Friday, August 24, 2007

Loonies And Lexicons

I've been perusing the Google Analytics reports for my site over the past few weeks, and have found some interesting facts:
  • I average 8 unique visitors per day

  • 79% of visits are from referring sites

  • 58% of visits are from Firefox users

  • I am far too eager to draw inferences on my little blog's tiny readership
Another little tidbit I discovered is that 30% of my visits are from the United States. Since I'm sure that my own "check the locks" visits are artificially inflating my Canadian readership (currently at 50%), this means that a significant proportion of my readers are coming from outside the country. With this in mind, I thought I'd throw together a brief lexicon for Americans looking to make sense of my more Canada-centric posts.

Canadian-to-American Personal Finance Lexicon

Loonie
Canada's $1 coin, named for the loon engraved on the back of the coin. The loon was actually not the original design for the coin, but the original dies were lost en route to the mint, and an alternate design had to be used

Toonie
Younger sibling to the Loonie, this is our $2 coin. This coin is known for having "the Queen with the Bear Behind"

Cheque
Canadians write cheques and use chequing accounts, but we check our e-mail. Clear as mud?

CRA
Canada Revenue Agency. This is the equivalent of the IRS in the USA. This agency is pretty flighty with its naming. A few years ago, it was simply called "Revenue Canada", which became "Canada Customs and Revenue Agency", and then finally settled on the current moniker. The funny thing is, though, the signs outside the CRA office in Ottawa (our nation's capitol) all still say "Canada Customs and Revenue Agency". I guess they didn't get the memo...

RRSP
Registered Retirement Savings Plan. Also referred to as an RSP, this is equivalent to a traditional IRA in the US. Contributions to this plan can be used as deductions on your tax return. A big difference between the RRSP and the IRA is that RRSPs often have much higher annual contribution limits

GIC
Guaranteed Invesment Certificate. This is equivalent to CDs in the US

HBP / LLP
Home Buyer's Plan / Lifelong Learning Plan. Plans that allow the annuitant of an RRSP to withdraw retirement savings pre-retirement, without paying a tax penalty. Withdrawals must meet certain criteria (eg. valid student status), and must be paid back over time, or else they will be treated as taxable income

CDIC
Canada Deposit Insurance Corporation. This is equivalent to the FDIC in the US. CDIC generally covers up to $100,000 in Canadian-currency savings at member financial institutions

CMHC
Canada Mortgage and Housing Corporation. This is the agency that insures high-ratio mortgages against default. I believe this is roughly equivalent to PMI in the US. If you have a down payment of less than 25% when purchasing a home, then you pay a premium (usually 2-3% of mortgage amount). This premium is added to the mortgage, and generally takes about one year's worth of mortgage payments to pay off

For the most part, Canadian financial "rules" are pretty much equivalent to their American counterparts; names, limits and percentages may be different, but the fundamental concept is the same. However, there are some key differences between our countries:
  • Mortgage interest is not tax-deductible in Canada

  • Lottery winnings are not taxable in Canada

  • In Canada, online savings accounts do not have a government-mandated maximum on the number of withdrawals per month
What else have I missed? What are the other PF-related differences between Canada and the US? Help me out in the comments.

7 comments:

Big Cajun Man said...

Well I will add you to my bloglist on my web site, but it comes very slowly, especially since you are a Canadian Content victim :-).

Keep plunking along, and when you pass me in readership, remember your friends too.

--C8j

Wooly Woman said...

Hi! Just found your site, and added you to the blogroll. I wonder if Americans have ever tried to translate for Canadians? I live in BC, and I have always wondered (but never did the research) how much different RRSPs and 401ks are. Looking forward to more Canadian reading from your blog.

Jeremy said...

Just added you to my bloglist - gotta support the Canucks (and get you more uniques). This was an interesting post - a topic I have often struggled with when consideringmy readership.

SavingDiva said...

Thanks for the breakdown. As one of the American readers, I find Canadian finance laws fascinating (I had no idea that lottery winnings aren't taxed)...and look forward to reading more...

maria said...

Yes, it's true! Canadian people do not pay taxes on their lotery winnings. And I, for one, hope that they will never change that.

Marie

mariam said...

Great post! Even as a Canadian, I learned something new ;) And I agree with the whole American readership thing... who knew they would be interested in us ;)

Jon said...

Hey, great post. I read a few Canadian PF blogs and it's nice to have a little glossary. :)

Another thing regarding mortgages that I'm still not clear about is the terms. In the US we generally do 15 or 30 year mortgages, fixed rate or variable. How do they work in Canada? From what I understand you only get a 2-5 year contract, which you then have to renegotiate or something?