New to Canada: how money, credit and taxes work here

In Canada, lenders keep a record of how you borrow and repay money. That record is called your credit report, and it is turned into a number called a credit score. The score runs from 300 to 900. Above about 660 is good, above 760 is excellent.

Your credit history does not travel with you. Even if you had perfect credit in your home country, in Canada you start with no history at all. This is normal. It usually takes 6 to 12 months of activity before you have a usable score.

The score is built from five things: paying on time (most important), how much of your credit limit you use, how long you have had credit, how often you apply for new credit, and the mix of credit types you have.

Two simple rules will build a good score fast. First, always pay at least the minimum before the due date — one late payment can stay on your report for six years. Second, keep your card balance below 30% of the limit. If your limit is $1,000, try not to owe more than $300 when the statement is issued.

To start, ask your bank for a secured credit card. You give the bank a deposit (often $500) and they give you a card with that limit. Use it for one small monthly bill, pay it in full, and after about a year you can move to a normal card. You can check your report free at Equifax Canada and TransUnion Canada. Checking your own report never lowers your score.

A bank is a company owned by shareholders. The big ones are RBC, TD, Scotiabank, BMO, CIBC and National Bank. They have branches and machines everywhere, good apps, and services in many languages. Deposits are protected by CDIC up to $100,000 per category.

A credit union is owned by its members — that means by its customers, including you. Examples are Vancity, Coast Capital, Servus, Meridian and Desjardins in Quebec. They often charge lower fees, pay a bit more interest on savings, and are more willing to say yes to someone with no Canadian credit history. Deposits are protected by a provincial insurance plan instead of CDIC, and in some provinces that protection has no dollar limit.

Neither is 'better'. A practical approach many newcomers use: a big bank for everyday banking and travel, and a credit union for a loan or mortgage where the bank says no.

Most banks offer a free 'newcomer package' for your first year — no monthly fee, a free credit card, and sometimes a safety deposit box. Ask for it by name. Do not accept an ordinary account with a $16.95 monthly fee when a free version exists.

A chequing account is for daily money: your pay goes in, your rent and bills go out. It pays almost no interest. Watch the monthly fee and the number of free transactions.

A savings account holds money you are not spending. It pays interest. A high-interest savings account (HISA) at an online bank usually pays much more than a big bank's regular savings account.

A TFSA (Tax-Free Savings Account) is not a product — it is a tax shelter you put savings or investments inside. Money grows tax-free and you can take it out any time. You get room starting the year you become a Canadian resident and are 18 or older.

An RRSP (Registered Retirement Savings Plan) lowers the income tax you pay this year, but you pay tax when you take money out in retirement. You need Canadian earned income first to get RRSP room.

An FHSA (First Home Savings Account) is for buying your first home. It cuts your tax bill now and the withdrawal for a home is tax-free later. If you plan to buy a home in Canada, open one.

A cheque is a paper instruction to pay someone. You still need them sometimes, usually for rent or a damage deposit. Write the date, the person's full name, the amount in numbers and in words, and sign it. A cheque can take up to five business days to clear, and money may show in your balance before it is really yours — if the cheque bounces later, the bank takes it back.

A void cheque is a blank cheque with the word VOID written across it. Employers and landlords ask for it to get your account numbers. If you have no paper cheques, your bank app can produce a 'direct deposit form' that does the same job.

Direct deposit means money is put straight into your account — your pay, your tax refund, your Canada Child Benefit. It is free, fast and safe. Set it up with your employer and with the CRA.

Interac e-Transfer is how Canadians send money to each other. You send it using the person's email address or phone number. Most banks include some for free. Turn on Autodeposit so money lands automatically and no password is needed.

Important safety rule: no bank, no government office and no employer will ever ask you to send an e-Transfer to fix a problem or to pay a fee. An e-Transfer is almost impossible to reverse. If someone pressures you to send one quickly, it is a scam.

