Vancouver to San Diego: Biotech Pay, the RRSP, and California's Annual Inclusion

San Diego's biotech cluster, its wireless and technology sector, and its defence contractors recruit Vancouver's life sciences researchers and engineers. The move is a small rate cut: BC's combined top rate of about 53.5% becomes about 50.3% in California, with the RRSP taxed annually. The Vancouver home left behind is the planning item.

Key takeaways

• BC's roughly 53.5% top rate 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.
• BC's 12% combined GST and PST becomes 7.75% sales tax in San Diego.
• A Vancouver home kept empty faces three vacancy taxes. MSP ends on permanent departure.

The BC departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the departure date. BC 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 Vancouver home is excluded, but kept empty it invites BC's Speculation and Vacancy Tax, Vancouver's Empty Homes Tax, and the federal Underused Housing Tax; rent it under NR6 and Section 216, or sell in the departure year. MSP ends on permanent departure.

San Diego's side

Graduated California 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; 7.75% sales tax in the City of San Diego, among the lowest in California; 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 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.

Who makes this move

Vancouver biotech researchers to the Torrey Pines cluster, BC hardware and software engineers to Qualcomm and San Diego's wireless sector, Vancouver defence engineers to the naval and unmanned-systems contractors, and UBC researchers to UC San Diego and the Scripps institutions.

Worked example

A Vancouver biotech scientist moves to San Diego on July 1 with $200,000 of unrealized gain in a non-registered account, $350,000 in an RRSP producing about $10,000 a year of income, and a Vancouver condo sold in the departure year.

• Departure tax. $200,000 gain, $100,000 taxable, at about 53.5%: roughly $53,500. Cheaper than California's ordinary-rate treatment later.
• RRSP. Federally deferred. California taxes the $10,000 annual income; restructuring reduces it.
• Condo. Sold as a resident under the principal residence exemption. No vacancy taxes.
• San Diego. Combined top rate about 50.3%. Sales tax 12% becomes 7.75%.

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

The speculation and vacancy tax is an annual tax based on how owners use residential properties in areas in B.C. affected most by the current housing shortage crisis. — Government of British Columbia, Speculation and vacancy tax, https://www2.gov.bc.ca/gov/content/taxes/speculation-vacancy-tax

Practitioner note

Vancouver-to-San Diego clients often assume the move is tax-neutral and skip planning. The income tax is close to neutral; the RRSP position, the pre-departure gain realization, and the Vancouver condo are not.

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

Next step

Fairlight prepares the BC departure return, the RRSP restructuring, the property decision, and the first-year federal and California returns for San Diego clients. See cross-border pricing or book a call.