SNOWBIRD TAX GUIDE 2025: SAVE ON CANADA & ABROAD TAXES
Living the Dream, Dodging the Tax Nightmares
For many Canadians, especially business owners in London, Ontario, the dream is simple: spend summers at home, then escape the harsh winters by heading south or abroad. Whether it’s Florida beaches, Portuguese vineyards, or the turquoise waters of Mauritius, living the “snowbird” life offers freedom.
But here’s the challenge: while you’re chasing the sun, the Canada Revenue Agency (CRA) and foreign tax authorities may also be chasing your money. Without the right tax planning and accounting strategies, snowbirds risk double taxation, missed credits, or costly CRA reassessments.
The good news? With the guidance of a professional CPA in London specializing in corporate taxes and cross-border accounting, you can structure your finances to maximize savings and stay compliant in both Canada and abroad.
This guide walks you through how snowbirds can avoid tax headaches, optimize income, and enjoy their freedom in 2025.
Residency Rules: The Foundation of Snowbird Taxes
The number one rule in Canadian taxation is this: taxes are based on residency, not citizenship.
Residents of Canada are taxed on worldwide income.
Non-residents of Canada are only taxed on Canadian-source income.
So, the first step in any snowbird tax plan is figuring out: Am I a resident or non-resident in the eyes of the CRA?
That makes determining your residency status one of the most important accounting decisions snowbirds will face.
CRA looks at two types of residency:
Factual residency: You maintain strong residential ties to Canada — like a home, spouse/dependents, health card, driver’s license, or memberships.
Deemed residency: Even without strong ties, you may be considered resident if you spend 183 days or more in Canada in a calendar year.
Common mistake: Many people think staying under 183 days automatically makes them non-residents. Not true. If you keep a home, family, or business in London, CRA may still treat you as a factual resident.
The Snowbird Trap: Double Taxation Risk
Without planning, snowbirds can get hit by two tax systems at once.
Example:
You spend 5 months in your farm in London, Ontario Canada, 7 months in Florida.
Canada considers you a resident (family/home ties).
The U.S. considers you a tax resident (substantial presence test).
Result: Both countries want to tax your income.
This is where CPA-led tax planning is essential. Canada’s tax treaties (with over 90 countries) provide relief by:
Determining where you’re “primarily resident.”
Allowing credits so you don’t pay double tax.
Pro Tip:If your snowbird destination doesn’t have a treaty with Canada (like certain Caribbean islands), your double-tax risk increases significantly.
Canadian Income Snowbirds Still Pay Tax On
Even if you establish non-residency, the CRA will continue to tax certain Canadian-source income. Common examples include:
Rental income from London property
Dividends from Canadian corporations
Pensions (CPP, OAS, RRSP withdrawals)
Employment income earned in Canada
This income is typically subject to withholding tax — usually 15–25%, depending on treaties.
Example: A non-resident receiving $20,000 in dividends from a Canadian corporation may face a flat 15% withholding tax if their country has a treaty with Canada.
Departure Tax: The Exit Toll for Snowbirds
If you formally break Canadian residency, the CRA imposes a departure tax. This means they pretend you sold most of your assets on your departure date and tax the capital gains.
Applies to investments (stocks, ETFs, crypto, etc.).
Doesn’t apply to Canadian real estate — those are always taxable in Canada.
You can sometimes defer payment by posting security with the CRA.
Sarah, an incorporated consultant, moves permanently to Portugal.
She owns $400,000 in investments with $100,000 in unrealized gains.
On departure, CRA taxes her on the $100,000 gain — even though she hasn’t sold.
Proper planning with an experienced London CPA can help crystallize gains early or defer payment by restructuring through a corporation.
Incorporation and Snowbird Accounting Strategy
For entrepreneurs and consultants, the big question is: should your corporation stay Canadian if you live abroad?
Keeping it Canadian:
Corporate tax stay at 12–26% tax (depending on province).
Dividends to you as a non-resident face withholding tax (15–25%).
Shifting abroad:
Moving your corporation can trigger departure tax.
CRA may still argue your corporation is Canadian if you direct operations from here.
Smart Move: In many cases, keeping your corporation in Canada is the simplest. Then, restructure how you pay yourself (salary, dividends, or management fees) based on your new residency.
Leveraging Tax Treaties and Credits
One of the best ways to save as a snowbird is to use foreign tax credits effectively.
If you’re taxed abroad on income, Canada may give you credit for taxes already paid.
Example: A snowbird pays U.S. tax on rental income from a Florida property. Canada provides a credit so they don’t pay tax twice.
Warning: Credits only apply if there’s a treaty. If not, you could pay full taxes in both countries.
RRSPs, TFSAs, and Retirement Income Abroad
Snowbirds need to be extra careful with Canadian investment accounts:
RRSPs:
Withdrawals are subject to non-resident withholding tax (15–25%).
Can sometimes elect to pay regular Canadian tax rates if more favourable.
TFSAs:
Not recognized in most other countries.
Foreign governments may tax the income, even if Canada doesn’t.
Pensions (CPP, OAS):
Taxed at source with non-resident withholding.
May be partially exempted by treaties.
Snowbird Tip: Always check how your destination country treats Canadian pensions and investments before you go.
U.S. Specific: Substantial Presence Test
For snowbirds heading south to Florida, Arizona, or California, the U.S. Substantial Presence Test is key.
If you spend 183 days or more in the U.S. (using a weighted formula over 3 years), you may be considered a U.S. resident for tax purposes.
This can drag you into the IRS system — not a fun place to be.
Practical Strategies to Save on Taxes as a Snowbird
Here are some actionable moves snowbirds can make in 2025:
Plan Your Days Carefully: Track days in each country with an app — don’t risk being considered resident in two places.
Cut Canadian Ties If Needed: Cancel health coverage, driver’s license, memberships, or sell Canadian property if aiming for non-residency.
Restructure Your Corporation with the help of a CPA: Adjust salary/dividend mix for your new residency.
Use Tax Treaties: Choose snowbird destinations with strong tax treaties (U.S., Portugal, Spain).
Manage Departure Tax: Crystallize gains before leaving or transfer assets strategically.
Rethink Investments: Consider moving from TFSAs to accounts recognized internationally.
Get Professional Guidance: Every snowbird situation is unique — don’t DIY with CRA and IRS rules.
Meet David:
Canadian entrepreneur from London,, owns a consulting corporation.
Splits time: 6 months in Ontario, 6 months in Portugal.
With proper planning, he:
Sold his Canadian home.
Established Portuguese residency.
Kept his corporation in Canada but restructured how dividends are paid.
Used Canada-Portugal treaty to avoid double taxation.
Planned around departure tax by crystallizing gains in advance.
Result: David enjoys his snowbird life while keeping total taxes manageable — and no CRA surprises.
The Smart Snowbird Mindset
Being a snowbird is about freedom — but freedom comes with responsibility. Taxes can get messy when you split your life between Canada and abroad, but with the right London-based CPA handling your taxes and accounting, you can focus on enjoying the sun.
If you’re dreaming of living abroad, ask yourself:
Am I clear on my Canadian residency status?
Do I know how treaties affect me?
Have I structured my corporation, pensions, and investments to save taxes?
Next Step: Book a complimentary consultation with our CPA firm in London, Ontario. We’ll help you avoid double taxation, reduce departure tax, and structure your corporation for maximum tax savings.
