The TFSA Shuttle … channeling the Harlem Shuffle

A catalyst in concert with FHSA, RESP and RRSP tax-sheltered savings

In 1986, the Rolling Stones covered the 1963 R&B song Harlem Shuffle. While the original from the duo Bob & Earl was modestly successful, the Stones’ cover topped the charts in some places, peaking at #5 in Canada. The self-proclaimed world’s greatest rock’n’roll band had put their distinctive spin on something good, and made it even better.

Now, no-one’s about to suggest that tax planning is as enticing as a smooth groove, but magic truly can happen when good things come together. To the point, if you take one good thing
– FHSA for a home, RESP for education, RRSP for retirement – and combine it with another
– the ubiquitous TFSA – you really can produce a whole that is greater than the sum of its parts.

TFSA principles

Introduced in 2009, the tax-free savings account (TFSA) allows after-tax deposits to accumulate tax-sheltered and be drawn out tax-free. By contrast, a registered retirement savings plan (RRSP) is funded by pre-tax deposits that (also) accumulate tax-sheltered, and then are taxed on withdrawal.

Comparison of the two plans was inevitable, often framed as ‘TFSA vs. RRSP’. But rather than it being an either-or proposition, a more productive approach is to employ yes-and thinking. Specifically, if the TFSA is used as the entry point into RRSPs or other tax-sheltered plans, that routing can positively exploit a valuable feature unique to TFSAs.

The re-contribution credit

Whereas available room for other tax-sheltered plans is exhausted one-way as contributions are made, the TFSA calculation operates in both directions. For a Canadian resident over 18, annual room has three components:

- The prescribed annual TFSA dollar limit, currently standing at $7,000, +
- Unused room from previous years, +
- Withdrawals made in the immediately preceding year.

It is the third component that presents the opportunity for the TFSA to be used in concert (pun fully intended) with its tax-sheltered siblings. And whereas a catalyst in the chemical sense remains unchanged after influencing a reaction, not only might a TFSA help another plan, the benefit of that interaction can also echo back to the TFSA.

Start me up! (Assumptions)

Meet 20-something Mick. He’s a serial saver for current needs, and is ready to set aside an additional $100 each week to add to his routine. He intends on using a high-interest savings account (HISA) for this, with the going interest rate in early 2024 being 4%. It’s the start of the year and he hasn’t yet used any of his annual TFSA room.

Understanding there are 52 weeks in a year, to avoid a 19^th nervous breakdown doing the math, we’ll use $5,000 for the annual tally. As well, though his cash flow and the HISA terms are bound to vary, we’ll keep them constant here.

FHSA for a home

With the state of house prices, Mick knows he needs to start saving a down payment, for which he wants to use the recently-introduced first home savings account (FHSA). Base annual contribution room is $8,000, with a lifetime limit of $40,000. His plan will have him saving about $5,000 a year, using up his lifetime room in eight years.

Alternatively, Mick could open HISAs for both FHSA and TFSA. Assuming the same terms for each, weekly deposits could be directed to the TFSA, then after 50 weeks in mid-December the balance could be withdrawn and deposited to the FHSA before year-end. It’s important to be attentive to dates for two reasons:

- The TFSA re-contribution credit occurs the next January 1^st, which could be a 365-day swing if it’s missed.
- And though the deduction for FHSA contributions may be carried forward to a later year if desired, it can’t be carried back to an earlier year (i.e., there’s no ‘first 60 days after year-end’ rule as there is for RRSPs).

Timing aside, the average TFSA balance over the year will have been $2,500. At 4% interest, the mid-December balance will be about $5,100.

- An annual TFSA-out/FHSA-in shuttle of that full amount will allow Mick to max his FHSA in a little less than the eight years. With annual TFSA deposits of $5,000 and withdrawals of $5,100, the net re-contribution credit will be $100 each year, giving Mick $800 more TFSA room over the full duration by having used the shuttle option.
- If instead, an even $5,000 is taken out of the TFSA annually, it will again take exactly eight years to fill the FHSA, as if the TFSA had not been involved. However, by using the TFSA as a shuttle, $800 extra TFSA balance will be created, without making any material change to Mick’s investment choices or risk exposure.

