I will be in the self-employed category when i come to canada next month. i know i need to keep about 30% of my income on the side for taxes. but i was wondering how does the pension stuff work?

-would it be part of the tax filing or is it something separate?
-do i need to open any special pension bank account maybe?
-how much money do i need to put into a pension plan?
-how does all this work?

would be great if those who have experience with 'self-employment' could share their thoughts... thanks!

Try looking up "RRSP" on Google and go from there.

Get an accountant. I'm self-employed and I can't use the envelope that comes with the tax return form because my return is too thick (all those extra forms to fill). It's even more of a hassle in Quebec because the federal and provincial returns are filed separately.

In addition to mandatory contributions to the Canada Pension Plan, you have the option of a private plan (RRSP). The latter contributions are knocked off your taxable income. You don't get taxed until you withdraw the money (ie when you've retired). Your bank will happily open an RRSP account for you. There are limits on how much you can contribute (% of income and an absolute limit). This year you won't know what your allowance is until the return has been prepared. If the accountant says that you can buy $X of RRSP, you say "OK", he knocks that amount off your taxable income and you instruct your bank to make the transaction. Do this before the end of February. It gets easier after that because the CRA will send you a statement telling you what your limit for the year is. You can make contributions on a regular basis or, like me, in one chunk at year-end. I have been buying the maximum because I'm trying to stuff my pension. Not everyone does that. Unused allowances can be carried over and I think, although I'm not sure, that they can be transferred to spouses.

Next year the tax people may leave you alone and let you do everything at year-end. They may, however, come after you for instalments. Eventually they almost certainly will. This year I have already paid two instalments, based on the return I filed last year. I will soon receive notification of my September and December instalments, based on the return I filed in March. You don't have to pay up on the dates suggested but you'd better be up-to-date by the end of the year or you'll get your botty spanked.

As I say, get an accountant and do it sooner rather than later. Self-employment offers all manner of tax deductions. It's as well to know what they are so you can keep track. I use a spreadsheet that I update every time I get a deductible. Keep ALL the paperwork. You may also have to do regular GST returns but I'm not an expert on that; I'm not liable for GST.

Obviously, an accountant will cost you (tax deductible BTW) but can save you a bundle. Let the accountant be the creative one; if you tell him something that is clearly an attempt at tax evasion, he is obliged to grass.

RRSP's are the obvious alternative but, depending upon your type of business, income level etc, IPP's are another alternative.

Talk to a CA, who understands IPP's.

http://www.financialwebring.com

Good financial Site, Non Commercial, DIY Investors.

thank you all for your advice.

Souvenir, could you give me an idea how much of an expense an accountant would be per year?

I run a business in BC, we pay our accountant c$1000 p/a. We tally up all our receipts, income/outgoings etc monthly and supply him with a spreadsheet.

I'm really not sure. The CA who prepares my return does it as a sideline ($70 cash). If he did it in a professional capacity, we could be talking $300 per hour.