Payment of tax can be deferred if the underlying property is TCP and security is provided, assuming that the taxpayer can obtain security at an acceptable cost. The final proposal is the most draconian. Property that is TCP retains that status, and Canada will also tax post-emigration gains on ultimate sale, subject to treaty exemption. And payment can be deferred if security is given. These exceptions are of small comfort.
Many taxpayers face double taxation, even for migrations with no tax reason.
Canadian tax liability arises on emigration and, because many countries tax capital gains using historical cost, the same gain will often be taxed again in the foreign country when the property is sold. Treaty exemption will not apply, and there is generally little or no relief through foreign tax credits. The proposals are a signal to entrepreneurs to leave Canada before making investments. And with the increasing mobility of capital in the global marketplace, the result could be a flight of entrepreneurial capital, with consequences to the Canadian economy that are at best uncertain and possibly severe. Canadian corporations expanding into foreign markets will also feel the heat when relocating Canadian employees.