What to Do With Your 2017 Tax Refund

By Grant T. Smith


tax refundThe other day, I read a great article by Rob Carrick, of the Globe and Mail. Carrick was talking about how to spend your tax refund and he listed four strong ideas:

  1. Pay down debt
  2. Buy US dollars to fund your US vacation, in anticipation that the Loonie will continue to weaken
  3. Look for investment bargains
  4. Build an emergency fund


Each idea is valid and sound, but something is missing. Here is my spin on what to do with your tax refund.


We will file close to 2,000 returns this year and I see a fairly consistent problem among many tax payers. There are two types of people in this world, when it comes to taxes.  


The first type (savers) continually tries to keep their TFSA topped up to the maximum and their RRSP fully booked. They do not always succeed and many have shortfalls, especially around the time to buy a home or go back to school to develop new opportunities. Regardless, they continually strive to advance their tax-sheltered funds.


The second type does not.  


I can also say that we observe savers at all stages of their life:

  • People trying to establish a career
  • People building a family and acquiring property
  • Retirees


Consistently, this third group of people, in retirement, are secure with substantial income from their RRIFs and other retirement incomes, like CPP and OAS.


So when it comes to your 2017 refund, my advice is simple and clear – the first place to put you tax refund is your TFSA and when it is full, top up your RRSP.


Simple message this month: go forth and save.