Ralph Moss Limited

SMART MONEY MOVES

Make the most of your tax refund

Within the next couple of months, thousands of Canadians will receive a welcome cheque from Revenue Canada in the mail. It can be extremely tempting to treat yourself and your family to a special purchase with this "found money". But there are much better uses for your refund, which will generate longer-lasting benefits.

The highest return from your refund cheque can be had by reducing debts, starting with those that charge the most interest. In the 50% marginal tax rate, you have to earn $2 before tax to pay back every $1 of debt.

YOUR MOVE. Credit cards charge annual interest rates in the 15% to 19% range. If you're carrying an outstanding balance on your credit cards, paying it off should be your first priority. You may also want to use your refund to pay off an RRSP loan, or pay down your mortgage principal.

Your next move is to take steps so that you can avoid a refund next year. Read "Big refund?" to find out why.

The information and opinions contained in this newsletter are obtained from various sources and believed to be reliable, but their accuracy cannot be guaranteed. Readers are urged to consult their professional advisors before acting on the basis of material contained in the newsletter.

Last updated September 11, 1996
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Copyright© 1996 All rights Reserved, Ralph Moss Limited and Ariad Custom Publishing Limited
This article has been reproduced from Financial Planning Gude, Vol.10 No3. Copyright© 1996 Ariad Custom Publishing.