Getting a tax refund is exciting, but should it be?
Do your clients know that when a tax refund is issued, it means they are giving the government an interest-free loan? If your client receives a tax refund, it may mean your client’s employer is withholding too much tax. Here’s how to change that.
Your client can complete and submit Canada Revenue Agency (CRA) form T1213 (Request to Reduce Tax Deductions at Source).
Your client will indicate which regular deductions and non-refundable tax credits to qualify for. These would include things like regular Registered Retirement Savings Plans contributions, childcare expenses, etc. When approved by the CRA, your client will see more money on every pay. Your client might even want to make this request to reduce the tax withheld if a large bonus or vacation pay is anticipated.
Encourage your clients to use the additional cash flow to increase monthly contributions, support a Retirement Savings Plan or Tax-Free Savings Account or repay an investment loan. Increasing savings each year – even by a small amount – can have a substantial impact on retirement savings. For additional questions, contact your Regional Investment Sales Manager.