Not easy to navigate if you are a Quebec immigrant. In addition to getting used to a different country, you also have to get used to a new financial system.
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Bank accounts, loans, savings, taxes, retirement… This little guide will help you clarify some basic concepts.
Open a bank account
One of the first things to do is to open a bank account so that you can transfer funds and have your money at your disposal as soon as you arrive. Some financial institutions also allow you to open one from abroad. This is the case of Desjardins, which also has a team dedicated exclusively to newcomers and cultural communities.
Éva Loret, Account Manager on this team, emphasizes that it is very important to understand the difference between a debit card – which you use to make purchases that are immediately debited from your account – and a credit card. The latter allows you to shop in stores or online, rent a car, book a hotel room, etc.
The amount spent is not due immediately, but after a grace period of 21 days. Only a minimum payment is required when the bill is due (5% of the balance for new credit cards). It is best to always pay the full balance, otherwise interest, usually 19.99%, will be charged daily on the full balance, even if you have paid part of it.
A credit card can also be used for cash advances, but the interest is higher and calculated differently than when shopping.
Several major retailers also offer their own credit cards. These “loyalty cards” often have very high interest rates (30%).
Do your tax return
Éva Loret mentions that newcomers have to file their tax returns in Canada even if they haven’t worked and don’t have to pay taxes. “This will trigger the right to contribute to the TFSA and RRSP in particular, but also to receive certain allowances, GST credits, solidarity tax credits, etc. “, She says.
You are entitled to the same credits and deductions as all Canadian citizens, but some of these, such as the personal base amount, are granted in proportion to the time you have spent in the country during the fiscal year.
Did your children go to daycare? In this case, you can claim the reimbursable childcare tax credit.
“You must also declare your overseas income and provide your personal statement of overseas assets from the second year of your residency in Québec if it exceeds $100,000,” explains Éva Loret.
Create a credit history
Credit history is essential if one wants access to credit and property. Your payment habits are recorded on your personal credit report at two agencies, Equifax and TransUnion, and you are assigned a score.
This file is consulted by lenders every time you apply for a credit card, loan, line of credit, etc. “Once you arrive, you need to develop good payment habits. If you have a credit card, use it to pay for some purchases and bills on a regular basis, and pay off all balances every month, build a good history over time,” the account manager recommends.
Plan for education, retirement and buying a property
It is possible to set aside money for your children’s post-secondary education in a Registered Education Saving Plan (RESP). Government grants and a Canada Learning Bond also contribute to the money you save. These amounts accumulate tax-free and are hardly or not at all taxable upon withdrawal.
To plan for retirement, the Registered Retirement Savings Plan (RRSP) is a good tool that allows you to save tax-free. The contributions made during the financial year reduce the taxable income and thus the tax to be paid by the same amount.
The Tax-Free Savings Account (TFSA) is another great savings tool that increases savings tax-free while keeping funds accessible.
Do you want to buy a house? If you’ve contributed to your RRSP, you can withdraw up to $35,000 through the Home Buyers’ Plan (HBP). The Tax-Exempt First Home Purchase Savings Account (TFSAP) allows you to accumulate up to $40,000 tax-free and tax-deductible.
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