Looking forward to a tax refund this year? A tax refund is no reason to celebrate. You may fell the government is giving you money but in reality they are giving you back your own money. The government has had use of your funds for the year, interest free. Does your financial institution offer you an interest-free loan?
If you are receiving a tax refund year after year, chances are you're having more tax deducted at source by your employer than necessary. This is especially true if you make regular contributions to a Registered Retirement Savings Plan (RRSP), have sizable child care expenses, or pay tax-deductible spousal support. By filing CRA Form T1213, Request to Reduce Tax Deductions at Source, you can ask to lower those deductions. Quebec residents also need to file Form TP-1016 with the Quebec government.
If your request is approved, your employer will be instructed to reduce the amount of tax withheld from your paycheque. How much extra might you get? Based on the average Canadian tax refund of 1400.00, you could be pocketing an additional $116 per month.
Whether these funds are put to work immediately to pay down debt or deposited for your retirement, investing that extra money now rather than after receiving your return could mean a difference of thousands of dollars in the long term.
For more tax savings ideas, come and visit us at www.m2financial.ca