Toronto to Orlando: Simulation Tech, Corporate Relocation, and the Ontario Surtax You Leave Behind

Toronto to Orlando is a working corridor. Central Florida's simulation and training cluster, its hospitality technology employers, Lake Nona's medical and research campus, and a steady flow of corporate relocations pull GTA tech and finance workers who are choosing Orlando's cost of living over Miami's. The rate drop is the same as Miami's (Ontario's combined top rate is about 53.5%; Florida's state income tax is zero), and so is the shape of the file: the departure tax, the Toronto home, and the equity.

Key takeaways

• Ontario's top rate of about 53.5%, including the provincial surtax, sets the departure tax. On a $300,000 unrealized gain, roughly $80,000.
• Keeping the Toronto home means NR6, Section 216, and Toronto's Vacant Home Tax if it sits empty.
• 13% HST becomes 6.5% sales tax in Orange County.
• OHIP ends on permanent departure.
• Orlando has no city income tax; Florida has no state income tax.

Leaving Ontario

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property, valued 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.

The Ontario surtax layers onto provincial tax above two thresholds and is why the combined top rate reaches about 53.5%. Pre-departure loss harvesting and the choice of departure month are worth real money at this rate.

The Toronto home

Sell before or in the departure year and the principal residence exemption covers the gain. Rent it and you file NR6 before the first rent payment (so withholding is on net rather than 25% of gross) and a Section 216 return every year; Section 116 clearance applies when you sell. Leave it empty and Toronto's Vacant Home Tax applies to properties unoccupied for more than six months, and the federal Underused Housing Tax can apply to a non-resident, non-citizen owner.

Equity

RSUs and options that vest after the move are split between Canada and the US by working days over the vesting period. Both payrolls may withhold on the full amount. Tell your employer the departure date in writing and expect to recover the over-withholding on the first-year returns.

Orlando's side

No state income tax, no city income tax, no estate tax. Sales tax is 6.5% in Orange County (6% state plus 0.5% county surtax). Property tax is higher than Toronto's on a like-for-like home; homestead (own and occupy as your permanent residence on January 1, apply by March 1) takes up to $50,000 off assessed value and caps annual increases at 3%. Documentary stamp tax on a purchase deed is 0.7%.

The RRSP is untouched on departure and tax-deferred in the US under Article XVIII of the treaty, with no Florida layer to disregard it. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, with a US foreign tax credit.

Worked example

A Toronto software manager relocating to a hospitality technology employer in Orlando leaves on May 31 with $180,000 of unrealized gain in a non-registered account, $550,000 in RRSPs, RSUs vesting in September, and a Leslieville house kept and rented.

• Departure tax. $180,000 gain, $90,000 taxable, at about 53.5%: roughly $48,000.
• House. NR6 filed; Section 216 return annually; Section 116 on eventual sale. Not empty, so no Vacant Home Tax.
• RSUs. September vest split by U.S. and Canadian working days.
• RRSP. No tax on departure; periodic withdrawals later at 15%.
• Orlando. No state or city income tax. HST 13% becomes sales tax 6.5%.

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

"You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that." — Internal Revenue Service, Substantial Presence Test, https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

"No tax upon estates or inheritances or upon the income of natural persons who are residents or citizens of the state shall be levied by the state, or under its authority." — Florida Constitution, Article VII, Section 5(a), http://www.leg.state.fl.us/statutes/index.cfm?submenu=3#A7S05

Practitioner note

The rented Toronto house is the item that generates the most correspondence over the following years. An NR6 that is filed late leaves the tenant or agent liable for 25% of gross rent, and a missed Section 216 return forfeits the net-rent basis for that year. We calendar both from the departure date.

See also: Toronto to Miami and Toronto to Tampa.

Next step

Fairlight prepares the Ontario departure return, the rental filings, and the first-year US return for Central Florida clients. See cross-border pricing or book a call.