{"schema_version":"1.0","generated_by":"COLE — Citation Operations & Legal Engine","product_id":"exit-tax-trap","title":"Exit Tax Trap Auditor","site":"https://taxchecknow.com/nomad/check/exit-tax-trap","authority":"National tax authorities (CRA / ATO / HMRC / IRD NZ / IRS)","authority_url":"https://www.canada.ca/en/revenue-agency.html","jurisdiction":"Global (cross-border departure)","language":"en","currency":"USD","last_verified":"April 2026","legislation":"Exit tax rules vary significantly by country and are not universal: Canada imposes a deemed disposition on departure (ITA s128.1); Australia has no exit tax but permanently changes non-resident CGT treatment (ITAA 1997 s118-110 main residence; s104-165 temporary resident); New Zealand has no exit tax (but bright-line and FIF rules continue to apply); UK has temporary non-residence claw-back rules (TCGA 1992 s10A) and non-resident CGT on UK property (s14D); US imposes expatriation tax on covered expatriates renouncing citizenship or long-term green card (IRC §877A).","legal_anchor":"Canada Income Tax Act s128.1 (deemed disposition) · AU ITAA 1997 s118-110 + s104-165 · UK TCGA 1992 s10A (temporary non-residence) + s14D (non-resident CGT) · US IRC §877A (expatriation tax)","deadline":{"iso_date":"2026-12-31T23:59:59.000+00:00","display":"31 December 2026","description":"Calendar year-end — many countries assess departure tax against this boundary","urgency_label":"DEPARTURE-YEAR BOUNDARY"},"key_facts":{"canada_legal_anchor":"Income Tax Act s128.1 — deemed disposition","canada_deemed_disposition_scope":"Most worldwide property at FMV on departure","canada_exceptions":"Canadian real property; Canadian business assets; certain pensions","canada_deferral_election":"Form T1244 with CRA — 10-year deferral with security","australia_legal_anchor":"ITAA 1997 s118-110 (main residence); s104-165 (temporary resident)","australia_main_residence_exemption":"LOST for non-residents (from 9 May 2017)","australia_50_cgt_discount":"Not available for non-residents on AU property (from 2012)","uk_legal_anchor":"TCGA 1992 s10A (temporary non-residence); s14D (NR CGT)","uk_temporary_non_residence_window":"5 years — claw-back if return within","uk_non_resident_cgt":"UK residential property regardless of residency","us_legal_anchor":"IRC §877A — expatriation tax","us_covered_expatriate_tests":"Net worth over $2M; avg tax liability over $201k (2026); or non-compliance","us_gain_exclusion_2026_indexed":"First $821,000 of deemed gain excluded","new_zealand":"No exit tax (bright-line + FIF continue to apply)"},"formula":"Country-specific. Canada: deemed gain = (FMV at departure date − adjusted cost base) × effective marginal rate; Form T1244 election permits deferral with security. Australia: no exit tax triggered on departure BUT (future sale price − cost base) × non-resident CGT rate with NO 50% discount and NO main residence exemption. US: IRC §877A deemed gain on worldwide assets − $821k exclusion (2026) × capital gains rates; applies only to covered expatriates. UK: temporary non-residence attribution = gains accrued abroad if return within 5 years; non-resident CGT on UK property regardless.","thresholds":[{"label":"Canada — deemed disposition on departure (s128.1)","value":1,"status":"trap"},{"label":"Australia — main residence CGT exemption lost for non-resident sale","value":2,"status":"trap"},{"label":"US — expatriation tax (covered expatriate under §877A)","value":3,"status":"trap"},{"label":"UK — temporary non-residence claw-back if return within 5 years","value":4,"status":"risk"},{"label":"NZ / no-exit-tax country — minimal departure-date tax event","value":5,"status":"clear"}],"common_ai_errors":[{"error_id":1,"ai_says":"ChatGPT says: Leaving a country ends my tax obligations there","correct":"Reality: Wrong and sometimes the opposite. Canada deems you to have disposed of your assets on the day you leave — creating an immediate tax obligation on unrealised gains. Australia permanently changes the tax treatment of your Australian assets when you become non-resident. The UK has temporary non-residence rules that can claw back gains made abroad if you return within 5 years. Leaving is often the beginning of a tax event, not the end of one."