How we help
- Canadian departure-tax modelling and Form T1244 deferral elections
- Disposition or restructuring of PFIC-classified Canadian mutual funds
- TFSA and RESP closure or restructuring before US residency begins
- Pre-immigration trust planning for accumulated wealth
- Treaty residency planning for the year of move
- Coordination with the US exit-tax analysis (if applicable)
Two systems, one move
Becoming a US tax resident triggers Canadian departure tax under Section 128.1 of the Income Tax Act (see the Departure Tax page) and at the same time exposes the new US resident to US tax on worldwide income, FBAR and FATCA filings, and the various anti-deferral regimes (PFIC, Subpart F, GILTI). Most pre-emigration planning aims to clean up the Canadian side BEFORE the US-side rules attach.
The big traps
- Canadian mutual funds and ETFs (PFICs). Once US residency begins, most Canadian pooled investment products are passive foreign investment companies (PFICs) under IRC section 1297. Without a timely Qualified Electing Fund election (which the fund must support — almost none do) or a mark-to-market election, the punitive excess-distribution regime applies for the entire holding period. Selling out of Canadian mutual funds BEFORE the residency date and reinvesting in US-domiciled equivalents avoids the trap.
- TFSAs and RESPs. Tax-sheltered in Canada, fully taxable in the US, and frequently treated as foreign trusts with Form 3520 / 3520-A obligations. Most cross-border advisors recommend closing or restructuring them before US residency.
- RRSPs. The Canada-US treaty's Article XVIII provides automatic deferral for US-resident owners of RRSPs (since 2014, no separate election is required). Distributions are US-taxable in the year received, but accumulating growth is sheltered.
- Closely-held Canadian corporations. A Canadian-controlled private corporation owned by a soon-to-be US resident becomes a CFC (controlled foreign corporation) once the move occurs, with Subpart F and GILTI inclusions for the new US shareholder. Pre-emigration restructuring — a Section 85 rollover, an asset sale within the corporation, a dividend strip — can avoid the worst outcomes.
- Departure tax cash-flow. The Canadian Section 128.1 deemed disposition produces a tax bill in the year of move. The Form T1244 election (with adequate security) defers payment until the property is actually disposed of, preserving cash for the move itself.
The timing
The Canadian departure tax attaches on the date Canadian residency ceases. US residency typically begins (for someone arriving on a green card) on the date of US entry, or (for someone meeting the substantial-presence test) on the first day of physical presence in the year residency is met. There can be a "gap" of a few days where neither country claims residency, but in most cases the dates overlap.
The first-year US tax return for a new resident is a dual-status return — non-resident for part of the year, resident for the rest. The return positions for the year of move can materially affect the US tax bill and frequently require treaty Article IV tie-breaker analysis to determine the residency cut-over date.
How we work the file
Pre-emigration engagements start 90+ days before the planned move. We model the Canadian departure tax, identify and execute pre-move restructuring (TFSA/RESP closure, PFIC sell-down, corporate reorganization where applicable), elect departure-tax deferral if needed, and prepare the first-year dual-status US return in coordination with the Canadian departure-year T1.
What to expect when you call us
Your first call is a free, no-obligation consultation with a tax lawyer. We will review the details of your situation, explain your options under the Income Tax Act and CRA administrative practice, and give you a clear, fixed-fee quote if you choose to retain us. Your consultation is confidential, and once we are retained, communications are protected by solicitor–client privilege.
If you retain us, we begin work within 24 hours of being retained.
Frequently asked questions
Is the consultation really free?
Yes. Most cases qualify for a free, no-obligation consultation with one of our tax lawyers. During the call we'll review your situation, explain your options, and give you a clear quote if you decide to retain us.
What does a tax lawyer do that an accountant does not?
A tax lawyer focuses on the legal side of tax — disputes, litigation, and the structuring of transactions in light of the law and anti-avoidance rules. That includes representing taxpayers in CRA audits and objections, appearing at the Tax Court of Canada, defending penalties and director or derivative liability, and designing reorganizations such as section 85 rollovers and estate freezes.
