You’ve filed your taxes (or you’re planning to very soon) and you’re expecting an income tax refund. To some, this perceived windfall is a sign to go on a spending binge.
According to Canada Revenue Agency, the average income tax refund in 2017 was about $1,765. That’s about the cost of a nice all-inclusive vacation in the sunny south, some very nice dinners out, or a decent shopping spree.
If you’re getting a return, this means you’ve overpaid taxes and you’re simply getting some of that back. Stop treating your tax refund as “extra” cash. Here are some smart ways to put that tax refund to work.
Pay off Debt
Pay off some debt and reduce the interest you are paying on that loan.
Stash it Away
Take advantage of 2018 tax savings by depositing your 2017 refund into your RRSP or tax-free savings account.
Update your Home
The average refund is enough to cover some upgrades to your home. This can boost your return if you are planning to sell this spring.
Boost your Mortgage Payment
Depending on your mortgage terms and conditions, you may be able to make a lump-sum payment.
Build your Down Payment
If home ownership is part of your future plan, deposit your refund into a ‘down-payment’ account. An RRSP is a great option.
Always consult your financial advisor to determine the best solution for your needs and goals.