As tax filing deadline looms, almost half will use refund to pay off credit cards

This article offers 5 excellent ideas about what to do with your tax refund.  I have a sixth idea for you, there are many investment vehicles out there and Alta West Mortgage has a few too. We offer several Mortgage Investment Company's(MIC's) that yield good returns in these uncertain times. Contact our office for more info on that and read this article for more investment advice.

John Waters, BMO Nesbitt Burns' manager of tax planning, offers the following five top tips for putting your 2009 tax refund to good use.

1.) Pay down your RRSP loan or make your 2010 RRSP contribution now

If you took out a BMO RRSP Readiline loan to maximize your RRSP contribution and generate a larger refund, use your tax refund to pay down the loan.  If not, consider making your 2010 RRSP contribution now instead of waiting until the deadline next year.  This will allow you to benefit from almost an extra year of tax-deferred growth!
 
2.) Pay down credit card debt

Interest on some credit cards can eat away at your savings.  Reduce the cost of credit by using your tax refund to reduce or pay down your credit card balances, targeting the highest rates first.
 
3.) Lump sum mortgage payment

If you have a mortgage, it is a good idea to use your tax refund to make a lump sum payment. Applied directly to your principal, a lump some payment (BMO allows you to pay up to 20 per cent of your original mortgage principal per calendar year) could save you significant dollars in interest costs over the life of the mortgage.
 
4.) Top-up your TFSA

If you are not carrying any extra debt then make your refund work for you. Contributing to a Tax-Free Savings Account (TFSA) can let you grow your money tax free. Even if you maxed out your TFSA contribution in 2009, you have room for an additional $5,000 this year.
 
5.) Save for education

An education can be an expensive thing. Contributing to a Registered Education Savings Plan (RESP) can help alleviate some of the pressure that all parents feel when planning for their children's future. Consider opening an RESP using your income tax refund. A $2,500 dollar contribution to an RESP can earn a $500 grant from the government. Maximize your contributions every year and you could earn up to $7,200 in lifetime grants for every child.

Source; National Post