Your RRSP isn't touched the day you stop being a Canadian tax resident. Your TFSA is — just not in the way most people expect. That split surprises almost everyone I talk to: Canada's departure tax reaches nearly everything you own the moment your residency ends, but registered accounts are the one category Parliament deliberately carved out. What happens to them instead isn't a single event at the border. It's a slower story that plays out one withdrawal, one contribution, and one CRA form at a time, for as long as the account stays open.
The short answer
Neither your RRSP nor your TFSA is caught by Canada's departure tax — both are explicitly exempt property under section 128.1 of the Income Tax Act, so becoming a non-resident doesn't trigger a deemed disposition on either account. But the two diverge sharply after that. Your RRSP keeps compounding tax-deferred and can stay open indefinitely; withdrawals face a flat 25% non-resident withholding tax under Part XIII, which some tax treaties cut to 15% on periodic RRIF payments (the US) or to 0% (the UK). Your TFSA also survives departure and stays tax-free for Canadian purposes — but it stops earning new contribution room for every calendar year you're non-resident, and contributing to it while non-resident triggers a 1%-per-month penalty tax until the money comes back out. In practice, the TFSA is usually the account that causes the real trouble, because almost no destination country recognizes it as tax-free the way Canada does.
What actually happens to your RRSP the day you leave
I've written before about the deemed-disposition side of leaving Canada — the tax bill that lands on almost everything else you own the day your tax residency ends. RRSPs, RRIFs, TFSAs, FHSAs, RPPs and Canadian real property are the specific exceptions Parliament wrote into section 128.1. No deemed sale, no valuation exercise, no line on Form T1243 for these accounts. You don't have to deregister or collapse an RRSP just because you've moved.
What changes is how withdrawals get taxed. A resident pays graduated rates — 10%, 20% or 30% depending on the amount. A non-resident pays a flat 25% on the gross amount of any lump-sum withdrawal, full stop, whether it's $5,000 or $500,000. That 25% under Part XIII is generally the final Canadian tax — no return required, no reconciliation — and it's reported to you on an NR4 slip rather than a T4RSP.
The 25% withholding — and the treaty trick that can cut it
The 25% rate isn't fixed if you live somewhere with a tax treaty that says otherwise. Under the Canada–US treaty, periodic pension payments from a RRIF are withheld at 15% instead of 25%. That's the standard planning move for anyone heading to the US: convert the RRSP to a RRIF before you start drawing it down, then take the income as periodic payments rather than a lump sum.
"Periodic" has a precise meaning, and it's where a lot of advice goes wrong. Under the Income Tax Conventions Interpretation Act, a RRIF payment only counts as periodic up to the greater of two times that year's minimum withdrawal, or 10% of the RRIF's fair market value at the start of the year. Anything above that reverts to lump-sum treatment — 25%, no discount. On a $600,000 RRIF with a $40,000 minimum, roughly $80,000 a year can flow through at 15%; say a client needs $150,000 that year — they'd pay 15% on the periodic portion and 25% on the excess.
Here's the flag I'd put in front of every client before building a withdrawal plan: the "no withholding on the minimum" rule residents enjoy does not carry over. For a non-resident, the entire periodic payment — minimum included — gets withheld at the treaty rate. This gets misreported often enough that I'd confirm it with a cross-border accountant before relying on it.
The UK treaty is even more generous on this point: periodic RRIF payments to a UK resident are exempt entirely — 0% withholding — under Article 17 of the Canada–UK convention, using the same periodic-payment test. Lump-sum withdrawals get no relief either way; they're 25% regardless of where you live. None of the five Caribbean citizenship-by-investment countries — St. Kitts & Nevis, Antigua & Barbuda, Dominica, Grenada and St. Lucia — carries a full income tax treaty with Canada, only a tax information exchange agreement, so RRSP and RRIF withdrawals into any of them are taxed at the flat 25% with no periodic-payment relief available at all.
Section 217: the election most non-residents never hear about
If RRSP or RRIF income is close to your only income for the year, flat 25% withholding can cost more than Canadian tax at graduated rates once you factor in the basic personal amount. Section 217 of the Income Tax Act lets a non-resident elect to file a full Canadian return and have that pension-type income taxed at ordinary resident rates instead.
