When you immigrate to another country, it is important to know the rules and practices connected with finance. No matter where you live, you work and earn money, purchase things and use services, and it may seem that everything is the same all around the world. However, there are some practices that are different in Canada. It is great when you learn this information beforehand, it will help you to save money and manage your personal funds.
Canada has its own rules for taxing individuals. Here we will discuss some most common topics related to taxes in Canada.
Taxes in general
In Canada, when you buy something, you may be surprised, because the price you pay is actually higher than the price you see on the label. In Canada, the sales tax applies on top of your purchase. Let’s assume you are moving Toronto and your plane lands at Pearson Airport. You buy a cup of coffee that costs 4$, but the price you pay will be 4,5$ because of the tax applied. If you are looking for local Toronto movers, they also charge taxes on their services.
Taxes in Canadian provinces
There are 10 provinces and 3 territories in Canada. Taxes are collected on federal level and on provincial level. Tax applications are different for different types of goods and services.
There are three types of sales taxes in this country: PST (provincial sales tax), GST (government sales tax), and HST (harmonized sales tax). The latter just adds the provincial rate to the federal rate. GST is 5%, and the HST rate varies from province to province. Atlantic provinces (New Brunswick, Nova Scotia, Newfoundland, and Labrador) use HST that is applied to all goods and services taxable.
Food and drinks
When you buy grocery items that are considered to be basic foods (fruit, vegetables, meat, poultry, fish, eggs, some milk products), they are not taxed. Tax is not added to the price of fruit and vegetables, no matter if they are fresh, sold in cans, or frozen. Prepared foods like microwave dinners are not taxable, but prepared meals in a restaurant are taxed. The amount of information about taxes may seem overwhelming, but you will get used to all that.
Prepared meals are taxed in a different way than For example, in Alberta, British Columbia you pay 5% GST on top of the price of your restaurant meal, and there is no provincial sales tax applied. In New Brunswick and Nova Scotia the tax rate will be harmonized, 15% and 13% respectively.
Other consumer goods
The sales tax is applied to most articles of popular consumption that you see on the shelves. There are exceptions, of course: prescription drugs, medical gadgets, mobility apparatus, and feminine hygiene products are exempt from GST. Cleaning and laundry products, household items, electronics, and toys are taxed as well.
After you find your first place to live in Canada, you will have to register with essential services providers. You will have separate bills for water, electricity, mobile phone, and internet. All those services are taxable, and there will be an additional amount depending on which province you live in. For example, if you register with a mobile company in New Brunswick and select a monthly plan worth 50 CAD, your monthly bill will total 57, 50 CAD (which is the service price plus 15% HST).
Many residents hire other household services like lawn mowing, cleaning, landscaping, or snow removal. Companies that provide those services have to include tax in the bill. When you are looking for a cross country moving company, make sure that you understand the pricing of their services. There will be no tax on most medical and dental services or daycare services for children under 14 years old. If you need to know about taxes on goods and services, you need to look for information specific to your province.
As a newcomer, you may feel that you pay a lot of taxes. But in reality, the government gives it back in the form of free education, health care, road construction and city development, and other social services. Canadian quality of life is ranked among the highest in the world.
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