Athome

In my opinion this is not a good move. First I would want to know what interest this account in Canada is paying on my money. If it is a Canadian interest rate, you would currently be better off with your money in an e-savings account in the UK.

Second it would seem to lock you in to making the exchange through HSBC. What if they offer you a lousy rate?

HSBC use there branches in other countries as a marketing tool to try and get you to bank with them. It's convenient but that is all it is. Opening a bank account in Canada is not like opening one in the UK. You walk in, show two pieces of ID, tell them your new address and that's it done. NO hassle at all.

Contrary to what some people may think, HSBC is not a great bank from a customer's point of view. They don't pay the best interest, they charge lots of fees for everything and are no better if not worse than many banks. Actually the best bank in Canada to deal with if you are happy with internet banking, is President's Choice. No fees for anything. They are a bit more difficult to open an account with though.

Athome

I don't know what the regulations are around proving settlement funds harrys as that didn't apply in our case. But I'm sure there must be other ways to prove sufficient funds.

As I replied to Steve, I personally don't think this HSBC deal is a good one. Nor am I a tax accountant but I tend to think that interest earned in a Canadian account will attract tax. You will have income in Canada. It might not be much but it will have to be accounted for somehow. I don't think you will have any trouble but you may well have some hassle from an accounting point of view. Bear in mind that once you 'land' you have declared yourself resident of Canada. The interest earned on that money in a Canadian bank account is not being paid to a non-resident.

harrys

Many thanks Athome. Yes, you are absolutely right. The account I am opening is only a current account which will earn no interest, hence no Canadian income. My thoughts were - get something going for convenience and then once I am sure that I am about to settle there for good, I can shop round for a better deal. HCS

Athome

If you've done it already, all well and good. But have a look at my last response to the other thread on exchange rates. I've started to think people are not necessarily looking at this whole thing in the right way.

What I mean is people are looking at opening a Canadian account as if it were an immediate necessity. They transfer funds from the UK and then start accessing them from the Canadian bank. Why? If what someone needs is access to funds, why can't they access the funds from a UK account?

It is a different story once you are moved and if working, need a place to deposit wages. Then you need a Canadian account but what exactly does anyone need one for initially?

harrys

Yes. Point taken. Sometimes one can rush too much hoping to do as many things as possible, and perhaps unnecessarily. Thanks. HCS

Athome

Opening an account when you get here is dead easy harrys. It isn't like the UK. All you need is an address to tell them and your UK passport to show them. No need for utility bills, etc.

That means you can take your time and check out one bank vs. another. Have a look at President's Choice Bank. No fees. Also check out Credit Unions which are similar to UK building societies.

In my opinion none of the major banks in Canada offers the best deal. Just like the banks in the UK really.

harrys

Thanks for advice Athome, it is certainly appreciated. HCS

wesbett

Hi Athome
great original post - very informative.

I'm wondering if you or anyone has some advice on our situation. We are moving to Canada in September, my wife is canadian so she already has a long standing Canada Trust account which we have turned into a joint account ready for when we get there. We've sold our house and will need to decide who to go with for tranferring the large lump sum over when we are ready - there will be no hurry as we will be living with relatives initially. The mortgage is with Nationwide and we've also had FlexAccounts with them for years so we can use your tip on drawing money from ATMs. On receiving the money from the house sale, we'll put it into a FlexAccount e-saver account until we are ready to transfer. The question is should we go with them for the transfer or use a FX house?

Also, I am a graphic designer and my plan is to freelance for a living, keeping my existing UK employer as a client and also other UK clients I have as well as picking up some canadian ones. For the UK clients, would it be best to have them pay me straight to a Canadian account or UK account and whats the best way to declare the income?

Thanks
W

Athome

You have several different topics here wesbett so lets take them one at a time.

First, if your wife has a really long standing CT account, chances are she is grandfathered in with no fees. It depends on how long you consider long standing. I would check on that. If she is subject to all the usual fees, look around after you arrive. President's Choice has no fees.