RESP for education

Now in his 30’s, Mick had been hoping his son Jack would earn an athletic scholarship for his pole-vaulting prowess. But as he’s grown, it appears that Jack’s jumping skills were just a flash in the sand, and Mick now needs to catch up on contributions to the boy’s registered education savings plan (RESP). With carryforward of past unused room, Mick plans to deposit $5,000 for the next seven years or so, to claim the maximum grant money.

As with the FHSA example above, deposits could go direct to the RESP, or route through a TFSA. The Canada Education Savings Grant (CESG) is the main support program, matching 20% of annual RESP contributions, so $1,000 in our example. By routing through the TFSA, some of that CESG will be delayed a few months as compared to direct RESP contributions. Even so, that’s a small price to pay to obtain the additional TFSA balance or room, which will sum up to just over $700 across those planned years using the same HISA terms.

Another consideration is that once Jack is enrolled in a qualifying post-secondary program, personal RESP contributions can be withdrawn tax-free. The withdrawn amount could be routed back to Mick’s TFSA, assuming there is sufficient room. While the continuing income would be tax-sheltered whether left in the RESP or moved to the TFSA, once again the availability of the re-contribution credit favours use of the TFSA.

If Mick wants to take it a step further, some of those refunded contributions could go to Jack’s TFSA. After all, Jack’s entry into post-secondary will roughly align with him hitting age 18, when he will start getting TFSA room. This could be a good time to establish the knowledge, tools and behaviours to help him on his own personal finance journey.

RRSP for retirement accumulation

As Mick travels through his 40’s, 50’s & 60’s (though some observers feel like he’s the picture of eternal youth), his savings efforts will increasingly focus on retirement. The dollars will be larger – from the amounts saved to their accumulation and on to the annual drawdowns – but otherwise the same fundamentals apply. Mick could go direct into RRSP, or use a TFSA-RRSP shuttle, bearing in mind that larger amounts mean larger re-contribution credits.

There is one more effect to consider, being the annual tax refund Mick can expect to receive after deducting those non-workplace RRSP contributions when filing his annual tax return. If that too is routed to and through the TFSA, it will provide an extra lift to the anticipated TFSA re-contribution credit generated each year.

HISA or market investing?

Saving for retirement and being in retirement can each be decades in length. While a HISA may work for shorter-term purposes like a home purchase or education, it’s not suitable as the core of retirement savings. Indeed, a diversified investment portfolio is generally more appropriate for RRSP savings. In turn, a parallel TFSA portfolio could be arranged to facilitate the intra-year shuttle. With a higher expected (though variable and not-guaranteed) return relative to a HISA, this could be one more boost to the TFSA re-contribution credit.

Mick should consult with his advisor before undertaking this more advanced version of the shuttle concept, to determine what approach best aligns with his knowledge, personal circumstances and risk tolerance.

RRIF for retirement decumulation

Into his 70’s, Mick will have migrated his accumulating RRSPs into the decumulating form of a registered retirement income fund (RRIF) with mandatory minimum annual withdrawals. By default, he would probably take a fixed weekly or monthly spending withdrawal. Alternatively, he could take a lump sum early in the year and route it into a TFSA (HISA being most appropriate for this use), still available for spending, while getting one more TFSA room kicker.

TFSA as the others’ little helper

Over its 15-year history, the TFSA has progressed from novelty to fixture in our financial landscape. By using it as a shuttle, its built-in flexibility can feed into other tax-sheltered plans, while making itself better in the process.

Disability income support – 2024

Public assistance, tax relief and coordinated private planning

People with physical and mental disabilities often face serious financial challenges due to earning limitations and direct out-of-pocket costs. Fortunately, government support is available, as summarized below. Unless noted otherwise, all figures are for programs and federal tax credits for the 2024 tax year, rounded to the nearest dollar.

