Last updated: July 09 2008

Suggestions For Tax Refund Revellers. . .

By now, most Canadians have achieved tax freedom ó for tax year 2007, at least ó and are well on their way to working for themselves now. Think about it. ..

You've come through the March 15 quarterly income tax instalment, the April 30 tax filing deadline, the June 15 instalment and small business filing deadline, your corporate tax filing deadline and property tax payment deadline too. You've even paid up all your GST instalments, not to mention renewals of provincial auto, property and health insurance!

And, you've probably received your tax refund, or are about to. For most Canadians this is the most significant financial event of the year ó an average of $1400 according to a recent news release from CRA.

Fortunately there are so many great ways to leverage those interest-free, tax eroded dollars with a multitude of new tax-assisted savings plans to invest your tax refund into . . .

  • The RRSP contribution maximum has increased for 2008: save up to 18% of your earned income to a maximum of $111,111 or $20,000 this year, less your Pension Adjustment amounts. Check your Notice of Assessment to determine your exact RRSP contribution room.
  • You can start saving now to sock away up to $5000 per family member each year in the new TFSA ó the Tax-Free Savings Account. Your eligibility to contribute to the plan, starting in 2009 depends on whether or not you have filed a tax return. . .so tell the delinquents in your family to do so quickly.
  • You can invest more into your child's RESP ó Registered Education Savings Plan: there is no annual limit and the lifetime limit has increased, too, to $50,000
  • The new RDSP ó Registered Disability Savings Plan, which is expected to be available by at least some financial institutions will provide a government-assisted asset-back savings plan for the vulnerable in our society. . .a great way to get involved in community assistance even if there is no disabled person in your family.

What's the bad news? Let's face it, governments are still in your pocket. . .you'll see it through various increasing user fees, like often cost-prohibitive provincial and federal park entrance passes, or fuel taxes which add to high vacation travel costs; and increasing fees on utilities needed to run home air conditioners or heat the family pool!

It's all very expensive. . .enough to tempt some to take a little extra comfort nipping from that wine cellar. . .even if the taxes on alcohol consumption make that cost prohibitive, too!

Oh well, try to enjoy your after-tax dollar in the summer sun. . .and multiply its effectiveness by taking advantage of all the tax assistance you can get, because the Erosion Twins. . .Taxes and Inflation, clearly have an increasing appetite for your money.

Next Time: Meet the Erosion Twins