No, the toolbox will never try to understand your equations, and then infer what the variables mean to you, and then perform substitutions that you think right.
A problem is that even though you think of x and y as living in a cartesian coordinate system, to syms, it just sees variables. There is no understanding there, at least not yet. Maybe in the future. And certainly, it cannot automatically perform transformations like that.
In SOME circumstances, you can get rewrite to simplify some expressions, but that often just takes just trial and error in my experience. Or you can use simplify to give you many different alternate simplifications, then picking the one you like.
Of course, if you want it to make the transformations you are discussing here, you can do things like this:
simplify(subs(t,[x,y],[r*cos(theta),r*sin(theta)]))
ans = But here I have explicitly told it to do the transformations you seem to want.
Getting symbolic algebra tools to do as you wish can sometimes be a skill, sometimes an art, and sometimes a bit of magic is need to get the result you wish to see.