},{"error_id":2,"ai_says":"ChatGPT says: I only pay tax when I sell","correct":"Reality: Wrong in Canada and for US expatriation. Canada's deemed disposition rule under s128.1 of the Income Tax Act creates a taxable gain at departure regardless of whether assets are sold. You can elect to defer payment by posting security with CRA — but the tax liability crystallises on the date you cease Canadian residency, not on the date of actual sale."},{"error_id":3,"ai_says":"ChatGPT says: Exit tax applies in every country","correct":"Reality: Wrong. Exit tax rules vary significantly. Canada has a deemed disposition. Australia has no exit tax but changes future sale treatment. New Zealand has no exit tax. The UK has temporary non-residence rules but no exit tax on departure. The US has expatriation tax for covered expatriates only. Never assume one country's rules apply to another."},{"error_id":4,"ai_says":"ChatGPT says: I left years ago so it is too late to fix","correct":"Reality: Wrong in many cases. Voluntary disclosure programs exist in Canada, Australia, and the UK for taxpayers who have not filed correctly. CRA's Voluntary Disclosures Program, the ATO's voluntary disclosure process, and HMRC's Let Property Campaign and Worldwide Disclosure Facility all allow retrospective correction with reduced penalties. The window narrows over time — but is usually not closed."}],"faq":[{"id":1,"question":"Does Canada have an exit tax?","answer":"Yes. Under section 128.1 of the Income Tax Act, a person who ceases to be Canadian tax resident is deemed to have disposed of most worldwide property at fair market value on the date of departure. The resulting capital gain is taxable in the final Canadian return. Exceptions apply for Canadian real property, Canadian business assets, and certain pensions."},{"id":2,"question":"Can I defer the Canadian deemed disposition tax?","answer":"Yes. Form T1244 allows you to elect to defer payment of the departure tax by posting security with CRA. The deferred tax is payable when the asset is actually disposed of, or at the latest over 10 years. The election must be filed with the departure-year return."},{"id":3,"question":"Does Australia have an exit tax?","answer":"No formal exit tax at departure. But becoming a non-resident permanently changes CGT treatment of Australian assets: the main residence exemption is lost (from 9 May 2017), the 50% CGT discount is removed on AU property (from 2012), and some rollovers / concessions become unavailable. Australian-source income continues to be taxable."},{"id":4,"question":"What happens to my main residence in Australia if I leave?","answer":"Under ITAA 1997 s118-110, non-residents are not entitled to the main residence CGT exemption when they sell Australian real property. The full capital gain is taxable at non-resident CGT rates (no 50% discount). This applies even to a home you lived in as your main residence before becoming non-resident. Many Australians sell their home BEFORE departure specifically to preserve the exemption."},{"id":5,"question":"Does the UK have an exit tax?","answer":"No formal exit tax. But the UK has temporary non-residence rules under TCGA 1992 s10A — if you leave and return within 5 years, certain gains and income accrued abroad during the absence are taxed on return as anti-avoidance. Non-resident CGT under s14D also applies to UK residential property regardless of where you live."},{"id":6,"question":"What is the US expatriation tax?","answer":"Under IRC §877A, US citizens renouncing citizenship and long-term residents surrendering green cards are taxed as if they sold all worldwide assets at fair market value on the day before expatriation — but only if they are 'covered expatriates'. Covered = net worth over $2M OR average annual net tax liability over $201k (2026, indexed) OR failed to certify 5 years of tax compliance. First $821k of gain excluded (2026, indexed)."},{"id":7,"question":"What is a covered expatriate?","answer":"A US citizen or long-term green card holder who meets any of three tests at expatriation: (1) net worth >= $2,000,000; (2) average annual net US income tax liability for the 5 years prior exceeds $201,000 (2026, inflation-adjusted); or (3) fails to certify under penalties of perjury that they have been US tax compliant for the 5 years prior. Meeting any test triggers IRC §877A."