Gad Saad says he is leaving Canada due to rising antisemitism, and the tax bill on his way out has left him numb.
Saad, a professor of marketing at Concordia University and author of the best-selling book Suicidal Empathy, posted Thursday night about what an “exit tax” would cost him to leave Quebec and Canada.
“Following a very difficult meeting with my accountant, I just found out how much it is going to cost me,” Saad said in a post on X. “No human being in a free society should have their hard-earned money stolen in this manner. I’m genuinely numb. I’m speechless.”
Saad says two things are pushing him out. The tax system, which he says makes it nearly impossible to save enough to retire, and the government’s immigration policies, which he says have made Canada unsafe for his family as Jewish Canadians.
What Is the Exit Tax?
National Post spoke with two tax specialists about how the rule, also known as a “departure tax,” works. Kim Moody is the founder of Moodys Private Client in Calgary and writes for the Financial Post. David Rotfleisch is a tax lawyer and chartered accountant at Rotfleisch and Samulovitch in Toronto.
Rotfleisch explains: “The exit tax is a bit of a misnomer. It’s payable when you become a non-resident of Canada, and it’s one of the deemed dispositions under the Income Tax Act. A deemed disposition means it’s a legal fiction. It’s not an actual disposition, but the Tax Act says you have disposed of something. The most common one that’s going to affect all of us is the deemed disposition on death. When we die, all of our assets are deemed to have been disposed of, and the CRA collects tax on the accrued capital gain. The exit tax is another deemed disposition, on departure.”
Moody adds: “It’s a policy that’s been around forever. Any appreciation in value that you’ve accrued during the time that you’re a resident of Canada is deemed to be realized at that time. The policy intent is basically if you benefited from Canada’s economy and taxation regime, and you’re not going to pay tax in the future, then Canada wants to get its pound of flesh at the time that you leave.”
What Gets Taxed and What Is Exempt?
“Pretty much anything other than real estate is going to get hit with (the) departure tax,” says tax lawyer and chartered accountant David Rotfleisch.
Moody explains the most common exceptions: “Canadian real estate that is held personally, and registered plans, like RRSPs, RRIFs and TFSAs. The logic behind the exception is that if you die holding Canadian real estate, or if you eventually sell it during your lifetime, that’s when Canada gets its pound of flesh. So it’s a deferral more than anything.”
Rotfleisch adds: “If you have a stock market portfolio, when you leave the country, you’ve got to pay tax on that portfolio. Or if you have cryptocurrency, that’s a big one. We have a lot of clients in the crypto space who are hit with large departure tax additions. Pretty much anything other than real estate is going to get hit with departure tax.”
