Introduction

Over 1.3 million new immigrants settled permanently in Canada from 2016 to 2021. And whether you are a student, a new worker, or a family, moving to Canada can be an exciting adventure. But, it can also pose several difficulties, such as adjusting to the new currency, banking system, tax system, and cultural views about money.

But with the knowledge and tools to make informed decisions about your personal finances and take control of your finances, you can live a fulfilling and prosperous life in your new home. So, let’s get started!

Understanding the Canadian banking system

The Canadian banking system is considered one of the safest and most stable in the world. The Office of the Superintendent of Financial Institutions (OSFI), which establishes regulations for the nation’s banks and financial institutions, regulates it.

The Royal Bank of Canada, Bank of Montreal, Canadian Imperial Bank of Commerce, Toronto-Dominion Bank, Bank of Nova Scotia, and National Bank of Canada are among the largest Canadian banking firms. These banks provide various financial services, such as credit cards, loans, mortgages, checking and savings accounts, and investment accounts.

Luckily, opening a bank account as an immigrant in Canada is a straightforward 3-step process:

1. Choose a bank and make an appointment

Explore many banks in your area to choose the one that provides your needed services. Consider factors like costs, ATM locations, and customer service. Once you’ve shortlisted a bank, call or visit online to make an appointment.

2. Gather your documents

You will need to provide identification documents such as a passport, driver’s license, or permanent resident card. Moreover, you may need to provide proof of address, such as a utility bill or rental agreement. You can learn more about the required documents from the Canada Immigration Website.

3. Bring your initial deposit and fees

To start a checking or savings account, most banks need an initial deposit. Although the sum may change, it is usually around $100. Moreover, be aware of the associated fees before opening an account. Overdraft fees, ATM fees, and monthly maintenance costs are standard fees.

By following these tips, you can open a bank account in Canada and start managing your finances with ease.

How to build a credit history in Canada?

In Canada, credit bureaus such as Equifax and TransUnion collect information on your credit history and use it to create a credit report. Your credit report contains details about your credit cards, loans, credit history, and credit queries.

A solid credit history makes it easier for you to get loans and makes you eligible for better terms and interest rates. It may even assist you in finding a job, renting an apartment, or buying a car. On the other hand, a low credit score might restrict your choices and make it more difficult for you to be given a loan in the future.

Here are some tips for building a credit history in Canada:

1. Get a credit card

Starting to build credit is easy with a credit card. Choose a credit card with a low limit, and use it responsibly. To prevent interest costs and late fees, make complete and timely payments each month.

2. Make loan payments on time

Make your payments on time each month if you have a loan, such as a student loan or a car loan. Your credit score can suffer from late payments.

3. Keep your credit utilization low

Your credit utilization is the ratio of the credit you have available to you to the credit you are actually utilizing. Have a credit usage rate of no more than 30%.

4. Check your credit report regularly

Check your credit report at least once a year to ensure accurate information. Dispute any errors or inaccuracies with the credit bureau.

These suggestions can help you begin establishing a good credit history in Canada. A strong credit score can help you reach your financial objectives, but it requires time and persistence.

Understanding taxes in Canada

The tax system in Canada is progressive, which means that those with higher incomes pay a greater proportion of their income in taxes. The federal, provincial, and territorial taxes in Canada are levied as per an individual’s income for the tax year.

Other taxes, such as the Goods and Services Tax (GST), Harmonized Sales Tax (HST), and property taxes, are in addition to income tax.

In Canada, many tax credits and deductions can assist you in lessening your taxable income and tax burden. Standard tax deductions and credits include:

• Basic personal amount: All Canadian taxpayers are entitled to this non-refundable tax credit, which lowers the amount of taxable income.
• RRSP contributions: Your taxable income can be used to offset contributions to an RRSP, which can help you pay less in taxes overall.
• Childcare expenses: You can be qualified for a tax credit for daycare costs if you have children under the age of sixteen.
• Medical expenses: You can claim a tax credit for some medical costs, including those for prescription medications and dental work.

You must know that having a Social Security Number (SIN) or Tax Identification Number (TIN) is a prerequisite to file taxes in Canada as an immigrant. The SIN is a unique nine-digit number that identifies you for work and government programs. Whereas the TIN is a unique issued by the Canada Revenue Agency (CRA) and is used for tax purposes.

Here are some tips for filing taxes in Canada:

1. Keep accurate records

During the year, keep track of all your earnings, expenses, and receipts since you’ll need these details to file your taxes.

2. Know the deadlines

The majority of people in Canada must file their taxes by April 30. The deadline is June 15 if you or your spouse is self-employed, but any taxes payable are still due by April 30.

3. Use tax software or take help from a professional

You can submit your taxes with the assistance of various tax software tools, or you can employ a qualified tax preparer to help you out.

4. Maximize your deductions and credits

To reduce your tax liability, make sure you utilize all permitted tax deductions and credits.

You can make sure that, as a new immigrant to Canada, you are meeting your tax duties by comprehending the Canadian tax system, being aware of the various tax credits and deductions, and using this filing advice.

Wrapping up

It could be challenging to manage your personal finances, particularly if you’re a new immigrant in Canada. You can start along the path to success and financial freedom using the advice and tactics discussed in this post.

We hope this blog has provided you with valuable knowledge on personal finances. If you need further guidance, our team at GJM & Co. is here to help. Our expert accountants can assist you with personal finance strategies, tax policies, and more to help you better understand and manage your finances.

Should you have any queries or need consultation, Schedule a Call today or write to us at info@gjmco.in.