Sitting the money in the E-savings is the right move. What you may want to consider is when do you plan to leave the UK and how much income are you likely to have earned in the fiscal year. ie. Are you leaving in June and only have income from April/May for the fiscal year. If so and if that income is less than £5k, it will be below your personal tax free allowance. In that case you can open another Flex account in one person's name only and ask Nationwide for the form to fill out in which you declare you will earn under the personal allowance and telling Nationwide not to withhold tax on that account. We sat house sale money in an account like this in my name. (No declared UK income) In the five months the money sat, we earned over £2k in interest. In a normal taxed account, they would have taken £800 off in tax and we would then have had the hassle of trying to get that money back.

Using your ATM cards and credit cards when you first arrive is simple and remember, they both will get you the full Interbank Rate when used. Remember that although your Nationwide debit card has no daily limit, the local ATM in Canada may have. Having two cards on two different flex accounts means you can still withdraw twice that limit per day. It also guards against losing one card. You just transfer all funds to the other account while you wait for the lost card to be replaced. Also, Nationwide has no problem with you maintaining an account even though you no longer live in the UK. You should talk to your branch though as head office will not send new cards etc. overseas. They send them to your branch and your branch has to agree to mail them to you in Canada. Have a chat with the branch manager and explain things. I also had them pre-warn their security department that they should expect to see large transactions originating in Canada. You don't want them putting a stop on your account because they suspect identity theft or something.

Finally, regarding who to use to transfer the money. Talk to Nationwide head office and ask them to tell you what rate relative to the Interbank Rate they would transfer the funds for you at. It will depend on how large an amount you are talking about. Tell them you are considering using them or a forex company so they know you know what you are doing. They won't be able to quote a specific number but they should be able to tell you in percentage terms. Then do the same with some forex companies and make your decision.

However, if you want to future buy the $ in order to lock in a rate and be sure of how much in £ your new home is going to cost rather than risk the exchange rate moving against you between now and then, you have to go to a forex company. Nationwide doesn't sell currency futures, forex companies do.

When looking at whether to lock in, consider the whole picture. One, locking in assures you of a rate. That means no risk of exchange rate fluctuation. But you get a poorer rate depending on how far ahead you want to buy. It also means you cannot benefit if the exchange rate goes in your favour. At the same time, buying a future only requires a 10% deposit. That means the rest of the money sits in your e-savings until the transfer date. So you earn interest at 4.55 or 4.65% on it. If you calculate how much the exchange will have to move in order to pay you more than that interest will, you will probably find that it has to move quite a bit to overcome the advantage of the interest earned. So that mitigates the downside of locking in.

There is no correct answer to this. You bite the bullet now and live with it good or bad, or you wait and risk the exchange going for you or against you. Flip a coin, it's almost as good a way of deciding as any.

wesbett

Hi Athome
many thanks for the excellent advice. Do you have any comment or advice on my other question with regard to freelancing for both British and Canadian clients? Shoudl I just get paid directly into a Canadian account for everything and sort the tax out in Canada.
Many thanks again
Wes

tim hortons man

for those that may be wiring money on a regular basis I would check out xe.com I wire money over regular to Canada and its the cheapest and most convenient. Takes a bit to set up but easy to do once done.

Buchan6

Brilliant post.

glenlivet

Aye, that's what I thought too. That's why I asked the moderators why the instigator of this post, and many other useful contributions has been banned. No proper explanation given and it was pointed out to me that I was a naughty boy because you're not supposed to question why the moderators do what they do. Oops.....

kt0157

Another route to consider instead of buying a future is spread betting (which works in much the same way but is structured as a "bet").

K.

CDNReturner

Great Post AtHome!

BUT.......my experience is that the tax treaty only allows for either 10% or 15% to be withheld by the UK government and as we all know it is 20% that the banks withhold in the UK. Therefore when claiming the interest income withheld on your Canadian tax return it amounts to the 10 or 15% and not the whole 20%. Sorry, I can't remember the exact percentage. It's because they have this complicated calculation for federal foreign tax credit and then separately for provincial foreign tax credit. I also think my problem is that my UK interest income is 1/3 of my total income. If my Canadian income were higher this calculation would allow me to claim back more of the UK interest paid. It just isn't that straight-forward.

I've been away a couple of weeks and tomorrow is the day I will try and contact the UK government on trying to get the rest of my money back. And try and find out why I haven't had any money returned on my P85.

Cathie