With support delivered in multiples ways, from both provincial and federal sources, it can be difficult to determine what, how and how much may be available. To help you navigate, the material in this document is broken into three major topics below. Hyperlinks to official sources are included in the subtopic descriptions, with full text of those links in the appendix:

Direct financial assistance

Canada pension plan

The Canada pension plan (CPP) is a social insurance plan providing income replacement to contributors and their families in the event of retirement, disability or death. It is government-run, but funded by mandatory employee and employer premiums.

CPP disability benefit [1]

The CPP disability benefit is available to people under age 65 not receiving a CPP retirement pension who have made recent CPP premium payments while working. Generally, this means contributions in four of the last six years, or contributions for at least 25 years, including three of the last six years.

The disability must be both:

- severe (a person is incapable of regularly pursuing any substantially gainful occupation); and
- prolonged (long-term and of indefinite duration or is likely to result in death).

The monthly disability benefit is a basic amount, plus an addition based on the person’s past CPP premiums. Currently, the base is $583, with the maximum at $1,607. When the person turns 65, the CPP disability benefit is automatically changed to a CPP retirement pension.

CPP post-retirement disability benefit [2]

A person 60 to 65 with a CPP retirement pension for more than 15 months is not eligible for the CPP disability benefit. Instead, if the definition for disability and minimum contribution requirements are met, the post-retirement disability benefit (PRDB) is paid as a $583 flat rate. The application is the same as for the CPP disability benefit.

Benefits for children under 25 [3]

The CPP children’s benefits provide monthly payments to the dependent children of disabled or deceased CPP contributors. The disabled contributor’s child’s benefit, currently $294, is for a child of a person receiving a CPP disability benefit. Though related to the disabled contributor’s own claim, this is a separate application form and process. It is taxable to the child, even if received by a parent or guardian on the child’s behalf. The child must be under age 18, or under 25 if attending a qualifying post-secondary educational institution.

Canada child benefit

The Canada child benefit (CCB) is a tax-free payment made to eligible families by the federal government to help with the cost of raising children under 18 years of age. The maximum amounts are progressively reduced as family net income (FNI) exceeds indexed annual thresholds. Amounts for 2024 are:

- For July 2023 to June 2024, $620 for a child under 6, and $523 for a child between 6 and 17, reduced as 2022 FNI exceeds $34,863
- For July 2024 to June 2025, $649 for a child under 6, and $548 for a child between 6 and 17, reduced as 2023 FNI exceeds $36,502

The CCB may include the child disability benefit (CDB) and related provincial/territorial programs.

Child disability benefit (CDB) [4]

The CDB is available to families with children qualifying for the disability credit (see below). Amounts for 2023 are:

- For July 2023 to June 2024, $264 per child each month, reduced as 2022 FNI exceeds $75,537
- For July 2024 to June 2025, $277 per child each month, reduced as 2023 FNI exceeds $79,087

To qualify, Form T2201 must be completed by a qualified health professional and submitted to the Canada Revenue Agency (CRA) for approval. The payment is then delivered as part of the monthly CCB payment.

Provincial support programs

Some provinces have standalone disability support programs, while others recognize disability as a special qualification within the broader social support system. Generally, a licensed physician using provincially prescribed criteria and forms must certify the disability. Provincial approaches vary in terms of service offerings, cost reimbursements, rates for family size and composition, and direct financial assistance.

