Finances - What you need to know

I’m not a expert and the following information in not financial advice. However, I would like to share these tips and terminology as they would have been good for me to know on arrival.

Banking

Canada has a large and stable financial system dominated by a few major Canadian banks, a lesser role played by a couple of international banks and some smaller regional banks.
Here are a few of the most well-known and common banks you’ll find in Vancouver:
- HSBC: a large multinational bank with a heavy presence in B.C. Has a generous $500 welcome bonus. It is easier to qualify for premier status than in other countries which will give you easy access to free international transfers. Suits those with professional jobs and significant savings.
- CIBC: fantastic customer service and an easy streamlined application process. A $300 'Welcome to Canada' package and excellent mobile banking. Plenty of branches nationwide. Suits those on working holiday visas. May be able to give you a credit card with a limited balance.
- RBC: large bank with dual USD/CAD ATMs and USD accounts, heavy Caribbean presence for holidays but difficult to get a credit card.
- TD: mainly East coast Canadian bank with a $150 welcome bonus.
- Scotiabank: has reduced fees for global transfers but people have told me their customer service isn't particularly memorable.
Look out for newcomer arrivals bonuses. These require either a certain amount of savings or income over a period but can be a pretty good way to get that early cash boost.
Most credit cards offer some sort of “cash back”, where at the end of a period (often a year) you can expect to get back 1-3% of what you have spent on the card in a cash bonus.
Void cheque - this is a term you will need to get used to. Basically, a void cheque is a cheque issued by your bank which is void and includes your bank details on it (it will either be an actual cheque or a form). This will often be required by employers to pay you by direct deposit so it’s advisable to ask your bank for one of these early and make an electronic copy.
Credit score - North America has a thing with credit scores. Make sure you pay all of your bills on time and keep an eye out on this score. The CIBC app offers this for free but it may also be possible to sign up for a free report from sites like https://www.creditkarma.ca/

Taxes

The tax system in British Columbia and Canada in general bears many similarities with most western countries. Employers will generally withhold the relevant tax from each pay cheque that you receive and you will complete a tax return at the end of the financial year where your total tax burden is calculated - if you only earned income from one source you are likely to receive a refund but if you have multiple sources of income there is the chance that you may need to pay a little more in.
The tax year in Canada follows the calendar year, so January to December, which is convenient. It is the same as the USA, Singapore and Ireland but different to the UK, India, Australia, New Zealand and South Africa.
In Canada you are charged both Federal and Provincial Tax which is levied together. You only have to file one tax return.
You can find more details on BC and Federal Tax etc here: My Account for Individuals
In Canada, the CRA (Canadian Revenue Authority [Canada’s ATO or HMRC]) will need you to prepare your tax return using third-party software. Make sure you google for a free return from TurboTax or HR Block. You will need to physically mail in your first tax return.
Your employer(s) should provide you a T4 at the end of the year which shows what you have earned, deductions etc. Each employer is required by law to complete a T4 statement of remuneration for the prior year by the last day of February. If you haven't received it or have changed your address - follow this up!

Retirements savings

An RRSP is the Canadian equivalent of Australian superannuation or US 401k, a private savings scheme intended to help you pay for your retirement. Unlike in Australia, but in common with many other countries, however, contributions to an RRSP are not compulsory and are not offered by all employers.
If there is no RRSP offered by your employer, you can still set up your own with many banks and financial institutions.
Contributions made to a RRSP may help reduce your tax bill at the end of the year as they are not included in your taxable income. However, given that these contributions can only be withdrawn subject to penalties and taxation, if you are not intending to live in Canada until your retirement, it is worth considering how much money you want to contribute into one.
Some employers offer “matching” where they will match a certain amount of the contribution that you make to an employee-sponsored RRSP. This is effectively free money if you make an RRSP contribution but again, consider the implications of not being able to withdraw these funds without penalties before tying any money up in one.
CPP is the Government run Pension Plan. All workers who contribute to it over their careers will be entitled to some amount upon retirement depending on the amount contributed. Your employer will deduct a certain amount from your pay each period and pay this into the CPP. That said, unlike an RRSP you do not have “private ownership” of the amount that you are entitled to and there is no way to access this money if you return home.
TFSA accounts are another interesting feature of the Canadian tax system that you may hear about. They are exactly what the name suggests, Tax Free Savings Accounts. A TFSA is an account that allows Canadians to deposit up to the TFSA contribution amounts (for 2020 this is $6,000) and use that money for investments and savings. The benefits of this account is that all money earned within the account through dividends, interests and capital gains are completely tax free and can be withdrawn at any time. Great right! The drawback for us foreigners is that depending on where you come from, your home jurisdiction may still include amounts earned in the TFSA taxable and levy tax on them when you do your taxes back home. For this reason, I would only really think these accounts are useful for people who intend to stay in Canada long term and will not be paying taxes in their home jurisdiction going forward.
One last thing you should know about is EI, employment insurance. If you have an employer, a small percentage of your pay will be paid to the government for EI. If you lose your job (not quit) you may be entitled to a payment from the government to help you until you get another job. The good news is that even temporary work permit holders are entitled to these payments. In the Coronavirus pandemic there were a number of changes in eligibility and rules so this is worth looking into if you lose or have lost your job.
The Canadian government has great resources on all of these various plans here:

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