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Banks & Taxes in Canada

A Comprehensive Guide about Opening a Bank Account and Managing Your Taxes

When moving abroad, especially if you are a working expat, managing finances in Canada is something you will have to do. Finances include things like opening a bank account and understanding the tax system. This section will cover such issues and much more.

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Understanding bank accounts and the tax system in Canada is something you will have to come to grips with when moving to the Great White North, especially if you will be working and earning an income there. As an employed person in Canada, you will be expected to pay your taxes, but Canada has tax treaties with several countries to help you avoid double taxation in Canada and your home country.

From opening a bank account as a non-resident to the best banks in Canada, and even information on the country’s income rate, and how taxes work for those expats who are self-employed or run their own business, this section will enable you to confidently establish and manage your finances in Canada.

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How to Open a Bank Account in Canada

If you are wondering how to open a bank account in Canada as non-residents, this sub-section will explain all you need to know. Your first question might be if you can even open a bank account in Canada. The answer is yes, it is entirely possible for an expat who is not Canadian, nor a resident, to open an account in the Great White North. Keep in mind that with some branches, you may need to physically go to their establishment to open your account; for others, it is entirely possible to do so online. Read more about this below.

The required documents to open a bank account as a non-resident in Canada are pretty basic:

  • Passport
  • A second form of ID (e.g., driver’s license or credit card)
  • Immigration papers
  • Social Insurance Number

Different banks may require different documents, so it’s best to check with your chosen branch for full information.

Open a Bank Account Online for Canadian Non-Residents

With some branches, it is entirely possible to open a bank account even before you arrive. One of the myths of online banking is that it is not safe or secure. In reality, it is quite the opposite. The Canada Deposit Insurance Corporation (CDIC) covers all online deposits. If the online system fails (which is extremely unlikely), you will be covered up to 100,000 CAD (75,242 USD). Investment products (such as bonds, stocks, and mutual funds) however, are not covered.

Setting up a Canadian bank account online is a quick and easy process. Information and detailed instructions on how to do so are typically found on the bank’s website. The typical documents required are:

  • Passport
  • Immigration papers
  • Temporary residence permit, work, or study permit (if applicable)

If you are opening your bank account online, it might be a good idea to contact the bank beforehand in case you have any questions or need help navigating the online process. You can e-mail, call, or even chat online depending on your bank of choice. They will inform you of any additional documents that may be required. Please note that you may also have to visit the branch in person once you arrive in Canada.

Top Banks in Canada

The six top banks in Canada that dominate the market are:

International Banks in Canada

US
China
Japan
Taiwan
France
Switzerland
UK
India
South Korea
 Germany
Netherlands
Singapore
  • United Overseas Bank

Best Online Banks in Canada

There are many benefits to online banking. For most people, it is more convenient and faster to get things done via the internet. Pricing is a significant benefit of online banks. You can read more about this below under Bank Fees and Minimum Deposit. Types of online banks include savings, high-interest savings, checking, Tax-Free Savings Account (TFSA), hybrid, youth, and senior accounts.

Some of the top online banks in Canada are:

Bank Fees and Minimum Deposit

Bank fees in Canada range anywhere between 4 CAD (3 USD) to 30 CAD (23 USD) per month. While no minimum deposit is needed at most banks to open an account, there is a minimum monthly balance that banks require you to keep if you want your monthly fees waived. This amount is usually somewhere in the range of 3,500 CAD (2,634 USD). Bank fees can include monthly checking account fees, ATM fees, transfer fees, foreign transaction fees, checkbook fees, fees for debit transactions over the monthly limit (usually 1 CAD (less than 1 USD) per transaction), stop payment fees, Non-Sufficient Funds (NSF) fees, overdraft fees, paper statement fees, check certification fees, and plenty more.

No-fee bank accounts in Canada are available for youth, students, seniors getting the Guaranteed Income Supplement (GIS), and Registered Disability Savings Plan (RDSP) beneficiaries. You may also want to consider online-only banks as these typically come with no monthly costs and unlimited transactions.

Some of the banks offering no-fee accounts are:

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What is the Tax System in Canada?

The sales tax in Canada is called the Harmonized Sales Tax (HST), and it is 13%. Eight percent of this tax goes to the provincial government, and 5% goes to the federal government. Unlike in European countries, this tax is only added at the end once you are ready to pay. This means that the price you see on a tag while shopping may not be the final price you will have to pay.

Apart from sales, the tax system in Canada also includes other types of taxes such as income, property (read our Housing section link for more information on this), and, if you are a business owner, business taxes.

The federal, provincial, and municipal governments collect tax from companies and individuals to pay for government programs and services such as roads, public utilities, schools, health care, cultural activities, and economic development. Taxes are collected by the Canada Revenue Agency (CRA). People considered Canadian tax residents for tax purposes (not the same as residents for immigration purposes) file their taxes every year where they list their taxable income, deductions, and tax credits to calculate how much tax they owe.

Once your tax return is complete and the CRA confirms your calculations are correct, you will either be owed a refund or owe a balance. If you are owed a refund, you will receive a direct deposit in your account (typically after two weeks). If you filed your return by mail, it could take four to six weeks.

If you owe a balance, you need to pay by April 30 or the next business day if this date falls on a weekend or holiday.

There are penalties if you file your taxes late and you will have to pay interest on top of that so make sure you submit on time!

What is the Income Tax Rate in Canada?

The tax brackets in Canada for 2019 are:

Income (CAD) Income (USD) Tax Rate
< 47,630 < 35,818 15%
47,630–95,259 35,818­–71,616 20.5%
95,259­–147,667 35,818–111,016 26%
147,667–219,371 111,016–164,959 29%
210,371 < 158,191 < 33%

 

Provincial and territories have their own ratesas well for tax on salary in Canada.

