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Cost of Living/Taxes

Discussion forum for expats moving to or living in Canada.

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Cost of Living/Taxes

Post Posted: Sun Feb 05, 2006 7:42 am

Hi Guys

Just a few more questions! Dont want to rush into anything Smile

Have had a look at a few houses and they are remarkable for price v size compared to UK. I know this may not be new news for some folks but it was for me. Then I read about taxes on a post somewhere from your good self I think it was Jim B.

So if I earn $30 per hr, that = $1200 per week (40 hr week)
Less taxes of 45% = $ 540 per week

Now if the rule of thumb is one weeks pay for Rent per month to leave enough for living and banking that doesnt get very much does it?

If I cannot get a Mortgage because I have no credit then I have to rent but even if I was to buy in a few years time surely $540 wouldnt help buy a family home.

I really wanted to live in Toronto to be near family but perhaps Alberta would be a better choice to save on Taxes. How far is Alberta from Toronto Sad

Oh can I go back to the credit thing? To get a good credit rating, does that mean I have to buy things on payment terms? Wouldnt it be better to pay cash for stuff or will this never give me a credit rating!

Thanks

Annette

 

N1k1002003
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Re: Cost of Living/Taxes

Post Posted: Mon Feb 06, 2006 8:09 pm

Annette:

I don't know where you got that 45 percent tax rate from.........It is way TOO high.

Please read this web site from the Canadian Revenue Agency, for last year's tax rates ( 2005 ) in Canada.

www.cra-arc.gc.ca/tax/...tes-e.html

On your hypothetical income of $1200 a week gross, you would have a net income of about $800 per week, after paying Federal Tax, Provincial tax, Canada Pension, and Employment Insurance, ( all mandatory deductions here) as well as the Provincial Health Insurance Plan deduction in the Province in which you are living.

So with about $800 a week clear income, you are making about TWICE the average of a Canadian worker. If they can save and buy a house on their income, I am sure that you can too.

Read the web page and do the calculations for your self. Notice that the tax rate is based on increments, with the basic rate up to a certain amount of gross income, then it changes for the next so many thousands of income, and so on.

On renting and buying a home.

Should I assume that BOTH you and your husband are going to be coming here to live and to work and that both of your are journymen plumbers? If that is corect, then you will have more than enough income to be able to live VERY WELL INDEED. A luxury apartment in the best part of Toronto will cost you about $1500 a month, or just over one weeks worth of one person's gross pay.. With the two of you employed that gives you about $ 6000 a month of net cash income, after taxes to work with. Take out another $1500 a month for food and car expsenses to get to jobs and you have about $ 4500 a month to use as you like.

To buy a house here in Canada, you need to show that you are "credit worthy" and most of that is based on your steady employment and how much you earn per year. As I said the two of you combined are well above the national average for income. To establish your credit rating, pay your rent, utilties and other monthly bills on time and also get a low limit credit card or two, and buy and pay on them to get established. Most of the national furniture stores will give you a $500 limit card with little trouble, Use it and pay on time and soon you will be getting un-solicited card offers thru the mail. Be wise and soon you are in a position to do a car purchase for a new car.

Buying a house, and getting a mortgage.

Down payments can be as low as 5 to 10 percent of the selling price of the house, but obvioulsy that leaves you with a really big balance to pay off, Try to get as much cash to put down on the house as you can save up. Mortgae loans here can b either a fixed rate or a floating rate that goes up and down with the money market. A floating rate is better in my opinion.

How far is Alberta from Toronto? Oh about four days by car IF you drive for 12 hours a day ,every day to get there. In other words we don't go to Calgary from Toronto, for a coffee. I 'd stick to Ontario, and of course I think Toronto is the best place to live.

If you only pay cash for things that you buy, you will never have any kind of a CREDIT rating, as you haven't shown that you can repay over time on a thing that you bought. Getting a loan/mortgage is based on the amount of your net income, LESS the things that you all ready have to pay for, and what you have left over as disposable income. With the two of you being skilled trades people you should have no problem getting into a house in a couple of years of working here in Canada.

