- Pay down high-interest debt: This can include outstanding credit card balances, and should be your top priority. Consider making a lump-sum payment, especially if the interest on the debt is not tax deductible.
- Save for a child's education: You can contribute to a child's Registered Education Savings Plan (RESP), which will also potentially qualify them for a Canada Education Savings Grant (CESG). The plan will earn tax-free investment income on both your contribution and any government grants. Grandparents may consider opening a family RESP plan, which can have multiple children as beneficiaries.
- Create a flexible savings strategy: A contribution to a Tax-Free Savings Account (TFSA) can be part of your retirement savings strategy, and interest earned and investment income is not taxed. Because you can withdraw the funds at any time, it is a great option for use as an emergency fund. A good rule of thumb is to have at least six months of living expenses set aside for contingencies.
Splurge Vs. Save? TD Shares Tips To Help Canadians Get The Most Out Of Their Tax Returns
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