Toronto to Los Angeles: The RRSP Addback and the Entertainment Corridor

Toronto's film, television, and music industries feed Los Angeles's, and its tech and finance sectors send talent to the city's growing technology hubs. The move is a small rate cut: Ontario's combined top rate of about 53.5% becomes about 50.3% in California. The planning is about the RRSP, the pre-departure gain realization, and the Toronto home.

Key takeaways

• Ontario's roughly 53.5% top rate, including the provincial surtax, sets the departure tax. On a $300,000 unrealized gain, about $80,000.
• California's combined top rate is about 50.3%; capital gains at ordinary rates.
• California does not follow the treaty on RRSPs, and the City of Los Angeles taxes freelancers' gross receipts.
• 13% HST becomes 9.5% sales tax in most of Los Angeles County.
• OHIP ends on permanent departure. Keeping the Toronto home means NR6, Section 216, and the Vacant Home Tax if empty.

The Ontario departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the departure date. Ontario 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. Realizing gains before departure at Ontario's half inclusion is often cheaper than carrying them into California. The Toronto home: sell it, rent it under NR6 and Section 216, or face the Vacant Home Tax.

Los Angeles's side

Graduated state rates to 12.3% plus a 1% surcharge above $1 million, for a combined federal and state top rate near 50.3%; capital gains taxed as ordinary income; 9.5% sales tax in most of Los Angeles County, up to 10.25% in some cities; Proposition 13 property tax at about 1.1% of purchase price with a 2% annual cap; no estate tax; aggressive residency audits; community property. The City of Los Angeles also levies a gross-receipts business tax that applies to freelancers and independent contractors from the first dollar of revenue earned in the city.

The RRSP in California

Federally deferred under Article XVIII of the treaty. California does not conform: the Franchise Tax Board taxes the interest, dividends, and realized gains inside the account each year. Before departure, restructure toward growth assets that produce little annual income, draw the account down while still a Canadian resident, or accept the annual inclusion and track California basis.

Freelancers and equity

Entertainment work is often contract-based; Los Angeles's gross-receipts business tax applies from the first dollar earned in the city. RSUs vesting after the move are split by working days between Canada, US federal, and California.

Who makes this move

Toronto film and television professionals to the Los Angeles studios and streamers, Ontario musicians and performers to the entertainment industry, Toronto tech workers to Los Angeles's technology hubs, and Bay Street finance professionals to Los Angeles's asset managers.

Worked example

A Toronto television producer moves to Los Angeles on July 1 with $300,000 of unrealized gain in a non-registered account, $500,000 in an RRSP producing about $15,000 a year of income, and a Toronto house sold in the departure year.

• Departure tax. $300,000 gain, $150,000 taxable, at about 53.5%: roughly $80,000. Cheaper than California's ordinary-rate treatment later.
• RRSP. Federally deferred. California taxes the $15,000 annual income; restructuring reduces it.
• House. Sold as a resident under the principal residence exemption.
• Los Angeles. Combined top rate about 50.3%. HST 13% becomes sales tax 9.5%.

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

California does not conform to federal tax treaty provisions; income excluded from federal income under a treaty may be taxable by California. — California Franchise Tax Board, Publication 1031, Guidelines for Determining Resident Status, https://www.ftb.ca.gov/forms/2025/2025-1031-publication.pdf

There are 5 Ontario income tax brackets and 5 corresponding tax rates. — Government of Ontario, Personal income tax, https://data.ontario.ca/dataset/personal-income-tax-rates-and-credits

Practitioner note

Toronto-to-Los Angeles files have a specific order of operations: RRSP restructuring, then gain realization, then the departure date, then the OHIP end date, then the California residency start. We build the timeline backward from the job start date.

See also: Weighing Florida instead? See the Canada-to-Florida guide, or the same city's Toronto to Miami guide.

Next step

Fairlight prepares the Ontario departure return, the RRSP restructuring, and the first-year federal and California returns for Los Angeles clients. See cross-border pricing or book a call.