The Amount Of Wealth Leaving Canada Would Be Eye-opening For Many Canadians

More and more successful Canadians are continuing to leave this country.

Many tax practitioners have long been aware of this phenomenon . For example, in the first 23 years of my career, I worked on about a dozen tax cases involving Canadians leaving this country. But the number of files that my colleagues and I have worked on in the past 10 years has skyrocketed to almost one thousand.

In 2015, 68,945 people permanently left Canada, according to Statistics Canada estimates . The next year (the first of the new Liberal government), it was 97,473 — a staggering increase. In 2017, it increased again to 104,013. Departures dropped to a low of 60,407 in the COVID-19 year of 2020, but it has been increasing ever since. For 2024, departures were at a 10-year high of 106,134, and 27,086 left in the first quarter of 2025.

The problem with these statistics, however, is they are simply blunt numbers. They are estimates based upon statistical modelling and administrative proxies such as inactive tax filings and health-care deregistrations.

The statistics also don’t come with other useful information, like how much wealth and recurring income has left Canada as a result of such departures. They also don’t track any private businesses that might be attached to such individuals that may have also left. Any loss of businesses usually comes with related Canadian job losses and that would be a useful statistic to track as well.

Why would I like to see those statistics? The first reason is that I’d like to better correlate such statistics to what I’m seeing in practice. The amount of wealth leaving Canada that I’m witnessing would be eye-opening for many Canadians, even to those who seem to love bashing the so-called rich and are not shy about telling them to not let the door hit them on the way out.

The second reason is to track how much long-term federal and related provincial income tax loss there is as a result of these departures. Such cumulative revenue loss to the government can only be recovered by massive immigration (something we have experienced as a country in recent years), increased tax measures (we’ve experienced that, too) or increased economic activity (no, it’s well known that Canada’s economic performance has significantly lagged for quite some time).

The third reason is to estimate what opportunities Canada is losing. If the successful people had stayed, would they have started new businesses that would employ more Canadians or used their wealth to attract more taxation revenues for Canada? My guess is an obvious yes, but I’d like to put some precision around it.

To illustrate, let’s use an overly simplistic example. Let’s say Bob, a resident of Ontario (where the highest marginal tax rate is 53.53 per cent so let’s round that to 54 per cent), leaves Canada on Jan. 1, 2026. His entire net worth — say $100 million — is invested in guaranteed investment certificates (GICs). The GICs earn annual interest of 5 per cent (his sole income source). Ignoring graduated personal tax rates, Bob will pay 54 per cent of his $5 million in interest income in tax, which works out to $2.7 million.

Let’s compare that to an average Ontarian who earns a salary of, say, $50,000, with no deductions or credits available to them. That person will pay roughly $10,000 in taxation.

In other words, Canada needs 270 average Canadians to replace Bob’s lost taxation revenue. And that assumes there are jobs available for those 270.

Some of the lost taxation revenue can be made up by Canada because of the “departure tax” occurring in the year a Canadian permanently leaves. Departure tax is lingo used in my profession since the Income Tax Act deems there to be a disposition of one’s assets at fair market value (FMV) immediately before a person becomes a non-resident of Canada, thus causing taxation on any appreciated gains on such properties. There are a variety of exceptions to this general rule, and, in some cases, one can carefully plan to take advantage of departure tax deferral opportunities or minimization.

In Bob’s case, there would be no departure tax since the cost base of a GIC is often the same as its FMV, thus resulting in no gain. He could easily leave Canada with little tax consequence.

Economic policies set by governments matter. In the past 10 years, there is little doubt that it has had a negative impact on retaining successful Canadians. With skyrocketing federal spending currently happening, it appears that Canada is headed down a further economic path of increased taxation that will be inevitable to pay for such spending.

The C.D. Howe Institute recently predicted the federal government’s cumulative deficits over the next four fiscal years could be a staggering $311 billion. That is fiscally irresponsible, and future generations will pay greatly through higher taxation loads and a poorer standard of living.

One way to deal with this is to develop tax and economic policies that make it enticing for successful Canadians to stay in Canada and to risk their capital for the benefit of all Canadians. This would also help attract new successful Canadians as well.

Canada’s future prosperity depends on policies that reward ambition rather than punish it. We don’t just lose tax dollars when we drive away successful Canadians; we lose innovators, job creators and the very people who can help build a better future. It’s time for leadership that sees this clearly and acts decisively.

As leadership guru John Maxwell once said, “A leader is one who knows the way, goes the way, and shows the way.”

This is Canada’s moment to stop the bleeding and start leading.

Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody.

_____________________________________________________________

If you like this story, sign up for the FP Investor Newsletter.

_____________________________________________________________