Moving to Canada from another country is one of the cleanest tax-planning windows in the international tax world. The Canadian Income Tax Act gives new residents a one-time cost-base reset on most of their worldwide assets — but only if the moves are made in the right order, with the right documentation.
The deemed-acquisition rule
Paragraph 128.1(1)(b) of the Income Tax Act provides that an individual who becomes resident in Canada is deemed to have disposed of (and reacquired) each property they own at its fair market value at the time residency begins. The effect: pre-immigration appreciation gets a step-up; only post-immigration appreciation is subject to Canadian capital-gains tax when the property is later sold.
The rule applies to most kinds of property — foreign shares, foreign mutual funds, US real estate, foreign brokerage accounts, cryptocurrency, business interests outside Canada, art, jewellery. It does NOT apply to taxable Canadian property (TCP), which retains its original cost base.
What "becomes resident in Canada" means
Canadian tax residency is determined primarily by residential ties — permanent home in Canada, spouse and dependants in Canada, personal property and social ties in Canada. The bright-line 183-day rule under subsection 250(1)(a) applies as a backstop (a sojourner present 183+ days in a year is deemed resident), but most new immigrants establish residency the moment they arrive with their family and household.
The exact date matters because it sets the valuation date for every asset that gets the step-up. A new resident who arrives on March 15 has the March 15 fair market value of every relevant asset as the new cost base going forward.
Why valuations matter
For publicly-traded securities, the FMV at the residency date is easy — closing prices on the relevant exchange. For private-company shares, real estate, art, and other illiquid assets, FMV requires a contemporaneous appraisal. The CRA can challenge unsupported valuations years later, and reconstructing the FMV after the fact is much harder than locking it in at the time.
The standard pre-immigration package for a high-net-worth move includes: independent appraisals of private holdings dated within 30 days of the planned residency date; brokerage statements showing the day's closing prices for liquid assets; and a cost-base summary spreadsheet to be retained with the new resident's records.
What the reset doesn't fix
The Canadian step-up doesn't change anything about the departure-country side. A US citizen moving to Canada keeps the US citizenship-based filing obligation and continues to be taxed by the US on worldwide income (with foreign tax credit relief for the Canadian tax). The US side of a Canada-bound move usually involves no exit tax (the US has an exit tax under IRC section 877A only for citizens who give up citizenship or long-term green-card holders who give up the green card).
For US residents who are NOT US citizens, the move to Canada is a regular non-resident transition on the US side: the US tax-residency relationships are cut, FATCA / FBAR obligations end, and the US side becomes a final-year tax filing.
Foreign-affiliate considerations
For new residents who own non-Canadian corporations, the step-up affects the share cost base but not the foreign-corporation's underlying tax position. Once the new resident is in Canada, the foreign affiliate rules apply: the corporation is a "foreign affiliate" (and possibly a "controlled foreign affiliate") of the new Canadian resident, with FAPI inclusions and dividend characterizations that can materially change the effective tax rate on the corporation's profits.
Pre-immigration restructuring — particularly dividend-stripping accumulated earnings while the future Canadian resident is still a non-resident — can shift income from a high Canadian rate to a lower foreign rate.
Trust considerations
Soon-to-be Canadian residents who are settlors or beneficiaries of foreign trusts face Section 94 of the Income Tax Act — which can deem the foreign trust to be a Canadian-resident trust based on the new resident's contributions or beneficiary status. The 60-month relief rule (contributions by an individual who has been resident in Canada for less than 60 months are excluded from the Section 94 calculation) gives new immigrants a planning window. Working with the trust's settlor or trustees before residency to restructure or restate the trust is normally preferable to relying on the 60-month window alone.
The takeaway
Pre-immigration tax planning for Canada is concentrated in the 60–90 days before residency begins. The work is largely valuation-locking and structural cleanup, not aggressive tax planning. For most new residents, the value is in having a defensible cost-base position for every asset, not in cutting-edge tax structures.