“Departure Tax Valuations”
What Is Departure Tax?
- 01. Deemed Disposition
You are treated as having disposed of all capital property, including shares in your private company, at fair market value on your departure date, triggering a deemed capital gain.
- 02. FMV Must Be Documented
The CRA does not accept self-reported values without support. A report prepared by a credentialed CBV or ABV is the standard expected in any review or audit.
- 03. Cost Basis Implications
The FMV established at your Canadian departure date typically becomes your cost basis for tax purposes in the country you relocate to, affecting future capital gains when you eventually sell your shares.
Common Departure Scenarios We Value
Relocating to the United States
Canadian business owners moving to the US, including those on TN, O-1, or EB visas, who hold shares in a Canadian private corporation must value those shares at the departure date.
Tech Founders & SaaS Shareholders
Founders or minority shareholders in tech and SaaS companies departing Canada often require CBV-prepared fair market value estimates for cross-border filings and US tax basis establishment.
Professional Practice Owners
Dentists, physiotherapists, optometrists, and other practice owners who hold shares through a professional corporation need a valuation of their practice as of the departure date.
Shareholders with Partners Remaining
When one shareholder departs Canada while others remain, the departing shareholder's shares are subject to deemed disposition. A fair market value opinion protects all parties.
Filing Without a Defensible Valuation Creates Real Risk
01. CRA Reassessment Risk
If you file departure tax without a supported FMV, the CRA can reassess the value of your shares, often upward. A CBV-prepared report gives you a credible, documented position to defend.
02. Underpayment Penalties & Interest
Understating the value of your business at departure can result in tax underpayment, triggering penalties and arrears interest. An independent valuation establishes a defensible baseline before you file.
03. US Tax Basis Implications
The fair market value established at your Canadian departure date often forms your cost basis for US tax purposes. A well-supported valuation can reduce future US capital gains tax when you eventually sell.
04. Section 220 (4.5) Deferral Election
Departing taxpayers can elect to defer departure tax by posting security with the CRA. The amount of security required is calculated from the FMV of subject assets, making an accurate valuation central to structuring any deferral.
From Engagement to CRA-Ready Report in 1-2 Weeks
01. Initial Consultation
Review ownership structure, departure date, and filing deadlines. Confirm scope and report format under CICBV Practice Standards.
02. Document Collection
Gather 3-5 years of financials, corporate records, shareholder agreements, and relevant transaction data.
03. Valuation Analysis
Apply income and market approaches, normalize earnings, and establish defensible FMV as of the departure date.
04. Draft Review
You and your advisors review a draft report. We refine assumptions where supported by additional information.
05. Final Report Delivery
Signed CBV valuation report prepared to CICBV Standards -- structured to accompany your departure tax return.
Ready to Start Your Departure Tax Valuation?
We work with business owners, cross-border tax advisors, and immigration lawyers
across Canada and the US. Most engagements are completed in 1-2 weeks.