Leaving New Brunswick for the US: Departure Tax, Medicare, and Where Fredericton, Saint John, and Moncton Talent Lands

New Brunswick sends its cybersecurity professionals from Fredericton, its energy and industrial staff from Saint John, and its logistics and customer-operations workers from Moncton to New England, the Southeast, and Texas. The province's combined top rate of about 52.5% and its 15% HST make almost any US destination a large cut, and the departure tax on the way out is among the higher effective rates in Canada.

Key takeaways

• New Brunswick's combined top rate of about 52.5% sets the departure tax. On a $300,000 unrealized gain, about $79,000.
• NB Medicare coverage ends on permanent departure.
• 15% HST becomes state and local sales tax between zero and about 9%.
• The New Brunswick home is excluded from departure tax but brings NR6, Section 216, and eventually Section 116 if kept.
• The RRSP is untouched and stays tax-deferred under the treaty.

The New Brunswick departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the departure date. New Brunswick real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 for illiquid assets. At about 52.5%, the effective exit rate on gains at the top bracket is roughly 26 cents per dollar.

New Brunswick-specific items:

• NB Medicare. Coverage ends when you leave the province permanently. Confirm the date and arrange US coverage.
• Property. Excluded from departure tax. New Brunswick assesses non-owner-occupied residential property at a higher rate, which matters if you keep and rent your home under NR6 and Section 216; Section 116 applies to a later sale as a non-resident.
• Private corporations. A New Brunswick professional or consulting corporation is deemed sold, loses CCPC status, and becomes a US controlled foreign corporation; wind it up before departure.

The US side

• Maine and Massachusetts (the New England corridor): Maine's top rate is 7.15% with a large pension deduction; Massachusetts is a flat 5% with a 4% surtax above $1.1 million.
• Texas and Florida: no state income tax.
• North Carolina (Charlotte, Raleigh): a flat 3.99% and falling.

The federal return is the same everywhere: dual-status in the arrival year, RRSP treaty deferral, FBAR on Canadian accounts, and Form 8938 above thresholds.

Worked example

A Fredericton cybersecurity engineer moves to Austin on June 30 with $150,000 of unrealized gain in a non-registered account, $350,000 in an RRSP, and a Fredericton home sold in the departure year.

• Departure tax. $150,000 gain, $75,000 taxable, at about 52.5%: roughly $39,000.
• Home. Sold as a resident under the principal residence exemption.
• RRSP. No tax on departure; periodic withdrawals later at 15%.
• Austin. No state income tax. HST 15% becomes sales tax 8.25%.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

"19.5% over $176,756." — Government of New Brunswick, Personal Income Tax, https://www2.gnb.ca/content/gnb/en/departments/finance/taxes/personal.html

Practitioner note

New Brunswick files are among the more expensive exits per dollar of gain, and the 15% HST drop is among the largest consumption tax improvements of any province. The Fredericton cybersecurity stream often carries a personal corporation that must be dealt with before departure.

See also: Browse every corridor by city, province, and state.

Next step

Fairlight prepares the New Brunswick departure return, the corporate wind-up, and the first-year US return. See cross-border pricing or book a call.