We are coming to the end of tax season. Are you excited about getting a tax refund? Most Canadians are because they feel good that they are getting something for nothing, and the refund cheques are often used to buy treats or luxuries. Consider that getting a tax refund is just you giving an interest free loan to the CRA throughout the year. Most Canadians have debt elsewhere, such as a mortgage, line of credit, car loan or credit cards, where they are paying anywhere from 5-20% in interest. Does it make sense to borrow money at 5-20% at the same time as giving Revenue Canada an interest free loan?
What can be done about this? Many Canadians are not aware that there is a form to apply to change this. Less taxes can be taken off every paycheck. It is Revenue Canada’s T1213 form, “Request to Reduce Tax Deductions at Source.” This can have a positive impact on your monthly cashflow allowing you to either top off your savings or pay down debt. Even small regular amounts can have a big impact on retirement savings. And next year when you owe money to the CRA, you can celebrate that you were the one that got the interest free loan, not the government!
For more information on this and other ways of keeping more control of your money, reach out for a complementary telephone consult at 647-302-0151, or follow me on Instagram @moneypuzzle.ca.