Entitlement is reduced or eliminated where earnings or assets exceed regulated thresholds, though some provinces will disregard assets held in a discretionary trust for the disabled person (ie., Henson trust, discussed below). To determine provincial resources, consult these program links: [5]

British Columbia – Disability assistance

Alberta – Assured Income for the Severely Handicapped (AISH)

Saskatchewan – Saskatchewan Assured Income for Disability (SAID)

Manitoba – Employment and Income Assistance for Persons with Disabilities

Ontario – Ontario Disability Support Program (ODSP)

Quebec – Ministère du Travail, de l’Emploi et de la Solidarité sociale (general)

New Brunswick – Family Income Security Act – Extended Benefits Program

Nova Scotia – Disability Support Program

Prince Edward Island – AccessAbility Supports

Newfoundland and Labrador – Persons with Disabilities & Income Support, Rates

Individual income tax relief

Forms of support [6]

Tax measures commonly available to assist persons with disabilities fall into three categories:

1. Deductions –
  Qualifying items reduce the taxable income upon which relevant federal and provincial tax rates are applied.
2. Non-refundable tax credits –
  Once a person’s tax liability is calculated, credits are applied to reduce that liability but cannot take it below zero. The qualifying amount is multiplied by the applicable federal or provincial rate (usually the lowest bracket rate) to calculate the credit value. The federal credit rate is 15%.
3. Refundable tax credits –
  As above, the qualifying amount is multiplied by the applicable federal or provincial rate. The resulting value is first applied to reduce the individual’s tax due, and if there is any left over after the tax liability has been reduced to zero, the remainder is paid to the taxpayer.

The following is an outline of the key items and their potential dollar values (often income-dependent), though it does not cover all possibilities. For a comprehensive view, including detailed qualification criteria, consult Guide RC4064 Disability-Related Information. [7]

Disability tax credit (DTC) [8]

This is a non-refundable credit, available both federally and provincially. Using tax form T2201, the disability must be certified by a qualified medical practitioner as being both severe (i.e., blindness, conditions requiring life-sustaining therapy, a marked restriction in speaking or hearing, walking, feeding, dressing, elimination or a marked restriction in everyday mental functions) and prolonged (lasting, or expected to last, continuously for at least 12 months).

The basic federal amount is $9,872. A supplement worth as much as $5,758 may be available for children under age 18, though the value is reduced if certain child and attendant care expenses are claimed for the child.

When multiplied by the credit rate, the maximum value for the DTC is $1,481 and for the supplement $864, for as much as $2,345 total.

Ancillary claims

Disability supports deduction [9]

A disabled person may deduct qualifying out-of-pocket expenses incurred to work, go to school or conduct grant-supported research. The person may not deduct amounts already claimed under the medical expense credit (whether claimed personally or on his behalf as a dependant), or amounts already reimbursed by health insurance plans or through other non-taxable payments. Generally, the deduction cannot exceed the person’s earned income for the year, calculated using CRA Form T929.

Medical expense credit [10]

A person may claim eligible medical expenses, whether incurred in Canada or elsewhere, that will be paid in any 12-month period.

Special rules apply to attendant care expenses, and whether the care was received at home or in a facility. This is a non-refundable tax credit, equal to expenses that exceed the lesser of $2,759, (indexed annually) and 3% of the disabled person’s net income. Each province uses as similar lesser-of a prescribed dollar amount and 3% of net income. Quebec applies the credit on qualifying expense amounts over 3% of family net income.

Eligible expenditures can be claimed either under this medical expense credit calculation or as a disability support deduction, but not both. Accordingly, run a test calculation to determine which of the two yields the best net tax result.

Refundable medical expense supplement [11]

This is a refundable credit designed to assist people with low incomes who claim either the disability supports deduction or the medical expense credit. Subject to a clawback where family net income exceeds $32,419, this federal credit can be worth as much as $1,464.

Home buyers’ amount [12]

A credit amount of $10,000 (value $1,500 as a non-refundable tax credit) is available for first-time purchasers of a qualifying home. You do not have to be a first-time buyer if you are eligible for the DTC or you bought the home for the benefit of a related person who is eligible for the DTC. However, the purchase must be to allow the person with the disability to live in a home that is more accessible or better suited to his or her needs.

