Newcomers move to Canada with many dreams, aspirations and goals, both personal and professional. For most of them, finding a job is a top priority and getting a job offer is a milestone in the journey of settling successfully in Canada. As important as it is to understand how to navigate the job market in Canada, educating yourself about the next steps after accepting a job offer is crucial too. 

Here’s some useful information about the compensation structure in Canada and how you can better fulfill your financial goals.

Before we dive deeper, here are some key steps to prepare yourself as a new employee:

Organize your finances. Your new job may pay you on an hourly, bi-weekly or monthly basis. In Canada, for salaried individuals, bi-weekly payments are fairly common. You can manage your money by setting financial goals, budgeting your income and expenses and outlining your investments.

Know the payroll deductions. This money is deducted by the employer and is sent directly to federal, provincial or territorial governments. 

Understand employee benefits. Employee benefits can save you money so inquire as much as you can about them when you’re offered a job. The Financial Consumer Agency of Canada (FCAC) suggests that employee benefits may include plans for: 

  • Health or dental care 
  • Disability or life insurance
  • Retirement or pension plan

With the basics in place, let’s look at the top five things you should know about your pay:

1. Paycheques are not the same thing as pay stubs or payslips

  • A paycheque is a physical or an actual paper cheque handed out to an employee for the service provided during a predefined timeframe. 
  • A pay stub or payslip is a summary of the amount included on the paycheque. It includes details such as your pay rate, pay period, employer and employee information, and deductions and contributions. Paystubs can be paper-based or digital.

2. Most employers offer direct deposit, not paycheques 

Direct deposit enables your employer to credit your pay directly to your bank account on a periodic basis and in a timely manner, as determined in your employment agreement. The amount received through direct deposit is net income, after deductions. To set up direct deposit, your employer will ask for information pertaining to your Social Insurance Number (SIN), your full name as it appears on your bank account, date of birth, and current address (because employee tax is determined based on your home address and not employment address).  

3. Gross income differs from net income

  • Gross income is your cost to the company. This is the amount you see on your offer letter and is reflective of your pay before any deductions or taxes are taken out. 
  • Net income, on the other hand, is your take-home pay. This is the amount that’s left over after deductions are taken from gross pay. 

4. Employee benefits may have a waiting period 

When you sign the offer letter, be sure to not only ask about employee benefits but also check if there is a waiting period for you to start receiving the benefits. Some other factors to consider are: 

    • Your contribution to various insurance plans. 
    • The coverage for each insurance plan and the people included (spouse, partner, children or dependents) 
    • Options to opt out of any of those plans.
    • Contributions to any savings or pension plans; check your contributions versus your employer’s contributions. Some companies offer valuable ‘matching’ benefits where the employer will match your contribution to a specific plan such as the Registered Retirement Savings Plan (RRSP).    

5. Although income tax is deducted from your salary, you need to file tax returns annually 

One of the major deductions from your salary is income tax. The Financial Consumer Agency of Canada (FCAC) recommends filling out a form called the Personal Tax Credits Return when you start your new job. This form will help your employer determine how much tax to deduct from your regular pay. And if you have other large expenses that are eligible for tax deductions such as RRSP contributions or childcare expenses, you can fill out a request to reduce tax deductions at source form — this will help increase your take-home pay. Every year, employers are required to issue a T4 slip to all employees which is the statement of remuneration paid. This T4 slip is key to filing your annual income tax returns. Your tax returns will help determine if excess taxes were deducted and whether the government needs to issue you a refund or if you owe the government money. 

Read our blog, Canadian tax return basics for newcomers: 6 things you should know, for more information and tips on filing your tax return in Canada for the first time.

With a steady source of income, a good financial habit to cultivate is to practice saving and investing your money. Your goals — short, mid or long term — can help guide your financial decisions and enable you to be better prepared for your future in Canada. 




About Arrive

Arrive is powered by RBC Ventures Inc, a subsidiary of Royal Bank of Canada. In collaboration with RBC, Arrive is dedicated to helping newcomers achieve their life, career, and financial goals in Canada. An important part of establishing your financial life in Canada is finding the right partner to invest in your financial success. RBC is the largest bank in Canada* and here to be your partner in all of your financial needs. RBC supports Arrive, and with a 150-year commitment to newcomer success in Canada, RBC goes the extra mile in support and funding to ensure that the Arrive newcomer platform is FREE to all. Working with RBC, Arrive can help you get your financial life in Canada started – right now. Learn about your banking options in Canada and be prepared. Click here to book an appointment with an advisor.

* Based on market capitalization


This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.