Here is a suggestion for you to consider. Save for a year, while living in a rental apartment in Toronto. Put a down payment ( $25,000 ) on a 2 bedroom condominium apartment suite ( price about $130,000 ) in a new building, and move in there. Live there for 2 to 3 years and a save for a house.

Buy a house, with a healthy down payment to lower the balance, keep the condo and rent it out for $1200 to 1500 a month, which will cover 2/3rds or 3/4's of the house mortgage per month. That way you are paying off the condo, and the rental amount for it is paying most of the cost of your new home. Like that idea? You will end up owning both a house AND the condo unit. Perfectly legal to buy the condo, in your names, but rent it out later, to help pay for it.

Pick one that has a lot of services, like an indoor pool, gym, sauna, security , and underground parking and storage space, for each unit. This makes it more attractive later when you are looking for a tennant to rent it from you.

Questions? Shoot........

Jim B.

 

buntingj
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Re: Cost of Living/Taxes

Post Posted: Tue Feb 07, 2006 2:51 am

Hi Jim

Thank you for all the info you are supplying to me, I am absorbing it all Smile

I do not recall where I saw the 45% on taxes but have read this in the last day or two! I am happy you have corrected this for me.

Your post makes me sound as if I would be so so rich eh! I like Canada by the minute <grin> Its ok the reality is still with me!

If Canada was our final choice, which if I get my way it will be, then my husband would go to work asap. We have two children 10 and 5 yrs so I would remain at home to settle the kids and help them settle with making friends and getting involved in various clubs which I think would be a priority. After this, then I would be working but my thoughts are wandering to going back to self employed but this is something I would give serious thought to.

The property investments you have mentioned in your post are something we have thought about. We are very lucky in that we bought our current house just before this area became one of the most sought after areas therefore have made 3 times what we paid for it, and we about broke the bank and it was risky for us to buy it but we managed Smile

I have seen a few houses in the Mississauga area that we could buy outright but to be honest I dont want to do that. I think keeping the money banked (here in my sisters account) to make sure things go ok for a year or two is a better idea ?

In a previous post you mentioned that it is ok to fill in all the application forms by myself. This was a query I had after looking at what was required. I think I could manage the forms on my own, but may need a little help along the way. With great sites like this, and of course yours and others input to it then I think I would manage. You are such a peace of mind.

I wouldnt, I dont think need a re location service either as I do have family in Toronto and if my father gets wind of what I am considering then he will bend over backwards to help.

I was aware the "long" distance between Alberta and Toronto but wasnt sure if there was a mode of transport ie Flying and how long the flight was but I take it Driving is the way?


Thanks for your help Jim and your photos on another site are lovely too.

Annette

 

N1k1002003
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You can fly to Alberta from Toronto about 4 hours flight.

Post Posted: Tue Feb 07, 2006 9:45 pm

Annette

Glad you liked the photos, and I have more to post soon.

Having your Dad in Toronto is a big bonus as he can advise on places to live and where to seek employment.

About 60 to 70 percent of all the Plumbers in Ontario are engaged in NEW construction, of houses, commercial buildings and industrial plants. Most of those are Union members, and of course that means good wages and working conditions on the work sites.

Of the remaining percentage, most are employed directly by a individual employer, most often as a in-house trades person at a hospital, municipal maintenance department or a factory. Of course a large city like Toronto has a city works department, that maintains the Police and Fire stations, and the school baords have their own plumbers and electricians and other tradesmen.

Once you are both qualified here, setting up a plumbing business is not hard to do. You would need to register as a Ontario small business as either a single operator, or the two of you as a partnership. This can be done in one business day, provided that you have done the required name check to make sure that there is NOT a similar/same name now in use in Ontrario. Once you have your business permit , ( cost about $100 )you can open a bank account in that name, and set about getting started, with your own telephone number, business cards and a van to haul your stuff about.

