The nice thing about NETFILE is that if CRA owes you a refund, you can expect to receive it by direct deposit in about eight business days. I owed the CRA a bit of money this year but my wife got a big refund and we wondered what to do with it. Jon Chevreau writes in The Financial Post that a lot of Canadians will face a similar decision – more than half of 25 million tax payers can expect a refund averaging $1,382 – and offers some ideas:
- Pay down Consumer Debt: Probably the best option for those carrying credit-card or other high-cost debt is to use the refund to pay it down.
- Pay down the RRSP loan: People who borrowed money to contribute to their RRSP should use the refund to pay down the RRSP loan.
- Contribute to Your RRSP: If the big refund is courtesy of a last-minute RRSP contribution, the refund can be used to start a virtuous cycle – get a head start on RRSP contributions for the current year.
- Pay down the Mortgage: The conventional advice is to use the tax refund to pay down the mortgage. Another option is to repay other low-cost loans.
We ended up picking the last option and paid down an investment loan.