Home accessibility tax credit [13]

This non-refundable credit is worth up to $3,000, based on a $20,000 amount. It is for eligible home renovations if they allow a person to gain access to or be more mobile or functional within the home, or if the renovations reduce the risk of harm within the home. The eligible person must be 65 or older, or be eligible for the DTC. The credit may be claimed by that person, or by a homeowner who supports the eligible dependent person if certain criteria are met.

Extended support

Caregiver amount

The Caregiver amount is a non-refundable tax credit that may be available to a person who supports a person with a physical or mental impairment. The amount and value of the credit are determined based on the dependant the taxpayer is supporting.

For care of a dependent spouse/common-law partner (CLP) the spouse/CLP amount is increased by $2,616. For a minor child or grandchild, the amount for an eligible dependant is similarly increased by $2,616. In either case, the value of the credit is $392. Depending on the dependent’s net income, the amount on which the credit is calculated can be up to $8,375, worth up to $1,256. [14]

If you are caring for your or your spouse/CLP’s dependent relatives (parent, sibling, adult child or certain specified relatives) 18 years of age or older with infirmities, the amount is $8,375, worth up to $1,256. [15]

Child care expenses [16]

Child care expenses may be deductible if incurred so that a parent may earn income, run a business, attend school or conduct certain research activities. The calculation of this credit can be complicated, even without disability issues to consider. For present purposes, be aware that there are provisions to guard against concurrent claims being made for the disability amount or the medical expense credit.

Transferrable amounts [17]

A person may be able to claim certain amounts, notably the disability credit and the medical expense credit, transferred from a spouse, common-law partner or dependant.

GST/HST relief [18]

Many goods and services used by persons with disabilities are not subject to GST or HST, whether by exemption or rebate. Here’s a list of what’s qualified:

- most health care services;
- personal care and supervision programs while a primary caregiver is working;
- prepared meal delivery programs;
- public sector recreational programs designed for persons with disabilities; and
- medical devices, supplies and specially-equipped vehicles.

Multigenerational home renovation tax credit [19]

Effective for 2023 and following years, this refundable credit is available for renovations that create a secondary dwelling unit to permit an eligible person (a senior or a person with a disability) to live with a qualifying relation. It is calculated on the lesser of eligible expenses incurred and $50,000, making it worth up to $7,500. The credit can be claimed by either the eligible person or a qualifying relation. One qualifying renovation is permitted to be claimed in respect of an eligible person over their lifetime, as compared to the Home accessibility credit (discussed above) which may be claimed annually.

Coordinated private planning

To optimize access and use of government financial and tax supports, individuals and families must manage their income and assets. This includes: family estate planning, up-to-date wills, informed beneficiary designations, executing powers of attorney, and establishing appropriate trusts.

Canada workers benefit

The Canada workers benefit (CWB) is a refundable tax credit designed to assist low-income working individuals and families. There is a basic amount that can be claimed if family working income is more than $3,000, and a disability supplement. For 2023, it is worth up to $1,518 for individuals (reduced as individual adjusted net income exceeds $24,975) or $2,616 for families (reduced as adjusted family net income exceeds $28,494).

Disability supplement [20]

A person eligible to claim the disability credit may be able to claim the disability supplement on top of the CWB basic amount. It can be claimed if individual working income is more than $1,150. For 2023, it is worth up to $784 for either individuals or families, and may be reduced as individual adjusted net income exceeds $35,095, or adjusted family net income exceeds $45,934.

Registered Disability Savings Plan (RDSP) [21]

An RDSP may be established for a person under 59 who qualifies for the disability tax credit. The maximum lifetime contribution is $200,000, complemented by government support of up to $20,000 in free Canada disability savings bond (CDSB) money and $70,000 in matching Canada disability savings grant (CDSG) money. The CDSG and CBSB are available until the year the disabled beneficiary turns 49.

