From etiquette and shopping culture, to tax and legal systems, understanding (and accepting) the differences between life in Canada and in Israel can make or break a successful Aliyah.

A Canadian olah to Israel and a professional myself, I am familiar with the administrative and practical hurdles that arise in this transition. I want to help others facing the unique challenges that come with Aliyah from Canada. That’s why I’ve created this guide.

Unlike other Aliyah guides, like those published by Nefesh B’Nefesh or Israeli government agencies, this is a high level guide focused exclusively on the Canadian legal and tax issues that may arise when a Canadian makes Aliyah.

It is designed to help Canadian olim take a proactive approach to identifying potential problem areas that may require attention before, during and/or after the move to Israel, ideally while there is still time to plan.

Note on Scope: The information provided here is general in nature and not legal advice. If you would like to discuss your specific situation, I invite you to get in touch with me.

1. Determine your desired Canadian tax residency position

First and foremost, it is important to understand that making Aliyah will not automatically make you a non-resident of Canada for tax purposes. The Canada Revenue Agency (CRA) will evaluate your situation holistically, according to whether you have retained significant residential ties to Canada, including (among other factors):

• A home available to you in Canada;
• A spouse, partner or dependants remaining in Canada; and/or
• Personal, economic and social ties to Canada.

In borderline situations, the Canada–Israel tax treaty may resolve dual-residency situations through its “tie-breaker” rules. These include factors such as where your “permanent” home and “center of vital interests” are, among other considerations.

Clarify your tax position early on.

Canadians who become non-residents under the CRA’s analysis are treated as though they sold certain Canadian property (even if you have not in fact sold it) at their fair market value, and will be subject to a departure tax called a deemed disposition.

If you expect to maintain substantial Canadian ties after your Aliyah, and your tax stance is not clear, it is highly recommended that you obtain professional tax advice before your Aliyah flight, or, at the latest, before filing your annual returns with the CRA.

2. Review Canadian bank and investment accounts 

Do not assume that every Canadian account will continue unchanged post Aliyah. Some institutions will take issue with maintaining accounts for non-residents. This should be factored in with your plans around tax residency status discussed above. In your Aliyah planning you should:

• Bank accounts: Keep tabs of all your chequing, savings, GICs, and other Canadian deposit accounts that you intend to maintain. Determine whether the relevant financial institutions require a Canadian mailing address.
• Brokerage accounts: Confirm whether your Canadian brokerage would continue to service you as non-resident and any related restrictions to trading or investments.
• Registered accounts: Review your RRSP, TFSA, and other registered plans. You won’t necessarily have to close these accounts; however, the Canadian tax treatment of your contributions, withdrawals, and investment income may differ post-Aliyah. A TFSA can generally remain open, but a non-resident does not accumulate new TFSA contribution room.
• Foreign reporting and Israeli tax: Consider how each account will be treated under Israeli tax rules once you become an Israeli resident. Consider obtaining professional tax advice from an Israeli tax lawyer in advance.

Do not close Canadian accounts simply because you are moving to Israel. First confirm the consequences with the relevant financial institution and consider the tax and practical implications of keeping each account open.

On a more practical level, account access from abroad may be challenging, and you may therefore wish to update the primary account holder, or establish powers of attorney for management of your Canadian accounts.

Finally, keep records. Download statements and retain records of account balances, investments, adjusted cost bases, contributions, and transactions as of your Aliyah date.

3. Decide what to do with Canadian real estate 

If you’re considering selling any Canadian real estate before your Aliyah, review whether the principal residence exemption will apply. Do not, however, assume that meeting the principal residence criteria will result in no Canadian tax or filing obligations. If you sell your Canadian real estate after becoming a non-resident, you will be subject to certain withholding and compliance requirements. If not attended to, the purchaser of your property may become liable, and subsequently entitled to withhold the appropriate amount from the purchase price.

If you choose to rent out your Canadian property as a non-resident, you may be subject to Canadian withholding and remittance obligations on rental income.

Beyond tax considerations, managing Canadian property from abroad may require:

• A written property-management agreement;
• Delegated authority to handle repairs, tenant notices, rent collection and legal proceedings;
• Appropriate and updated insurance coverage;
• Compliance with applicable provincial tenancy laws and municipal licensing requirements

Before deciding whether to sell, rent or retain the property, consider both the Canadian and Israeli tax consequences, as well as the practicalities and costs of managing Canadian property from abroad. For more detailed guidance on the issues that may arise when renting out Ontario property specifically as a non-resident, see my guide for non-resident landlords of Ontario.

