Cost of Living in Canada

The information provided in this section will help you to estimate how much it will cost you to live in Canada.

Your life in Canada may be different than in your home country. You may have to take a job with a lower salary while you upgrade your skills or get experience working in Canada. Not only might your financial status change, so might your standard of living. Though you may be earning a higher salary in Canada, the cost of living may be higher.

Pay Deductions

In Canada, there are automatic deductions on most pay cheques. A deduction is an amount of money removed from your pay by your employer for the following contributions. These deductions could reduce your pay by as much as 25% to 35% of your total income. This money goes towards:

• Income taxes
• Canada Pension Plan or Quebec Pension Plan
• Employment Insurance
• Union dues - if you belong to a union
• Contributions to a retirement or pension plan
• Any other necessary or agreed upon deductions between you and your employer

Gross income is the total amount of money that you earn before deductions.

Net income or take-home pay is the amount of money that you keep after all the deductions are removed.

Sales Taxes

In Canada it is common to add sales taxes to the price of goods and services. Common goods and services taxes include:

Goods and Services Tax (GST).
GST is a Government of Canada tax of 5% added to the price of goods and services.

Provincial Sales Tax (PST).
PST is added in most provinces and will range from an additional 7% to 10%. Alberta, Nunavut, Northwest Territories, and the Yukon do not have provincial or territorial sales taxes.

Harmonized Sales Tax (HST).
In some provinces, the GST is combined with the PST, and is called the HST.

Household Expenses

More than half of a person's take-home pay will go to household expenses, which include:

• Housing
• Heating and utilities
• Food
• Clothing
• Health Insurance
• Transportation
• Car Insurance

Housing, Heating and Utilities

In Canada, you can expect to spend 35% to 50% of your income on housing. This should include the cost of electricity, heating, telephone service, and water.

Many newcomers choose to rent an apartment on a monthly basis. Rental costs vary across cities and across Canada. You can expect to pay between $350 a month to rent a room and up to $2,000 a month to rent a luxury apartment or a large house. Housing may cost less outside large cities. An immigrant-serving organization in the area where you plan to settle can help you find housing that you can afford.

If you want to buy a house, you will probably need to get a long-term loan called a mortgage. Banks and other financial institutions provide mortgage loans. They decide whether the borrower has enough income, more assets than debts, and a good credit rating. Most will ask you to pay at least 10% of the cost of the house from your own money. In addition to your mortgage payments, you will also have to pay for property tax and household insurance. If you plan to purchase a condominium (condo), there are maintenance fees that you must also consider.

Food

Food costs make up about one-eighth of your take-home pay. This can double if you often eat in restaurants, buy expensive treats, or include alcohol and cigarettes as part of your food budget. Alcohol and cigarettes are very expensive in Canada because they are heavily taxed.

Clothing

Clothing is also a basic expense. Clothing expenses may be under 10% of your take-home pay. Some people shop at re-sale shops. These shops sell used clothing and furniture at very low cost.

Health Insurance

Some provincial and territorial health programs may not cover some newcomers for the first three months they are in Canada. Check with the province or territory to see if you will need to buy an additional health program.

Transportation

Many Canadian families own one or more cars. Canadians buy their cars new or used or they lease them. Make sure you consider all of the costs before you decide to buy or lease a car.

• When you own a car you will have to pay for the car's maintenance, gas, monthly loan payments, registration, and insurance.
• When you lease a car you will sign a contract to have the car for a set period of time. You will pay the same costs as you do in owning a car.

Car Insurance

It is the law that all cars must be insured and registered with the provincial or territorial motor vehicle licensing agency where you live. Car insurance can be expensive, but it protects you and other drivers in case of an accident. In most provinces, you can obtain more information by calling the Insurance Bureau of Canada.

Occasional Important Expenses

Occasional important expenses are bills that do not need to be paid regularly, but are still important. Some examples are buying prescription medicine for a family member (not covered by health insurance), school expenses, and long-distance calls to friends and family in your home country.

Related Links

Statistics Canada: Learn more about the costs for living in major cities across Canada.

Citizenship and Immigration Canada Fact Budgeting, Banking and Savings Fact Sheet: More information on assessing the cost of living in Canada.