Did you know from approximately 17.8 million Canadians received a tax refund? If you’ve filed your taxes for this year and know that you’ll be getting a refund, you might be wondering what to do with your refund.
Here are some smart ideas for you to consider:
- Pay your outstanding debts.
Most Canadians have debt – that’s a fact of life. With record inflation and the cost of living, in general, getting more expensive every day, take a look at your outstanding debts. Check your credit cards and assess which has the highest interest rate, and pay that down first and in full if you can. By reducing your monthly costs, it will allow you to pay off your other debts faster.
- Contribute to your RRSPs or open a TFSA
Use your tax refund and contribute to your RRSP or open a TFSA. Both options allow you to grow your assets tax-free and will reduce your taxable income for tax time next year! There are limits for both programs. Learn more by clicking RRSP or TFSA.
- Open an RESP for your children
If you have kids, you know raising a family is expensive! The average cost of undergraduate tuition alone in Canada is $6834/year in Canada, and this does not include books or living expenses. By opening and investing in your child’s RESP now, you can save for their future. Contributions grow in an RESP, and when they need the money, it will be taxed at your child’s tax rate, which will likely be lower than your own.
- Make your home energy efficient
Use your tax-refund to upgrade to energy efficient appliances that save money and the support a greener future. Consider home improvements like fixing old windows, getting a new roof, upgrading your home heating and cooling systems. Home upgrades like these can reduce your overall long-term costs, help you to cut down your energy bills, and increase the value of your home.
- Purchase an essential need
Have you been saving for a new mattress or home computer? Have you been putting off an essential purchase you and your loved ones need? Use your refund instead of your credit card to buy your essentials.
- Do good and make a charitable donation
Research and donate to a local registered charity that matters to you. You’ll be giving back and helping your community, and you’ll receive a tax receipt to reduce your taxable income next year.