4. Review your estate plan and make the necessary updates

Moving abroad will not necessarily revoke an otherwise valid Canadian will. However, if you acquire assets and/or beneficiaries in Israel, your Canadian estate plan may no longer work as efficiently as you’d like.

Before Aliyah, ask yourself:

• Whether your existing will clearly covers all of your Canadian assets;
• Whether a separate Israeli will may be appropriate;
• Coordinating the two wills so that neither inadvertently revokes the other;
• The most appropriate designations on RRSPs, RRIFs, TFSAs, pensions and insurance, if relevant;
• Where your proposed estate trustee resides and whether a Canadian court could require security from a non-resident trustee; and
• Where your signed original documents will be stored

Finally, you should evaluate your continuing powers of attorney for property and personal care. Canadian powers of attorney may not be valid in Israel, and you will likely have to obtain separate Israeli powers. Your Canadian and Israeli documents should be coordinated to avoid potential conflicts and inconsistencies.

A coordinated estate plan can provide greater clarity for your family and make the administration of your estate smoother across both countries.

5. Review corporations and/or professional practices 

Canadian business owners and professionals should obtain legal and tax advice before changing their residence. While moving to Israel does not automatically impact a Canadian business, it may affect the business’s corporate residence and/or tax status, as well as other obligations. Consider:

• Where your corporation’s central management and control will be exercised;
• Whether your corporation could become resident in Israel or dual-resident;
• Whether the move could affect your company’s CCPC status;
• Whether your shares may be subject to a departure tax if your residency changes;
• Whether salary, dividends or management fees will trigger withholding obligations;
• Whether working from Israel creates Israeli tax, payroll, permanent-establishment or registration requirements;
• Whether any professional licensing and insurance permit services to be provided from abroad; and
• Whether contracts adequately address governing law, privacy and cross-border access to data

This is particularly important for those who intend to continue servicing Canadian clients while living in Israel. The rules surrounding CCPC status and continued ownership of a Canadian corporation after relocation can be especially nuanced. For a more detailed discussion, see my post, “Leaving Canada but Keeping Your Company: Understanding CCPC Status Post-Relocation.”

Conclusion

While Aliyah from Canada may considerably impact tax filings, property, business operations, and estate planning, it won’t automatically end tax and legal obligations to Canada.

Canadians considering Aliyah should evaluate their situation proactively, and identify matters that will continue after the move. Decide which connections should be maintained to Canada, which should be modified, and which require more nuanced planning. A coordinated review with the appropriate Canadian and Israeli professionals can help prevent unwanted legal and tax surprises.

I assist Canadians abroad and those preparing to relocate with practical Ontario legal guidance across estate planning, property and corporate matters.

If you want to discuss your Canadian affairs before making Aliyah, feel free to get in touch.

Frequently Asked Questions

Will I lose my Canadian citizenship when I make Aliyah?

No. Making Aliyah and becoming an Israeli citizen will not cause you to lose Canadian citizenship in itself. Canada permits dual citizenship. Citizenship, tax residency and provincial healthcare eligibility are separate matters and should not be confused.

Do I have to file a Canadian tax return after moving to Israel?

Possibly. Your filing obligations depend on your Canadian tax residency, the date you leave, the income you continue to receive, from what source, and the assets that you own. You may need a departure return and may continue to have Canadian filing obligations as a non-resident.

Will I have to pay departure tax?

If you cease to be a Canadian tax resident, yes. You may, however, continue to be a Canadian tax resident even after becoming a resident of Israel.

Is my Ontario will valid in Israel?

An Ontario will may continue to govern assets connected to Ontario, but it may not be the best or only document for someone who owns assets in both countries. Your Canadian and your Israeli lawyers should coordinate any separate wills so that one document does not unintentionally revoke another.

Should I appoint someone in Canada as my Canadian power of attorney?

An individual based in Canada may be better positioned to deal with local banks, property, businesses and legal matters than someone in Israel. The appointment should be carefully drafted and given only to a person you trust.

Should I keep my Canadian property after making Aliyah?

Becoming a non-resident of Canada may change the tax, reporting and administrative obligations attached to your Canadian property. This should be analyzed and decided on before your move to Israel if possible.

Can I continue running my Canadian company from Israel?

Yes, generally, but moving your day-to-day operations to Israel can create Canadian and Israeli tax and other compliance considerations. Before making the move, it’s a good idea to confirm the implications with both Canadian and Israeli legal advisers.