Welcome to Canada! Whether you’ve chosen to relocate here for local politics, business opportunities, or because you fallen in love with the country’s natural beauty or bustling cities, we’re glad you’re here. Now, before you get too comfortable with some poutine or a bag of All-Dressed chips and fall in love with a local hockey team, take a second to learn about the financial implications of moving to Canada, specifically about banking and taxes.
Banking in Canada
One of the first things new Canadian citizens may notice as they set up their finances is that there isn’t a local branch of the bank they were using in their home country. While the process of setting up new accounts at a different bank sounds like a hassle, the Big Five banks of Canada have dedicated departments for getting new residents up to financial speed. These departments understand the needs of new immigrants and present financial solutions to make their transitions easier.
Each of the Big Five banks offer different incentives to new residents. If you can prove that you’re a permanent resident, international student, or foreign worker who has been in the country for less than three years, you can get started with an account and start building your credit history.
Canadian credit history
When you move to Canada, you can bring lots of things with you, but not your pre-existing credit history. This is a frustrating fact for many new residents, because without local credit history, they can’t be approved for large purchases, loans, or mortgages. One of the best ways to build Canadian credit is to apply for a credit card, use it wisely, and pay it off in full every month.
Another thing to note is that if you have a credit card through a bank that doesn’t exist in Canada, you may not be able to redeem your rewards points in Canada. Most rewards that are connected to credit cards are only valid within the country they were originally issued in.
If you’re sending money across borders, even to the US, it’s important to note that checks can take longer to verify and process and wire transfers may be a little slower. But if you still maintain a US bank account, or regularly transfer American currency into Canada, most banks in the Great White North will offer accounts that hold US dollars. When the exchange rate is favorable, you’ll be able to transfer your US dollars into Canadian dollars.
Before you make the move, think about your pre-arrival strategy.
It’s also important to note that in Canada, a check will usually clear in one day, but may take up to five days in the US.
Other facts about banking in Canada
While there is certainly a learning curve for acclimating to a new country and its banking practices, here are some quick facts to get you up to speed:
- The types of bank accounts available to Canadian residents may differ from what you’re used to, so speak with a representative to find out how to make your money work for you.
- Over 99% of Canadian adults have at least one account at a financial institution.
- Canadians place a great deal of trust in their banks; over 87% of adults trust their banks to protect their personal information. Nearly 80% of Canadians prefer the convenience of digital banking.
Taxes in Canada
Once you get your bank accounts set up and all your money is where you need it to be, it’s time to start thinking about everyone’s favorite financial topic: taxes. While the idea of taxes is guaranteed to make people from all over the world groan, it’s important to understand how tax laws in Canada can impact you and how you’re going to plan for the future.
The 183-day tax rule
When you move to Canada you may need to become a “deemed citizen” for tax purposes. This is different from actual citizenship and landed immigrant status. In Canada, residents pay taxes on all their global income, no matter where it was earned. So, if you have a business interest in India and another in China, you may end up paying taxes on both if you’re considered a deemed citizen in Canada.
You become a deemed citizen if you spend more than half the year – or 183 days – living in Canada. But you can also be a deemed citizen if you remain in Canada for less than 183 days if you own real estate in Canada. Talk to your financial advisor about how this designation may apply to you, so you’re not taken by surprise when it comes time to pay your taxes.
Share the wealth
Or more appropriately: share information about the wealth. Many new residents fear that they’ll be taxed upon arrival, but in fact, the opposite is true. This information allows the government to create a baseline for you and your wealth when you enter the country. You’ll only be taxed when or if your assets appreciate. If you fail to disclose your assets, you may be taxed on it as though you purchased it while living in Canada and may even be audited.
Moving to Canada is an incredible idea – the mountains are beautiful, the coastlines will take your breath away, and the banks and financial services are well-regarded around the world. If you’re planning to maintain wealth in another country or send remittance to family, visit our website or download Western Union’s mobile app.