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  • Adrian Harasymiw

The Tax Refund Conundrum

Updated: May 2

It's May 1st - Tax Filing Deadline in Canada.

Like many Canadians, if you "played" your financial cards right over the past year, you feel like the lucky recipient of a tax refund from the tax authorities. There's no doubt that when it comes to taxes, the feeling of receiving is so much better than the feeling of giving.

Let's put aside the argument that, if you actually played your financial cards right over the past year, your tax refunding/owing would be $0. That's an insightful discussion for another day.

Today, let's focus on the return from the government of your generous financial loan.

"To spend or not to spend? Tis is the question..."

The easy answer is "Not to spend".

But at Pinnacle Sovereign Wealth, we are about being realistic and not forgetting the "Enjoy Wealth" segment of what we help others do. Besides, it can't all be about "Creating" and "Protecting" wealth. What's the use in creating and protecting all that wealth if we've bored ourselves to death?

So, yes, bear with me, I will get to the "Creating" and "Protecting" in a moment.

Firstly, though, I'm going to suggest what most other wealth counsel might not but something that needs to be done to make this whole process all the more satisfying.

Take 10% of your tax refund and...brace yourself...spend it on yourself.

(If you filed as a couple with your spouse, don't forget to include him or her. Enjoy the wealth together. Chaos is surely to ensue if you don't.)

Now, let's not forget that a tax refund is a return of over-paid taxes throughout the year. So, it's important to think, what would you have done with that extra money over the course of the year? It's likely you would've spend at least some of it on yourself had it not gone to the government so there's no point in fully resisting that temptation now, lest you be left with aggrieved feeling.

How about taking steps to help the positive feelings of this tax refund linger? Consider gifting yourself (and/or your spouse) a gift card for something you know you'll buy anyways.

For example, if your plan is to earmark your 10% for books, why not buy a gift card that you can you use a few times in the coming months, letting the joy of your tax refund linger for more than just a day or two? This way, you're also less prone to blowing the whole amount in one spree of uncontrollable shopping urges.

Now that we've let the endorphins loose, it's time to get to the boring but productive part. Here are some objectives for your remaining 90%.

Objective #1: Pay Down Debt

Did you take on any unexpected debt over the last year? The government just repaid their debt to you through the tax refund so it's time to pay the money forward and reduce the debt you owe elsewhere. Besides, reducing the interest burden, especially in a rising interest rate environment, is the quickest and easiest way to create wealth for yourself.

This is especially true if you were convinced to take on debt to contribute to your RRSP. The whole ill-considered strategy goes completely to waste if you don't pay down and off this RRSP loan as soon as possible. Do not read further if this is what has landed you the tax refund in the first place. Do not "Pass Go". Just pay down that RRSP debt and be done with it. See you next year!

Objective #2: Invest in Your Future

Of course, given my vocation, building your money portfolio is at the fore of my mind. So yes, the untamed wealth counsel in me wants to say put it all into a TFSA and invest it for the long-term.

I might cringe but accept a contribution to your RRSP too, especially since it could help you garner another tax refund next year.

But seeing as I believe wealth is about so much more than just the monetary, you could also use your tax refund to invest it in yourself. For example, take a course in a new skill you've always dreamed about learning. You could also brush up on a skill or craft you've neglected for a few years but are looking to reignite. Be it professional or enjoyable, you (re)development of a skill or craft will build more wealth for you and your family. This truly would be a tax refund gift that keeps on giving throughout the years, one you won't soon forget.

Objective #3: Invest in Your Legacy

The first idea is to donate money to your cherished charitable cause. In most cases, this donation will help you potentially generate another tax refund next year through the charitable donation deduction.

On the other hand, ever the wealth counsel, you could look at starting or growing an RESP for your children or grandchildren. Family is the ultimate legacy we have. It's on no one but us to propagate our lineage.

Maxed out on your RESP/TFSA/RRSP? Or looking for a different way to save and leave your mark through time without fully giving up access to your funds? You could consider establishing a life insurance policy that can both protect and create more wealth for you.

Let's face it. Many of us bemoan the financial family dynasties we see in the world but very few of us do anything about it, outside of complain about it. We must first remember that each of those families have one thing in common. Someone started. Will you be the one to start?


The opportunities may seem endless and mindboggling, even for something as "small" as your tax refund. It's no wonder many people take the easies route and just spend it all. Taking all the options under consideration is daunting. Which one to pick? What about a combination? Are you making the right choice?

If you know the easy option isn't the right option but need counsel and management of your wealth portfolio, please connect with us at Pinnacle Sovereign Wealth through the link below. We are dedicated to helping you create and protect wealth so you can enjoy it. We would be honoured to help guide you in your unique suitable direction.

Together to winning at life through self-ownership and happiness,


#CreateWealth #ProtectWealth #EnjoyWealth #WinAtLife #TFSA #RRSP #RESP

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