Newfoundland and Labrador
Income (CAD) Income (USD) Tax Rate
< 37,591 < 28,273 8.7%
37,591–75,181 28,273–56,545 14.5%
75,181–134,224 56,545–100,952 15.8%
134,224–187,913 100,952–141,343 17.3%
187,913 < 141,343 18.3%

 

Prince Edward Island
Income (CAD) Income (USD) Tax Rate
< 31,984 < 24,057 9.8%
31,894–63,969 24,057–48,116 13.8%
63,969 < 48,116 < 16.7%

 

Nova Scotia
Income (CAD) Income (USD) Tax Rate
< 29,590 < 22,257 8.79%
29,590–59,189 22,257–44,530 14.95%
59,180–93,000 44,530–69,967 16.67%
93,000–150,000 69,967–112,850 17.5%
150,000 < 112,850 < 21%

 

New Brunswick
Income (CAD) Income (USD) Tax Rate
< 42,592 < 32,038 9.68%
42,592–85,184 32,038–64,063 14.82%
85,184–138,491 64,063–104,152 16.52%
138,491–157,778 104,152–118,657 17.84%
157,778 < 118,657 < 20.3%

 

Ontario 
Income (CAD) Income (USD) Tax Rate
< 43,906 < 33,020 5.05%
43,906–87,813 33,020–66,027 9.15%
87,813–150,000 66,027–112,809 11.16%
150,000–220,000 112,809–165,453 12.16%
220,000 < 165,453 < 13.16%

 

Manitoba
Income (CAD) Income (USD) Tax Rate
< 32,670 < 24,561 10.8%
32,670­–70,610 24,561–53,085 12.75%
70,610 < 53,085 < 17.4%

 

Saskatchewan
Income (CAD) Income (USD) Tax Rate
< 45,225 < 33,995 11%
45,225–129,214 33,995–97,128 12.75%
129,214 < 97,128 < 17.4%

 

Alberta
Income (CAD) Income (USD) Tax Rate
< 131,220 < 98,635 10%
131,220–157,464 98,635–118,363 12%
157,464–209,952 118,363–157,817 13%
209,952–314,928 157,817–236,649 14%
314,928 < 236,649 < 15%

 

British Columbia
Income (CAD) Income (USD) Tax Rate
< 40,707 < 30,587 5.06%
40,707–81,416 30,587–61,176 7.7%
81,416–93,476 61,176–70,238 10.5%
93,476–113,503 70,238–85,300 12.29%
113,503 –153,900 85,300–115,660 14.7%
153,900 < 115,660 < 16.8%

 

Yukon
Income (CAD) Income (USD) Tax Rate
< 47,630 < 35,795 6.4%
47,630–95,259 35,795­–71,590 9%
95,259–147,667 71,590–110,975 10.9%
147,667–500,000 110,975–375,680 12.8%
500,000 < 375,680 < 15%

 

Northwest Territories
Income (CAD) Income (USD) Tax Rate
< 43,137 32,411 5.9%
43,137–86,277 32,411–64,825 8.6%
86,277–140,267 64,825–105,391 12.2%
140,267 < 105,391 14.05%

 

Nunavut
Income (CAD) Income (USD) Tax Rate
< 45,414 < 34,122 4%
45,414–90,829 34,122–68,253 7%
90,829–147,667 68,253–110,975 9%
147,667 < 110,975 < 11.5%

 

Income not taxed in Canada includes:

  • Gifts and inheritances
  • Death benefits from a life insurance policy
  • Lottery winnings
  • Winnings from betting or gambling
  • Strike pay
  • Income from a TFSA
  • Compensation paid by a province or territory to a victim of a criminal act or motor vehicle accident
  • Certain civil and military service pensions
  • Income from certain international organizations (e.g., United Nations)
  • War disability pensions
  • RCMP pensions
  • Income of First Nations if on a reserve
  • Capital gain on sale of taxpayer’s principal residence
  • Provincial child tax credits or benefits and Québec family allowances
  • Working income tax benefit
  • GST, HST, QST, or SST credit
  • Canada Child Tax Benefit

Self-Employed Taxes Canada

The CRA has specific criteria and rules to determine whether you are self-employed or not. Make sure you meet the standards for this status. Here are some examples of workers who may be considered self-employed in Canada:

  • Chiropractor working from home office
  • Lawn-care company owner
  • Childcare provider at an in-home daycare
  • Uber driver
  • Real estate agent
  • Contract writer
  • Seller on eBay
  • Pet-sitter/dog-walker

This year (2019), the deadline for filing tax returns for those who are self-employed is June 15. Those who are self-employed will receive a T4A form with amounts in boxes 20 or 48. Your self-employment income is reported on lines 135 to 143 of your tax return. As a self-employed person in Canada, there are no automatic deductions on your income. Therefore, deductions owing to the CRA are calculated as part of your tax return.

The good news for self-employed people is that expenses related to your business are tax-deductible. This includes:

  • Business operations
  • Office and home office
  • Entertainment and travel
  • Cost of checks
  • Yearly dues for commercial and trade organizations
  • Parking fees
  • Private health service plan premiums
  • Interest on vehicle payments
  • Office cleaning supplies

Do you want to relocate? If you have never moved abroad, the process will be overwhelming, and if you have, you know the burden that lies ahead. Whatever stage you are at, InterNations GO! can help you with a complete set of relocation services, such as home finding, school search, visa solutions, and even pet relocation. Our expert expat team is ready to get your relocation going, so why not jump-start your move abroad and contact us today? Best to start early!

Updated on: September 20, 2019
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