The catch is the deadline: June 30 of the following year, and late elections aren't accepted — no grace period. If you know in advance a section 217 election will suit you, Form NR5 reduces withholding at the source rather than waiting on a refund. One NR5 covers five years, but electing under it commits you to filing a section 217 return every year of that period, whether or not it still benefits you.
Your TFSA: still tax-free in Canada, taxable almost everywhere else
The TFSA survives your departure the same way the RRSP does — no deemed disposition, and it stays completely tax-free for Canadian purposes. No Canadian tax on the growth inside it, none on withdrawals, even as a non-resident, indefinitely.
The problem isn't Canada. It's everywhere else. The TFSA is a made-in-Canada wrapper, and most destination countries simply don't recognize it. In the US, TFSA income — interest, dividends, realized gains — is fully taxable every year; the treaty provision that shelters RRSPs and RRIFs explicitly does not extend to TFSAs. The UK is the same story: HMRC doesn't treat the TFSA as tax-advantaged, so a UK resident owes UK tax on its income and gains like any other account.
There's a murkier problem for Americans specifically: whether a TFSA counts as a "foreign trust" for US reporting, meaning Forms 3520/3520-A and penalties starting at $10,000 per form, per year, for getting it wrong. The IRS has never formally ruled either way, and cross-border practitioners are split — most file conservatively rather than gamble. I'd treat this as genuinely open and get a specific answer from a qualified US preparer before assuming anything.
Because of all this, the consensus among the cross-border advisors I work alongside is straightforward: if you're heading somewhere that taxes the TFSA, collapse it before you go, or at minimum before you establish tax residency there. A wrapper that's free in Canada and taxed everywhere else isn't doing you any favours once you've left.
The 1%-a-month penalty for contributing while you're away
You can keep a TFSA open as a non-resident, but you cannot keep contributing to it without a cost. Any contribution made while non-resident draws a 1%-per-month penalty tax for every month it sits in the account — reported on the RC243 TFSA return — and a partial withdrawal doesn't stop the clock. The entire non-resident contribution has to come out before the penalty stops accruing. If that contribution also happened to exceed your available room, a second 1%-per-month excess tax stacks on top of the first.
The room mechanics matter too. You don't earn any new TFSA contribution room for a calendar year in which you're non-resident throughout. Room from a withdrawal made while non-resident isn't restored until you resume Canadian residency. None of the room you built up before you left disappears; it's simply frozen, not lost.
Can you still contribute to an RRSP once you've left?
Technically, yes — unused room carried forward from before you left is still usable as a non-resident. What stops accruing is new room, since that's generated only by Canadian-source earned income (18% of the prior year's earned income, up to the annual maximum — $33,810 for 2026, up from $32,490 in 2025). The practical catch: an RRSP deduction only offsets Canadian-taxable income, which most non-residents have little of. For most people who've actually left, contributing post-departure is a paper option that rarely does anything useful.
One rule doesn't bend for anyone: an RRSP must be matured — converted to a RRIF or annuity, or collapsed outright — by December 31 of the year you turn 71. Non-resident status buys no extra runway on that deadline.
The Home Buyers' Plan and FHSA traps nobody mentions
If you took money out under the Home Buyers' Plan (up to $60,000 per withdrawal after April 16, 2024, with a temporary five-year repayment start for first withdrawals made 2022–2025) and still owe a balance when you emigrate, the repayment clock accelerates hard: repay it by the earlier of your emigration-year filing date or 60 days after becoming non-resident. Miss it, and the unrepaid balance lands straight on your income at line 12900. The Lifelong Learning Plan works the same way.
The newer FHSA has its own quirk: a non-resident cannot make a qualifying, tax-free withdrawal to buy a home — residency is required right through to the purchase. Withdraw anyway and it's taxable, with 25% withholding (treaty relief may reduce it). The account can stay open up to 15 years or age 71, and rolls tax-free into an RRSP or RRIF even while non-resident — often the cleanest option once the home purchase isn't happening.