You will also need a city or town business licsense as a plumbing company/contractor, and it would be good to join a trade association of plumbers. liability insurance is a must, as is personal acicdent/disability insurance in case you are hurt while working. If you don't intend to haire any employees, you don't need to register for worker's compensation insurance, nor a employer's tax number. You would submit an annual income tax form for the business, as required. You decide how much to pay your selves, and what to spend on to make it a working business. All money that you pay out to "operate the business" is a tax deduction, such as for fuel in the van, the van it's self, the tools the inventory of parts, the insurance, the phone the advertising, the whole thing is a tax write off, at the end of the year. I strongly suggest that you hire a small business accounting service to do your monthy and yearly tax accounting. It is well worth the money spent, which is also a tax deduction. A home office in your house is also a tax deduction.

So as you can see, it you decided to go out on your own, in business here, it is well worth the start up costs.

On banking the sale proceeds of the house in the UK.......I would say that it is better to get the money into a Canadian bank and have it to use either as a down payment or to start your own business. The interest rates are not much different here or there. The plus to having it here is to have it at hand if needed. There are no currency controls in Canada, but I would suggest checking the UK regs about large transfers of money going out.

With the amount that house sale will bring you, plus the fact the two of you are " blue collar nobility " here in Canada, you will do great.

It is a sunny clear sky day, with a temp of minus 5 . The snow that we got 2 days ago has passed, and I am drying the clothes by the windw, in the sun. Tonight's supper will be chicken breasts with jumbo shrimp, and scalloped potatoes and broccoli. The cat is getting anxious about the smell of the thawing shrimp. ( Grin ).

Jim B .

 

buntingj
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Re: Cost of Living/Taxes

Post Posted: Wed Feb 08, 2006 4:51 am

Hello Jim

Once again thank you for the info on the Job situ, worth a lot more thought.

As with my house and banking situ, I dont really want to post to the world, would you mind if I sent you a private mail to see if you can offer more info?

We have had good temps today in Scotland, highest for a while at 9 deg C
The lowest I have seen this winter is -2 degC and that was only for a day or two. The day was find till it started drizzly rain all afternoon, I would prefer the cold to the rain!

Annette

 

N1k1002003
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Re: Cost of Living/Taxes

Post Posted: Thu Feb 09, 2006 8:56 pm

Hi Jim and all,

I'm a newbie here and your posts are really very informative. I'd like to ask a few questions regarding tax on foreign income. We'll be landing and will be returning to foreign job post a month after, then will be resigning from work after 6 months to finally settle in Canada . Wife and kids will remain in Canada though. I know that monthly salary from landing to resignation will be considered world income because of canadian ties therefore will be subject to tax. However, I would like to know how CRA would treat the severance pay earned outside Canada from years ago but will be transfered to Canada months after the person has first landed and has become PR? Since severance was earned from the start of employment which was years ago and prior to landing, would it be fair to say that this should not be taxable? Subjecting the partial severance (from landing to time of resignation) to tax is fair enough but from the start of employment is rather unfair.

If we declare this to customs during landing, would it be beneficial? Meaning, would they consider this our money prior to landing therefore will not be taxed when filing of tax comes? Thanks and hope to hear from someone.

 

crystall
Newbie
Newbie
 
 
  
Re: Cost of Living/Taxes

Post Posted: Thu Feb 09, 2006 9:07 pm

Crystall:

This is one area that I am NOT an expert in, so I will not attempt to answer you, but instead will refer you to the Canadian Revenue Agency web site, to seek a better and probably more expert answer to your questions. When you get there , look for a way to send them a direct e-mail to get a answer.

Be sure to set out your situation clearly.

Sorry I could not be of more help, to you, in this specialsed area of knowledge.

Jim B Toronto.

 

buntingj
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