Settling in to a new home country can mean learning and getting adjusted to a lot of new things – new weather, new customs, new job, and of course, understanding the financial system in Canada. This includes day-to-day banking, insurance, taxation, planning for children’s higher education, investments, retirement planning, and more.
5 important things to know about managing your finances in Canada:
1. It Starts With Credit
Building credit history is a key step to starting a new life in Canada. Your credit history is kept on file by Credit Reporting Agencies, who track how you use credit products (such as credit cards and loans) and pay your bills. This information is used to create your Credit Report and Credit Score. Poor Credit History, could make it harder for you to get a credit card or a loan. You could have to pay more to borrow money. It could even affect your ability to rent housing or get hired for a job.
2. Choose The Right Bank Account
Speak with your financial institution about choosing the right account based on your expected transaction pattern and average monthly balance to help save money on service fees.
3. Entitlements To Government Benefits And Credits
Talk to your accountant to find out if you are eligible to receive the Government of Canada tax credits like the Canada Child Tax Benefit, the Universal Child Care Benefit, and the Goods And Services/Harmonized Sales Tax (GST/HST) credit.
4. First Tax Return
Even if you have not received income in the year, you have to file a tax return so that the Canada Revenue Agency can decide if you are eligible for government tax credits and benefits such as the Canada Child tax benefit. Find a good accountant.
5. Tax-Free Savings
In Canada, there are many ways to help you save money to reach your goals. You can:
- Save money in a Tax-Free Savings Account (TFSA)
- Save for your retirement by investing in a Registered Retirement Savings Plan (RRSP)
- Save money for your children’s education with a Registered Education Savings Plan (RESP)
Talk to your financial advisor and accountant about these savings.