Always compare the APR (annual percentage rate), not the monthly payment. A seller can make any payment look small by stretching the loan over more years — you then pay far more interest in total.

Rough guide to what is normal in Canada: a mortgage around 4%–6%; a car loan from a bank around 7%–10%; a personal loan or line of credit around 8%–14%; a credit card around 20%–23%.

Anything above that is expensive money. Payday loans can cost the equivalent of several hundred percent a year. 'No credit check, guaranteed approval' car lots often charge 25%–35%. Rent-to-own furniture and electronics stores can cost two or three times the item's real price. Avoid all of these if you possibly can — a small secured credit card and a credit union loan are far cheaper ways to build credit.

At a car dealership, agree on the total price of the car first, and only then discuss financing. Say no to add-ons you did not ask for: extended warranty, rust protection, paint protection, life insurance on the loan. Ask for the total amount you will pay over the whole loan, in dollars. Never sign a blank or partly filled form, and take the contract home to read it if you feel rushed.

Other warning signs: a fee demanded before a loan is given, a promise to 'repair your credit' for a fee, an immigration or job offer that requires payment, and anyone who asks for payment in gift cards or cryptocurrency. All are scams.

You are allowed to say 'I need to think about it' and walk away. Real lenders and honest dealers will still be there tomorrow.

Canada taxes your income in layers, called brackets. Only the income inside each layer is taxed at that layer's rate, so earning a dollar more never leaves you with less money overall. You pay both a federal rate and a provincial rate.

If you have a job, tax is taken off every pay automatically, along with CPP (the public pension) and EI (employment insurance). Your employer sends you a T4 slip early each year showing the totals.

Everyone files a tax return once a year, by April 30, for the previous calendar year. You file even if you earned nothing, because filing is what triggers benefits: the GST/HST credit, the Canada Child Benefit, provincial credits, and rent or property tax credits.

In your first year you file as a resident from the date you arrived, and you report your world income only from that date. Keep your date of entry — the CRA will ask for it.

Free tax clinics run by community organizations will file for you if your income is modest. They are listed on the CRA website under the Community Volunteer Income Tax Program. Quebec residents file two returns: one federal and one with Revenu Québec.

Canada adds sales tax at the till, not on the price tag. A $10 item is never $10 at the register. Expect roughly 5% to 15% more depending on your province.

Alberta and the territories add only the 5% federal GST. British Columbia, Saskatchewan and Manitoba add GST plus a provincial PST. Ontario and the Atlantic provinces charge a single combined HST of 13% or 15%. Quebec charges GST plus QST, about 14.975% together.

Basic groceries, rent, most medical services and children's items are usually not taxed. Restaurant meals, clothing, electronics and services usually are. The sales tax calculator on this site shows the exact total for your province.

Tipping is separate from tax and is expected in Canada: about 15%–20% at a sit-down restaurant, and something for taxis, hairdressers and food delivery. It is calculated on the pre-tax amount.

Get your SIN (Social Insurance Number) first. You cannot legally be paid without it. It is free from Service Canada — never pay anyone to get one, and never share it with a landlord or on a job site.

Apply for your provincial health card straight away. Some provinces cover you from day one; others make you wait up to three months, so buy private health insurance to cover the gap.

Renting: a landlord may ask for a deposit, but the rules differ by province, and in Ontario a damage deposit is not allowed at all. Always get a written lease and check your provincial tenant board's website — it will tell you exactly what a landlord can and cannot do.

Driving: your foreign licence is usually valid for 60 to 90 days. Ask your provincial licensing office whether Canada has an exchange agreement with your country. If not, you must take the tests. Bring a letter from your old insurer showing years of claim-free driving — it can cut your Canadian car insurance premium a lot.

Your foreign qualifications may need assessment (WES is common) and some professions require a licence from a provincial regulator. Start that process early; it often takes months.

Free help exists: settlement agencies funded by the government offer language classes, job search help and financial coaching at no cost. Search 'newcomer settlement services' plus your city.