Establishing yourself financially in Canada: what you need to know

How do you open a bank account in Canada?

One of the first things to do when you move to Canada is open a bank account. For this you have two options: you can wait to arrive or you can open an account from your country of origin.

Some banks allow you to open an account from abroad by phone or teleconference. This is an option to consider, since in this case you can transfer funds in advance, meaning you can devote your time and attention to other things when you arrive.

Whatever option you choose, to open a bank account you will need the following in hand:

• Your passport
• An official document from a Canadian government institution attesting to your immigration status, such as a visa, work permit, study permit, etc.

Some banks might request other information, such as your future address in Canada, the address of your employer or educational institution, or your taxpayer identification number from your country of origin. Be sure to have as much information as possible at your disposal when making your request.

Also, inquire with the bank that you have chosen about specific services available to newcomers. You could, for example, qualify for a temporary reduction in your fees or other advantages.

How do you transfer your money to Canada?

Once you have opened your bank account, you can transfer your money to Canada. Here are your options:

• International bank transfer: You can make a transfer directly to your bank account. This option generally incurs fees on issue (origin bank fees) and receipt (destination bank fees), in addition to the exchange rate.
• Traditional money transfer services: Some transfer service companies, such as WorldRemit, facilitate quick money transfers to Canada. These services can be quite expensive.
• Online money transfer services: There are several secure online transfer services available, such as PayPal or Interac. These options can be practical, fast and affordable.

Whatever method you choose, be sure to deal with a reputable and secure company, especially if you plan to use an online service. Assess the security measures that these services have implemented and check the client reviews before proceeding with a transfer.

What are the main expenses to expect when living in Canada (housing, education, transportation, etc.)?

Living expenses in Canada can vary considerably from place to place. There are differences in both the costs associated with housing and the prices of goods and services. It can be difficult, as a newcomer, to determine how much money you need to dedicate to each budget category.

Here is an overview of the main expenses to expect:

• Housing: For renters, basic living expenses generally include rent, electricity and home insurance. If you are an owner, you must budget for mortgage payments, municipal taxes, electricity, insurance and home maintenance. Please note that housing prices in big cities like Vancouver, Toronto and Montreal are often much higher than in smaller cities.
• Food: Food expenses will vary according to the size and needs of your family. After rent, this will likely be your largest expense.
• Phone and Internet: Phone and Internet costs depend on the provider and plan you choose. These services tend to be quite expensive in Canada, given the large territory to cover.
• Education: Tuition fees may vary depending on the institution you or your children attend.
• Transportation: If you purchase or lease a car, you will need to pay for auto insurance, registration fees, gas and maintenance. As for public transport, monthly passes for municipal networks usually cost around $100.
• Health care: While Canada’s health care system offers free basic coverage, some expenses are not included (e.g., prescription drugs, vision care, dental care and paramedical care). You will need to budget for or take out insurance to cover these expenses.
• Leisure: Do not forget to make space in your budget for treating yourself from time to time!

For more information, go to the Government of Canada’s Prepare financially page.

What taxes do Canadian residents pay?

In Canada, income taxes are payable at both the federal and provincial levels. Canada’s tax rate is progressive: the higher your income, the higher your taxes.

• Federal tax brackets are the same for all taxpayers. Provincial taxes, however, differ from province to province. Your total tax rate will therefore depend on your province of residence.
• The same goes for sales taxes, which include a fixed federal tax and a variable provincial tax.
• Municipal taxes applied to homeowners vary from city to city.

How will you file your income tax return in Canada?

Income tax returns must be filed annually.

• Every fiscal year ends on December 31.
• Tax returns must be submitted on April 30 at the latest.
• Tax-filing season begins in February following the end of the fiscal year. For example, taxpayers will file their 2024 tax returns in February, March or April of 2025.

All Canadian taxpayers must file their tax returns with the Canada Revenue Agency (CRA). In Quebec, a return must also be filed with Revenu Québec.

To file your tax returns, you can hire a professional or use authorized software.

To learn more about your options, go to the Government of Canada’s Ways to do your taxes page.

How does credit work in Canada?

In Canada, your credit report is automatically created when you first apply for a loan at a financial institution. You will then receive a credit rating, which is calculated based on your credit history and will be higher if you manage your debts responsibly.

Establishing good credit in Canada is important because it will give you easier access to products and services such as:

• Loans
• Renting an apartment (finding a home)
• Purchasing insurance

To learn more about how credit works in Canada, go to the Government of Canada’s Credit report and score basics page.

How do pensions and retirement savings plans work in Canada?

There are multiple types of retirement savings plans available in Canada. Some are government-operated, while others are private.

Here is an overview of government plans:

• Old Age Security (OAS): This pension pays monthly benefits to Canadians over the age of 65. These payments are taxable, and their amounts depend on your income and the amount of time you have lived in Canada or certain other countries after the age of 18.
• Canada Pension Plan (CPP): This plan pays monthly taxable benefits to residents aged 60 and over and who have contributed at least once to the CPP.
• Québec Pension Plan (QPP): This plan offers residents of Quebec basic financial protection for retirement or in the event of disability or death. Available as of age 60, retirement benefits are calculated according to your age and contributions.

As for private plans, your main options include:

• Registered Retirement Savings Plan (RRSP): Many financial institutions offer this plan, which allows you to make tax-deductible contributions toward your retirement savings. The maximum annual limit for tax-deductible contributions depends on your income and the tax year.
• Registered Retirement Income Fund (RRIF): At retirement, your RRSP must be converted to an RRIF. This plan allows you to periodically withdraw money according to your needs, while continuing to grow your capital.
• Employer-sponsored pension plans: There are several kinds of registered plans offered by employers that can replace a significant portion of your income in retirement.

All these options can be combined with other types of savings, registered or not.

What savings and investment options are available in Canada for newcomers?

There are many. It could be interesting to start investing in registered plans, since they allow you to save money tax-free (in Canada).

Whether you are a permanent resident, landed immigrant, foreign worker or student, you have access to these plans. These include the RRSP, but also:

• Tax-Free Savings Account (TFSA): A TFSA allows you to invest in different types of investments. Unlike returns on non-registered savings, those generated by the contributions you make to a TFSA are not taxable upon withdrawal.
  
  There is, however, an annual contribution limit. To learn more about contribution room, visit the TFSA contributions page.
• Registered Education Savings Plan (RESP): An RESP allows you to save for your child’s post-secondary education and can, in some cases, give you access to government grants.

You can also save with non-registered investments. Your returns would however be taxable upon withdrawal.

Please note that most investment products offered by financial institutions, such as investment funds or bonds, can be registered under a TFSA, RRSP or RESP.

Are there resources and programs for financial assistance for newcomers to Canada?

Yes. Many support services are available to help you find a job or accommodations, or with other needs related to your arrival in Canada.

Most free services to which you have access are listed on the Government of Canada website.

What is the best way to plan for my retirement in Canada as a newcomer?

The best way to plan for your retirement and your financial future is to consult an advisor. They will help find the best strategy for you.

Find an advisor