The most practical distinction is privilege. Communications with a lawyer are generally protected by solicitor-client privilege, while communications with an accountant generally are not and can be demanded by the CRA. Where the facts are sensitive or the matter could become contentious, that protection matters.
Lawyers and accountants often work together — the accountant on the numbers and filings, the lawyer on strategy, privilege, and the legal record. Barrett Tax Law regularly coordinates with a client's existing accountant.
Do you serve all of Canada?
Yes. Barrett Tax Law represents clients across Canada. We have offices and local phone lines in Toronto, Calgary, Edmonton, Fort McMurray, Ottawa, Vancouver, and Winnipeg, plus a national toll-free line at 1-877-882-9829.
Who is Barrett Tax Law and what areas does the firm handle?
Barrett Tax Law is a Canadian boutique tax law firm that represents individuals and businesses in their dealings with the Canada Revenue Agency. The firm's work spans CRA audits and disputes, voluntary disclosures, Tax Court of Canada litigation, collections matters, and corporate and estate tax planning.
The firm was founded in 2009 and has represented many thousands of clients across Canada. Its head office is in Concord, Ontario (Vaughan), and it serves clients nationwide. You can reach the firm toll-free at 1-877-882-9829 (1-877-8-TAXTAX).
Most matters qualify for a free, no-obligation consultation, and most are quoted on a fixed-fee basis once scope is understood, so the cost is known before work begins.
What does a tax lawyer do that an accountant cannot?
Accountants prepare returns and financial statements. Tax lawyers represent you when those returns are challenged, audited, or prosecuted — and our communications are protected by solicitor–client privilege, which accountant communications generally are not.
What should I do if I receive a letter from the CRA?
First, identify what the letter is and what it requires. A CRA letter may open an audit, ask for documents, propose adjustments (a proposal letter), confirm a reassessment, or start collection action — and each carries its own deadline and its own implications. Note any date by which a response is required.
Do not ignore it, and be careful about responding off the cuff. What you say and produce can shape your later objection and appeal position, and casual admissions can be difficult to undo. If the letter proposes adjustments or penalties, or if significant amounts are involved, get advice before responding.
A free consultation can help you understand the letter, the deadline, and the right next step. Acting early — while options are still open — is usually far better than waiting until a deadline is near.
Will the CRA criminally prosecute me?
Most CRA disputes are civil. Criminal prosecution is reserved for serious tax evasion or fraud, usually involving deliberate misrepresentation. If you have unreported income, a voluntary disclosure is one of the standard ways to reduce criminal-prosecution risk.
Is the first consultation really free?
Yes. Most matters qualify for a free, no-obligation consultation with an experienced tax lawyer. The consultation is a chance to describe your situation, get a clear sense of the options and likely path, and receive a fee structure in writing before you commit to anything.
You can reach the firm toll-free at 1-877-882-9829 (1-877-8-TAXTAX) to arrange a confidential consultation. The head office is in Concord, Ontario (Vaughan), and the firm serves clients across Canada.
Are my communications with a tax lawyer confidential?
Yes. Communications between you and your lawyer for the purpose of obtaining legal advice are generally protected by solicitor-client privilege, one of the most strongly protected confidences in Canadian law. In practical terms, the CRA generally cannot compel disclosure of privileged communications.
This is an important difference from working with an accountant or other non-lawyer representative, whose communications and working papers can generally be demanded by the CRA. Where the facts are sensitive — unreported income, offshore assets, or potential penalties — that protection can be significant.
Privilege has limits and can be waived inadvertently, so it should be handled with care. A consultation can explain how privilege applies to your particular situation.
How fast can you start on my case?
We typically begin work within 24 hours of being retained. For audit deadlines, Notices of Objection, and other time-sensitive matters, we move immediately.
What if I have unfiled tax returns from many years ago?
We routinely handle 5+ years of unfiled returns. Through the Voluntary Disclosures Program — applied for before the CRA contacts you — we can usually eliminate gross-negligence penalties and limit interest exposure.