For many Canadians, retiring abroad offers the chance to enjoy a warmer climate, experience a different culture, reduce living expenses, or be closer to family. While it can be an exciting next chapter, an international move may also affect your taxes, healthcare coverage, retirement income, property, and estate plan.

Before making the move permanent, it is important to understand how the laws of two countries may apply to you and your family.

Understand Your Canadian Tax Residency

One of the first questions to consider is whether you will remain a Canadian resident for income tax purposes.

Canadian tax residency is based on your complete circumstances. This includes the residential ties you maintain in Canada, the ties you establish elsewhere, the length and purpose of your absence, and any tax treaty between Canada and your new country.

Someone who maintains significant residential ties with Canada may continue to be considered a factual resident. However, a person who is also considered a resident of another country under a tax treaty may instead be treated as a deemed non-resident.

If you become a non-resident, Canada may treat you as having disposed of certain investments and other property at fair market value when you leave. This could result in a taxable capital gain, commonly referred to as departure tax. Important exclusions and special rules apply, so advice should be obtained before selling property, restructuring investments, or establishing permanent residency elsewhere.

Review Your Will in Both Countries

A Canadian will may not deal effectively with every asset located in another country. Foreign real estate, bank accounts, business interests, and personal property may be governed by the laws where the assets are located.

Depending on the country and the property you own, you may need one internationally coordinated will, separate wills for different jurisdictions, or additional local estate documents. These documents must be prepared carefully so that one will does not unintentionally revoke or conflict with another.

Before purchasing property abroad, find out:

• Whether foreign residents may legally own property
• How ownership can be registered
• Whether forced-heirship laws apply
• What rights a surviving spouse or other family members may have
• Whether Canadian probate documents will be recognized
• Whether estate, inheritance, capital gains, or wealth taxes may apply

A Canadian estate lawyer and a qualified lawyer or notary in your destination country should review the plan together.

Reconsider Your Choice of Executor

Administering an estate across two countries can be complicated. Your executor may need to work with foreign lawyers, banks, tax authorities, translators, and government departments.

Some jurisdictions place restrictions or additional requirements on an executor who lives outside the country. A foreign executor may need to appoint a local representative, post security, or obtain additional court approval.

Consider whether your executor is willing and practically able to manage an international estate. They should know where your important documents are kept and whom to contact in both countries.

Update Your Powers of Attorney and Healthcare Documents

A Canadian power of attorney, representation agreement, or healthcare directive may not automatically be recognized by financial institutions or medical providers in another country.

Depending on local law, you may need documents prepared in your destination country authorizing someone to manage your finances, property, or healthcare if you become unable to make decisions independently.

The Government of Canada recommends reviewing healthcare directives and considering an agreement that allows someone to make healthcare decisions for you while you are living abroad.

Think carefully about whom you appoint. Distance, language barriers, time zones, and local requirements could make it difficult for someone in Canada to act quickly during an emergency.

Understand Your Healthcare Coverage

Most provincial and territorial healthcare plans provide limited coverage, or no coverage, for medical expenses incurred outside Canada. Even when some emergency reimbursement is available, it may be limited to the amount the same service would have cost in Canada, which could be substantially less than the actual foreign medical bill.

If you plan to divide your time between Canada and another country, confirm the physical-presence requirements for maintaining coverage directly with your provincial or territorial health ministry. Requirements vary by jurisdiction.

Before moving, investigate:

• Eligibility for public healthcare in your destination
• The cost of private or expatriate medical insurance
• Coverage for pre-existing conditions
• Prescription availability and cost
• Hospital and specialist access
• Medical evacuation coverage
• Home care, assisted living, and long-term care
• Whether premiums or coverage change as you age

Standard travel insurance may not be appropriate for someone living abroad permanently or for an extended period.

Confirm How Your Retirement Income Will Be Treated

Canada Pension Plan benefits can generally be paid while you live outside Canada.

Old Age Security may also be payable abroad if you meet the eligibility requirements. Generally, this means that you were a Canadian citizen or legal resident immediately before leaving Canada and lived in Canada for at least 20 years after turning 18. Time lived or worked in a country that has a social security agreement with Canada may help you qualify.

Canadian pensions and other Canadian-source payments made to a non-resident may be subject to withholding tax. The usual rate on many payments is 25%, although a tax treaty may reduce or eliminate the tax depending on the income and your country of residence.

RRSP, RRIF, pension, investment, and rental income may also be treated differently after a move. You could have tax reporting obligations in Canada, your new country, or both.

Think Carefully Before Buying Foreign Property

Buying a retirement home abroad can be appealing, but foreign ownership and inheritance rules may be very different from those in Canada.

Before purchasing, determine:

• Whether foreigners can own the land and property directly
• Whether you are purchasing ownership or only a long-term right of use
• Whether government approval is required
• How the property will be taxed while you own it
• What taxes and fees will apply when it is sold
• How the property will transfer if you die
• Whether your beneficiaries can inherit or retain it
• Whether the property could be sold quickly if you needed funds

Use an independent lawyer who represents your interests. Do not rely solely on the seller, developer, or real estate agent for legal advice.

Prepare for Incapacity or a Death Abroad

Your family should know what to do if you become seriously ill, lose capacity, or die while living outside Canada.

Keep an organized record of:

• Your passport and residency documents
• Insurance policies and emergency contact details
• Wills and incapacity documents
• Local doctors, lawyers, and financial contacts
• Bank, investment, pension, and property information
• Digital accounts and instructions
• Funeral, burial, cremation, or repatriation wishes
• The person authorized to act locally

When a Canadian dies abroad, a representative may need to work with local authorities, insurers, funeral providers, and Canadian consular officials. Consular officials may help families find local service providers, but the Government of Canada does not pay for burial, cremation, or the return of remains to Canada.

Insurance coverage for local burial, cremation, or repatriation should be reviewed carefully before moving.

Consider a Trial Period

Living somewhere permanently can be very different from vacationing there.

Before selling your Canadian home or moving all your assets, consider renting in your intended destination for an extended period. Experience the country outside its main tourist season and become familiar with local healthcare, transportation, banking, language, climate, safety, and residency requirements.

A trial period may also give your financial, tax, and legal professionals time to identify issues before the move becomes permanent.

Things to Think About

Retiring abroad can be a wonderful next chapter, but it requires more planning than choosing a destination and comparing living costs.

A coordinated plan should address your tax residency, retirement income, healthcare coverage, wills, powers of attorney, executor, foreign property, insurance, and final wishes. Your Canadian financial advisor, accountant, and estate lawyer may also need to work with qualified professionals in your intended country of residence.

The goal is not to discourage the dream. It is to help ensure that your retirement remains financially secure and that your family is not left trying to resolve legal, financial, and practical issues across two countries.

Planning ahead can give you greater confidence to enjoy your new life abroad while making things much easier for the people you care about.

Sources:

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents

https://travel.gc.ca/travelling/publications/living-abroad?