},{"id":8,"question":"Does New Zealand have an exit tax?","answer":"No. New Zealand has no exit tax on departure. However, the bright-line property rule continues to apply to NZ property sold within the applicable period regardless of where you now live. Foreign Investment Fund (FIF) rules no longer apply after ceasing residency — but the final year's FIF liability must be settled."},{"id":9,"question":"Can I still fix an unfiled departure return?","answer":"Yes, in most countries. Canada: CRA Voluntary Disclosures Program (VDP) — pre-disclosure contact required, reduces penalties significantly. Australia: ATO voluntary disclosure reduces penalty from up to 75% to 20% or less. UK: Worldwide Disclosure Facility + Let Property Campaign. US: Streamlined Filing Compliance Procedures for non-wilful past non-filing. Disclose BEFORE authority contact for best terms."},{"id":10,"question":"What is the deferral election on Form T1244 (Canada)?","answer":"Allows a departing Canadian resident to defer payment of the deemed disposition tax by posting acceptable security (cash, bank guarantee, or other) with CRA. The deferred tax is payable when the asset is actually sold, at latest 10 years after departure. The election preserves cash flow — but the tax liability itself is unchanged. Interest may accrue on the deferred amount."},{"id":11,"question":"If I sell my AU home before leaving, am I protected?","answer":"Yes — sale while resident qualifies for main residence CGT exemption (if conditions met). Sale AFTER becoming non-resident loses the exemption. The order of events matters: sell then leave (exemption available) vs leave then sell (no exemption). Plan carefully with an AU tax advisor."},{"id":12,"question":"Do cryptocurrency holdings trigger exit tax?","answer":"Canada: YES — cryptocurrency is property for CRA purposes, deemed disposed on departure. Australia: the same treatment applies as for shares (non-resident rules change future sale treatment). US: crypto is included in worldwide assets for §877A covered expatriate calculation. UK: temporary non-residence rules can attribute crypto gains back if return within 5 years. Keep dated valuations as evidence."}],"sources":[{"title":"CRA — Leaving Canada (emigrants)","url":"https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-or-entering-canada-establishing-residency/leaving-canada-emigrants.html"},{"title":"CRA — Deemed disposition on emigration","url":"https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/disposing-property.html"},{"title":"ATO — Tax for foreign residents (including main residence exemption changes)","url":"https://www.ato.gov.au/individuals/international-tax-for-individuals/going-overseas/"},{"title":"HMRC — Temporary non-residence rules","url":"https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg26000"},{"title":"HMRC — Non-resident CGT on UK property","url":"https://www.gov.uk/capital-gains-tax/gifts"},{"title":"IRS — Expatriation tax (IRC §877A)","url":"https://www.irs.gov/individuals/international-taxpayers/expatriation-tax"},{"title":"IRD NZ — Leaving New Zealand","url":"https://www.ird.govt.nz/international-tax/individuals/leaving-new-zealand"},{"title":"Machine-readable JSON rules","url":"/api/rules/exit-tax-trap"}],"products":{"tier1":{"name":"Your Exit Tax Risk Report","price":67,"currency":"USD","description":"Does leaving your country trigger tax on assets you have not sold?","url":"https://taxchecknow.com/nomad/check/exit-tax-trap/success/assess"},"tier2":{"name":"Your Exit Tax Strategy","price":147,"currency":"USD","description":"Full pre-departure plan + deferral elections + multi-country sequencing + audit defence","url":"https://taxchecknow.com/nomad/check/exit-tax-trap/success/plan"}},"monitor_urls":["https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-or-entering-canada-establishing-residency/leaving-canada-emigrants.html"],"canonical":"https://taxchecknow.com/nomad/check/exit-tax-trap","api_endpoint":"/api/rules/exit-tax-trap","generated_at":"2026-04-23T09:50:12.227Z"}