As financial advisors, we know that waiting for money can be tough. That’s why an instant tax return in Canada seems so appealing to many people. But this service is a loan that takes a piece of your hard-earned refund. The CRA’s own method is free and gets your full refund into your bank account in about two weeks. Keep reading to see why waiting a few extra days is usually the smarter choice.
What Exactly Is an “Instant Tax Return”?
It is not a real refund from the CRA. It is a service offered by private companies that prepare taxes. These companies are sometimes called “discounters.”
What you are really getting is a loan. The tax company figures out how much money the CRA owes you, then gives you most of that money right away. In return, you have to sign a paper that lets the CRA send your full refund to them. The company makes money by keeping the difference.
The financial advisors at Phoenix Knight always recommend that you understand the true cost before choosing this option.
How Does a Same-Day Tax Refund Work?
The steps to get a same-day tax refund are simple. But you have to agree to give up a part of your refund. Knowing the steps helps you see exactly where your money is going.
The Process Step-by-Step
The Real Cost: Understanding the Fees
Getting your money this fast is not free. The fees for a tax return instant refund are controlled by the government to protect people, but they are still high.
Here is how the fees are usually calculated:
- They take 15% on the first $300 of your refund.
- Then, they take 5% on any amount over $300.
Let’s say your refund is $1,000. The fee would be $45 for the first $300 and $35 for the other $700. That adds up to a total fee of $80. You get $920 right away, but you lose $80 just to get it a little faster.
This is why knowing how to reduce your income tax in Canada is so valuable. You work hard to get a bigger refund, so you don’t want to give it away.
The Fastest Way to Get Your Full Refund (Without Fees)
Instead of paying high fees for an instant refund, you can get your money almost as quickly for free. Here’s the best way to get your full refund from the CRA:
Remember, simple mistakes or issues like filing taxes late can slow down your refund significantly.
Is an Instant Refund Right for You?
An instant tax return might help if you have a real emergency and need cash immediately. But for almost everyone else, it’s a very expensive choice.
Waiting about two weeks for the full refund from the CRA’s free and fast online service is a much better financial decision. By planning ahead, you can avoid high fees and keep every dollar that you are owed.
If you want to make a financial plan that helps you reach your goals, our team is here to help. Contact us today for expert advice on your taxes and finances.
Written by Robin DeRidder
Robin DeRidder is the founder and Principal Advisor of Phoenix Knight Financial Solutions Ltd. With over 20 years of specialized experience, he empowers Canadian businesses and individuals. Robin’s expertise lies in creating tailored tax and accounting solutions.
