You Got a Tax Refund — Now What?
For many Canadians, tax season ends on a high note—with a refund. Whether it’s $200 or $2,000, a tax refund isn’t “free money” (you earned it!), but it is a great opportunity to move your finances forward. Here’s how to make the most of it.
First, where it came from
Your refund likely means you overpaid income tax throughout the year—through payroll withholdings, installment payments, or credits / deductions you didn’t fully account for. That’s not necessarily bad—but it’s worth reviewing. Try to adjust the withholdings next year to boost monthly cash flow instead of waiting for a refund.
Cover the essentials first
- Emergency fund: Do you have 3–6 months of expenses saved?
- Outstanding high-interest debt: Paying off credit card balances could yield an instant return.
- Upcoming bills: Use it to ease the pressure from tuition, insurance, or summer child care.
Where to invest?
- TFSA: Tax-free growth with flexibility.
- RESP: Great for parents—receive up to 20% in matching grants.
- RRSP: Especially valuable if you’re in a high tax bracket.
Think like a Planner, not a Spender
Still tempted to splurge? That’s okay! Allocate a portion for enjoyment—guilt-free. But also consider: Split approach: 50% toward fun, 50% toward future. One-time upgrades: Invest in a course, health improvement, or equipment that enhances your productivity.
Bottom Line
Your refund is a tool—not a windfall. With a little intention, it can help you reduce stress, build wealth, and stay on track for your long-term goals. Need help deciding what to do with your refund? Let’s talk.
The information provided is for educational/entertainment purposes only. Actual information may vary, please consult our office for further details. Got a question? Feel free to reach us at helpdesk@assentt.com.
