Why getting a tax refund is a poor idea
Getting a large tax refund each year simply means you’ve remitted too much tax to the Canada Revenue Agency throughout the year, essentially giving the government an interest-free loan.
That’s a bad idea, says Tim Cestnick, author of 101 Tax Secrets for Canadians.
While many employees understand that there’s a cost to overpaying taxes throughout the year, the idea of receiving a refund can be appealing since many view it as forced savings or found money. But it’s still a mistake, Cestnick maintains.
And getting it upfront from a tax discounter, by cheque or loaded onto a debit card, is likely worse. That's because it comes with a catch — a fee that can be as high as 15 per cent of the refund in certain cases — which, when you think of it, is a rather dim way to access your own money.