Tax refund = Missed opportunity to build more wealth

Happy you earned a tax refund this year? From a financial perspective it's not great news, unfortunately.

Getting a refund means you paid more than your share of tax in the past year, with no compensation. The bigger the refund, the more money you could have had working for yourself - instead of the tax man.

Fortunately, if you are a full- or part-time employee, there is an easy strategy to get your tax refund working for you sooner.

If you make regular contributions to an RRSP or registered pension plan through your paycheque, your payroll taxes will be reduced to reflect the deduction you would earn the next tax season. The result? Your after-tax salary or bonus will be higher than it otherwise would be.

You can achieve the same result with your financial institution (within your RRSP limits) if you commit to make regular contributions to an RRSP or spousal RRSP using a pre-authorized chequing (PAC) service. Our team would be glad to help you fill out the form to set this up.

In helping you complete the form, we can also point out other regular payments that attract a tax deduction or credit, and which could further reduce your tax. Payments like child-care expenses, charitable donations, tuition, or interest paid on investment loans.

The goal is to minimize tax throughout the year, increase your take-home pay and direct the extra cash flow to growing your net worth. For example, you could:

- top up your RRSP contributions

- boost mortgage payments

- pare down other high-cost debt

- contribute to a Tax-Free Savings Account, where you'll never pay tax on growth or withdrawals, or

- establish an equity-based portfolio outside of registered plans to capitalize on tax-deferred growth.

Any of these ideas will enhance your financial well-being. And here's another advantage. By saving smaller amounts on a regular basis, you can also eliminate the fear of investing a big lump-sum investment at a short-term market high.

Give our office a call to ensure you're doing everything possible to accelerate the benefits of a tax deduction and build extra wealth, year after year.

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This Report is written by Investment Planning Counsel, a fully integrated Wealth Management Company. Mutual funds available through IPC Investment Corporation and IPC Securities Corporation. Securities available through IPC Securities Corporation, a member of CIPF. Insurance products available through IPC Estate Services Inc. Mortgage broker services provided by IPC Save Inc. (ON Lic. #10227).