Moving to Canada from Australia: Key Financial Planning Tips for Australian Expats

Moving to Canada from Australia is a significant life event, often motivated by career opportunities, lifestyle preferences, or personal circumstances. While the move can be exciting, it also introduces a complex range of financial, legal, and tax considerations. For Australians planning to live and work in Canada, proactive financial planning is essential to ensure compliance, protect assets, and optimise long-term outcomes.

This guide outlines the most important financial planning considerations for Australians moving to Canada, providing actionable insights to help you make informed decisions and avoid costly mistakes.

1. Clarify Your Australian Tax Residency Status

One of the first and most critical steps in planning your international move is to determine your Australian tax residency status. Your residency status affects:

• Whether you are subject to Australian income tax

• Whether you must lodge an Australian tax return

• How your Australian and foreign-sourced income is treated

  
  

Many individuals mistakenly assume that leaving Australia automatically ends their tax residency. In reality, it's based on several tax residency tests that are applied to your unique circumstances. We strongly recommend consulting a tax adviser experienced in cross-border taxation to formally determine your tax status before or soon after your departure.

2. Review and Manage Australian Investments

If you're deemed to become a non-resident for tax purposes, how your assets in Australia are treated for tax purposes moving forward changes considerably. Here are some of the key investment considerations:

Real Estate (Primary Residence): Selling your property after becoming a non-resident could result in the loss of the Main Residence CGT Exemption, potentially leading to a significant tax bill. Renting out the property will also have tax implications in Australia, with the rental income still considered taxable income due to being Australian-sourced.

Shares, ETFs, and Other Listed Assets: The ATO may consider you to have “deemed disposed” of your assets on the day your residency status changes to non-resident, even if you retain them. This can crystallise unrealised capital gains and lead to immediate tax liabilities, unless you elect to defer.

Platforms and Brokerage Accounts: Many Australian investment platforms limit access or service to individuals living overseas. If you plan to start investing in Australia while you're abroad, ensure your investment platform supports Australians overseas and is compatible with your tax residency status.

3. Coordinate Cross-Border Tax Planning

Canada and Australia both have progressive income tax systems, but the treatment of income, deductions, and investments differs significantly between the two countries. Fortunately, a Double Tax Agreement (DTA) between Australia and Canada helps prevent double taxation on the same income, though the practical application of the DTA can be complex.

It's essential to work with a cross-border tax specialist in both Australia and Canada to ensure full compliance and tax efficiency.

4. Understand Your Australian Superannuation Obligations

Even while living abroad, your Australian superannuation remains an important part of your long-term financial strategy. However, moving to Canada from Australia does affect how you manage and interact with your super fund. Here are some key points:

Fund Details: Update your contact details, review your investment allocation, and consider consolidating accounts to reduce fees.

Preservation Rules Still Apply: You cannot access your super early simply because you’re moving overseas. Standard preservation rules remain in effect.

Tax on Withdrawals: While super withdrawals after age 60 are typically tax-free in Australia, Canada may treat these withdrawals as taxable income, potentially increasing your retirement tax burden.

Contributions: You may no longer receive employer contributions unless you're working for an Australian employer while abroad. However, voluntary contributions are still permitted, so long as they are within the Australian contribution caps.

Retirement Planning: Evaluate how superannuation fits into your broader retirement strategy, particularly if you plan to remain in Canada long-term.

5. Understand Canadian Retirement & Savings Accounts: RRSPs and TFSAs

Australia’s superannuation system is quite different from Canada’s retirement savings framework. In Canada, there are two primary voluntary savings vehicles: the Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings Account (TFSA).

Registered Retirement Savings Plan (RRSP)

• RRSPs are tax-deferred accounts, similar in concept to Australian super, though they are not compulsory.

• Contributions are tax-deductible against your Canadian income, and investment earnings grow ‘tax-deferred’ (not tax-free) within the plan.

• Withdrawals are taxed as income, typically in retirement when your tax rate is lower.

• Contribution room is earned based on income and must be tracked annually.

Note: Australians moving to Canada cannot roll over super into an RRSP and should be cautious not to over-contribute.

Tax-Free Savings Account (TFSA):

• TFSAs allow after-tax contributions, and earnings and withdrawals are tax-free in Canada.

• Unlike RRSPs, TFSA withdrawals do not count as taxable income in Canada.

• Annual contribution limits apply, and exceeding them results in penalties.

Understanding the role these accounts play in your new financial plan is essential. You should evaluate how RRSPs and TFSAs integrate with your superannuation and other global assets.

6. Establish a Compliant Estate Plan in Both Countries

Estate planning often gets overlooked in the relocation process, but cross-border moves introduce serious complications. Here’s why you should update your Estate plan:

• Australian Wills and Powers of Attorney may not be legally recognised in Canada, or their provisions may not align with Canadian laws.

• Canadian probate rules and inheritance laws differ by province and can significantly affect how assets are distributed, especially if assets are held jointly, via trusts, or across jurisdictions.

It’s generally advisable to establish an Estate plan in both countries to ensure your assets are distributed as per your wishes. This will reduce tax burdens and streamline asset transfers for your heirs.

Conclusion

Moving to Canada from Australia is more than just a change of scenery; it’s a major financial transition that requires careful planning across tax, investments, superannuation, estate matters, and retirement strategy. If you're heading over for a few years or making a permanent move, the decisions you make now can have lasting impacts on your financial well-being in both countries.

Seeking professional tax, financial and legal advice tailored to your unique circumstances will help ensure a smooth transition and preserve your wealth across borders.

Runway Wealth Management is the trusted Financial Adviser to the Australian Expat community. Our tailored advice is backed by expertise, education and experience, which allows us to be at the forefront of Australian Expat Financial Planning.

If you would like to speak to one of our Expat Financial Advisers about this blog or if you have other queries, we would be more than happy to speak with you. Feel free to send us an enquiry through the ‘Contact Us’ tab provided in the link below:

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General Advice Disclaimer: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.