Your RRSP and TFSA When You Move Abroad (2026)
Key takeaways
- RRSPs and TFSAs are excluded from Canada’s departure tax, so simply moving abroad does not trigger tax on them.
- RRSP and RRIF withdrawals as a non-resident face a 25% Part XIII withholding tax; tax treaties commonly cut this to 15% for periodic pension payments.
- A TFSA can stay open and its income remains tax-free in Canada, but the tax-free status may not be recognised by your new country of residence.
- You earn no new TFSA contribution room for any year you are a non-resident throughout, and withdrawals do not restore room until you are resident again.
- Contributing to a TFSA while a non-resident triggers a 1% per month tax on that contribution until it is withdrawn or you become resident again.
- You can still contribute to an RRSP if you have unused room, but new room only builds on Canadian-source earned income.
Neither account is caught by departure tax
When you emigrate, Canada deems you to have sold most property at fair market value — but registered plans are excluded. The CRA’s emigrant guidance confirms that pensions and similar rights, including RRSPs, RRIFs and TFSAs, are not subject to the deemed disposition. That means the act of leaving Canada does not, by itself, create a tax bill on either account. What changes is how withdrawals and contributions are treated once you are a non-resident.
RRSP withdrawals as a non-resident
Your RRSP can remain invested and continue to grow tax-deferred in Canada after you leave. When you withdraw, however, the money is Canadian-source income taxed under Part XIII. The CRA sets the usual non-resident withholding rate at 25%, and RRSP and RRIF payments are expressly listed among the income types it applies to. The financial institution deducts this tax before paying you, and for most non-residents it is a final tax with no further Canadian return required.
Tax treaties frequently reduce the rate. Many of Canada’s treaties lower the rate to 15% on periodic pension payments — for example, regular payments from a RRIF or an RRSP annuity — while lump-sum RRSP withdrawals often stay at the full 25%. The exact rate depends on the treaty with your country of residence and on whether the payment is periodic or a lump sum, so it is worth converting an RRSP to a RRIF or annuity before drawing income in some cases.
Reducing RRSP withholding: NR5 and section 217
If 25% is more than you would pay as a Canadian resident, two mechanisms can help. You can file Form NR5 to ask the CRA to approve a lower amount of tax withheld during the year based on your income. You can also make a section 217 election, which lets you report eligible Canadian pension income — including RRSP and RRIF payments — on a Canadian return and pay tax at graduated resident rates, potentially recovering some of the Part XIII tax withheld. Guide T4145 explains the election in detail.
Keeping your RRSP contributions going
You can continue to contribute to an RRSP after emigrating if you still have unused contribution room. However, new room accrues only on earned income that is subject to Canadian tax. Once you stop having Canadian-source earned income, you stop building new RRSP room, even though you can keep using whatever room you had accumulated before leaving. For many emigrants, the practical decision is whether to keep contributing, leave the plan to grow, or begin structured withdrawals under a favourable treaty rate.
TFSAs: tax-free in Canada, but frozen for contributions
A TFSA behaves very differently. The CRA confirms that if you become a non-resident you are allowed to keep your existing TFSA, and any income you earn in it — interest, dividends or capital gains — will not be taxed in Canada. You can also withdraw funds without Canadian tax. The catch is on the contribution side: you will not accumulate any new available contribution room for any year in which you are a non-resident for the entire year, and you cannot re-contribute amounts tax-free until you become a resident again.
One crucial warning: your home country may not recognise the TFSA’s tax-free status. Some countries — the United States is a notable example — tax the income earned inside a TFSA and may impose additional reporting. Before you move, check how your destination treats a TFSA, because its Canadian tax shelter does not travel with you.
The 1% monthly penalty on non-resident TFSA contributions
If you contribute to your TFSA while you are a non-resident, that contribution is taxable in Canada at 1% per month for as long as it stays in the account. The tax continues until, whichever comes first, you withdraw the entire non-resident contribution or you become a resident of Canada again — and withdrawing only part of it does not reduce the tax; you must remove all of it. You report and pay this on a TFSA Return by 30 June of the year after the tax applies. The safest rule is simple: do not contribute to your TFSA while you live abroad.
RESPs, RDSPs and other registered plans
RRSPs and TFSAs are not the only registered accounts affected by a move. RESPs and RDSPs are likewise excluded from departure tax, but government grants attached to them have residency conditions: Canada Education Savings Grant and Canada Disability Savings Grant/Bond entitlements generally depend on the beneficiary being a Canadian resident, and contributions or grant eligibility can pause or stop once you emigrate. Withdrawals of the taxable portions of these plans to a non-resident are also subject to Part XIII withholding. If you hold an RESP or RDSP, confirm the specific consequences with the plan provider before you leave, as the rules differ from those for RRSPs and TFSAs.
Putting it together before you leave
A sensible sequence for most emigrants is: confirm your date of non-residency; stop TFSA contributions before you go; decide whether to keep, wind down or annuitise the RRSP based on your destination’s treaty rate; and file any NR5 or section 217 elections to manage withholding. Because outcomes hinge on the specific treaty and your destination’s own tax rules, cross-border tax advice is strongly recommended. This guide is general information, not tax advice.
Two further points are easy to overlook. First, keep your financial institution informed of your non-resident status: it must apply Part XIII withholding correctly, and some Canadian brokerages restrict trading in accounts held by non-residents, which can affect how you manage investments inside your RRSP or TFSA from abroad. Second, currency and timing matter — because RRSP withdrawals are taxed in Canadian dollars and then again, potentially, in your new country, coordinating the timing of withdrawals with your destination’s tax year and any foreign tax credit can materially change the net result. A short planning conversation before your departure date is usually the highest-value step you can take.
How Flyto can help
Flyto moves households from Canada to Europe and worldwide, door-to-door; get a quote. With one accountable partner handling the physical move, you have the headspace to get your RRSP and TFSA arrangements right.
Frequently asked questions
Can I keep my RRSP and TFSA after I move abroad?
Yes. Both can stay open; they are excluded from departure tax and the TFSA’s income stays tax-free in Canada, per Source.
How is an RRSP withdrawal taxed when I am a non-resident?
It is subject to a 25% Part XIII withholding tax, often reduced to 15% for periodic payments under a tax treaty, per Source.
Do I still get TFSA contribution room while abroad?
No. You accumulate no new contribution room for any full year you are a non-resident, per Source.
What happens if I contribute to my TFSA while non-resident?
The contribution is taxed at 1% per month until you withdraw all of it or become resident again, per Source.
Can I still contribute to my RRSP after leaving Canada?
Yes, if you have unused room, but new room only builds on Canadian-source earned income, per Source.
Can I reduce the RRSP withholding tax?
Yes — through a treaty rate, Form NR5, or a section 217 election to pay graduated resident rates, per Source.
Sources
- CRA — How non-residency affects your TFSA
- CRA — If you owe tax on non-resident TFSA contributions
- CRA — Non-residents of Canada (Part XIII tax)
- CRA — Electing under section 217 of the Income Tax Act
- CRA — Form NR5, Application by a non-resident for reduced withholding
- CRA — Guide T4145, Electing under Section 217
- CRA — RRSPs and related plans
- CRA — Leaving Canada (emigrants)
- CRA — Guide T4056, Emigrants and Income Tax