The other piece nobody plans for: your brokerage
None of this is purely a tax question. Plenty of Canadian institutions restrict or freeze non-resident accounts — particularly for US residents — over securities-licensing rules that have nothing to do with the CRA. "Hold, but don't trade" is common; some firms force a transfer to a cross-border-licensed affiliate first. Confirm this with your institution before you leave, not after your first trade bounces.
One recent-news correction worth making plainly: a one-year, 25% cut to mandatory RRIF minimum withdrawals was floated during the 2025 federal election campaign. It did not appear in Budget 2025, tabled that November, and has not been legislated. Plan against the existing minimum-withdrawal schedule, not the campaign one.
What I'd actually do before the paperwork goes in
Most of the Caribbean jurisdictions I work in day to day — St. Kitts & Nevis, Antigua & Barbuda, Barbados — sit outside the US and UK treaty math entirely, which is exactly why where you actually land matters as much as the account mechanics. Trade a Toronto address for a Nevis one and you're not picking up a periodic-payment treaty rate — you're picking up zero local tax on the withdrawal once it arrives, a different kind of planning problem.
I've now guided more than 100 families through some version of this exit in 2025 alone, and the RRSP/TFSA conversation comes up in nearly every one of them. A short list of what actually matters:
- Decide your RRIF conversion timing around your destination's treaty, not your birthday. If you're heading somewhere with a periodic-payment treaty rate, converting before you start drawing it down is usually the higher-value move.
- File Form NR301 with your Canadian institution and keep it current, so the correct treaty rate gets withheld at source instead of the default 25% — and you're not chasing a refund a year later.
- Run the section 217 math if RRSP or RRIF income will be most of what you earn in a given year; the June 30 deadline doesn't bend for anyone.
- Collapse the TFSA before you land somewhere that taxes it — particularly the US — rather than discovering the annual tax bill after the fact.
- Confirm your brokerage will still service you as a non-resident before you assume the account just sits there untouched.
None of it replaces a cross-border accountant who can run your specific numbers. But knowing which questions to ask before that meeting saves real money — and it's the kind of sequencing my team and I work through with clients before the flight, not after.
Key takeaways
- RRSPs and TFSAs are exempt from Canada's departure tax — no deemed disposition when you become a non-resident, and neither account has to be closed.
- RRSP and RRIF withdrawals face a flat 25% non-resident withholding tax, reduced to 15% on periodic RRIF payments under the Canada–US treaty and to 0% under the Canada–UK treaty; lump sums get no treaty relief anywhere.
- TFSAs stay tax-free in Canada as a non-resident, but almost no destination country honours the wrapper — the US taxes TFSA income annually and may treat it as a reportable foreign trust.
- Contributing to a TFSA while non-resident draws a 1%-per-month penalty tax on the full amount until it's withdrawn; no new TFSA room accrues for any full year of non-residency.
- Section 217, Form NR301 and RRIF-conversion timing are the levers that actually change the outcome — most people never use any of them.
Frequently asked questions
Does leaving Canada trigger tax on my RRSP? No. RRSPs (along with RRIFs, TFSAs, FHSAs and RPPs) are exempt property under section 128.1 of the Income Tax Act. The account simply continues; withdrawal rules change instead.
What withholding tax applies to RRSP withdrawals for non-residents? A flat 25% under Part XIII, generally as a final tax with no Canadian return required. Treaties reduce this for periodic RRIF payments specifically — to 15% under the Canada–US treaty, 0% under the Canada–UK treaty — but lump sums stay at 25% regardless of destination.
Can I keep my TFSA after I become a non-resident of Canada? Yes, and it stays completely tax-free for Canadian purposes. The issue is your new country of residence: the US and UK both tax TFSA income in full, every year.
What happens if I contribute to my TFSA while living outside Canada? Every dollar contributed while non-resident draws a 1%-per-month penalty tax until it's withdrawn in full — a partial withdrawal doesn't stop the clock. No new contribution room accrues for any calendar year you're non-resident throughout.
Can I still contribute to my RRSP after leaving Canada? Only against unused room from before you left, since new room requires Canadian-source earned income. The deduction only offsets Canadian-taxable income, which most non-residents have little of, so it rarely helps after departure.
