When relocating to Canada, people often have questions about their finances, such as: what will be my purchasing power in Canada?
You should be well-informed about three financial indicators:
1) Federal & Provincial Tax rates
For an introduction, you can read another of our blog entries on Taxes in Canada.
According to the Canadian Province you will live in, the tax situation might be quite different.
You should be aware of the income tax in your Province and the cost of living in the area you will live in to have a better idea of your purchasing power.
2) Interest Rates
Depending on whether The Bank of Canada is pursuing tight or loose monetary policy they raise and lower the key interest rate. This means they control how much it would cost in interest to borrow funds. This affects everybody from investors, corporations, banks and individuals. As many people who are relocating are looking to purchase a home in a Canadian city, the interest rate can play a massive role in their ultimate decision on how much they can afford.
3) Inflation rate
As of 14th December, the Canadian Government decided to scrap the penny because it costs 1.5cents to produce 1 cent penny. The penny has lost 90% of its purchasing power since 1908. However, Canada has an average inflation rate of 3% in the last 10 years.
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