Tax refund shouldn’t be treated as "extra cash"

It's tax season again and many Canadians are expecting to get an income tax refund. What are some of the sure-fire ways to make sure returns are not put to waste?

Lydia McNutt, a content manager at RE/MAX Canada, said Canadians need to stop treating tax refunds as "extra cash".

"If you're getting an income tax refund, it means that you've overpaid in taxes and you're simply getting some of that back," she said in a think piece.

Citing figures from the Canada Revenue Agency, McNutt said Canadians were able to get an average tax refund of $1,740 last year.

Also read: Tax tips for homebuyers

McNutt said Canadians can use their tax refunds to finance minor home upgrades.

"While your income tax refund may not be enough to fund a full-blown renovation, the average amount that goes back into Canadians' pockets is definitely enough to cover some small but sweet upgrades in your home," she said.

Not only will small upgrades can enhance the liveability of the home, but they can also boost the value of the property on the resale market, McNutt said.

Another smart way to use the tax refund is to pay down debts, particularly the high-interest ones or mortgages.

"A lump-sum mortgage payment will go directly toward your principal, so this could be a good place to park any extra funds. Ensure your mortgage agreement offers pre-payment privileges," McNutt said.

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