amount of time spent in Canada. Consult your Inter-Alliance WorldNet's Adviser to discuss how best to do this.

Prior to departure, expatriates must also file an income tax return for the year before departure. Doing this represents a "signing-out" of the taxpayer from the Canadian income tax system. Retirees with property valued above CAN$25,000 (virtually all property owners) must also submit an additional information return.

When the above steps have been taken and the retiree has left Canada, he or she is no longer subject to income tax on Canadian income. However, non-resident Withholding Tax is then automatically deducted from investment income by any institution holding investments of the non-resident. Also, any income from real estate rentals may still be required to be filed. Additionally, there is a 25% non-resident withholding tax on Old Age Security and Canadian Pension Plan and Quebec Pension Plan benefits paid to expatriates living in countries without a Canadian tax treaty. Expatriates residing in countries that do have a Canadian tax treaty may have the rate reduced according to the treaty terms.