The government support is subject to the beneficiary’s adjusted family net income (AFNI), or the parents’ AFNI if the person is under age 18. As an example using the government’s most recently published data,

- If 2023 AFNI is less than $106,717, a $1,500 contribution in the year will attract $3,500 of CDSG.
- If 2023 AFNI is less than $34,863, the government will contribute $1,000 of CDSB, regardless of personal contributions.

Contributions will most commonly be made directly from after-tax funds, but may also be by transfer from an RESP or through a beneficiary designation from a parent’s RRSP/RRIF. Amounts from an RRSP/RRIF roll over tax-free but do not qualify for CDSG matching, and will be taxable on eventual withdrawal. All contributed amounts grow tax-free, and are eventually paid out to, or for, the disabled beneficiary. Taxable amounts are reported by the beneficiary, which generally means very little tax is paid.

All provinces disregard RDSP assets when determining entitlement to provincial disability income support. Most provinces also exempt any income taken from RDSPs when calculating the amount of such support, but the exemption is only partial in New Brunswick, Prince Edward Island and Québec.

Trusts for disability planning

A trust separates legal ownership of property from beneficial ownership, allowing a trustee to manage the needs of someone who may be incapable of, or unsuitable to be managing property personally. An application mentioned above is a discretionary ‘Henson’ trust that can help preserve income from a provincial disability support program. As well, trust can receive preferred tax treatment when a/the beneficiary has a disability. Sometimes maximizing public support and optimizing taxes are complementary, and other times there may be trade-offs.

For an in-depth discussion of this topic, please see the companion article Disability needs planning using trusts.

Appendix – Hyperlinks to official sources

12 things to do with your 2023 tax refund

Spending and saving in helpful harmony

Other than those who work in the tax business, no-one looks forward to preparing an income tax return –that is, unless you’re expecting a refund!

If you’re keen and prepared, the Canada Revenue Agency (CRA) allows for online filing of your 2023 personal income tax return as early as Monday, February 19, 2024. Otherwise, the deadline to file without facing a late penalty is midnight on Tuesday, April 30, 2024.

Whatever date you can get yours in, it’s a good idea to register for your CRA “My Account” and sign up for direct deposit. According to the agency’s website, you can receive your refund in as little as eight business days.

Back to the refund itself, you may have visions of champagne and caviar dancing in your head, but here are some tax-motivated suggestions to complement those thoughts, before it’s all spent.

1. Your RRSP

As a first priority, consider contributing a portion into your registered retirement savings plan (RRSP). It can get your savings routine going early in the year, helping to generate another refund next year. Available contribution room includes carryover of previously unused room plus 18% of the preceding year’s earned income, up to the annually-indexed maximum prescribed by regulation. For 2024, that prescribed maximum is $31,560, reached at 2023 earned income of $175,333.

Even so, it’s important to understand that the reason many people get a refund is because their employer was not aware of RRSP contributions made outside the workplace. Too much tax may have been withheld on payroll than required, so really you’re getting back the money you loaned interest-free to the government over the year.

So, rather than waiting another 12 months before you get that next refund, you may wish to file CRA Form T-1213 with your employer to reduce the withholding tax on your payroll deposits. You’ll increase your current cash flow, rather than waiting to get it in a lump sum next year.

2. Spousal RRSP

You can use your contribution room for your own RRSP or to put it toward a spousal RRSP. This sets the stage for income splitting between the two of you, as you get a deduction at your tax bracket now, and your spouse withdraws at an expected lower bracket later.

Understanding that the primary purpose is to assist with retirement income, that withdrawal does not have to wait until any particular age. Even so, don’t be too hasty: Withdrawals taken in the contribution year or in the two calendar years afterward will be taxed to the contributor spouse.

3. RRSP loan paydown

An RRSP loan can give a boost to your RRSP if you don’t have money available as you near the contribution deadline at the 60^thday of the year following the calendar year for which you intend to claim the deduction. Bear in mind though that interest on such loans is not tax-deductible, and neither is the repayment of the loan principal.

It’s a good idea to use the refund generated from the contribution to pay down the bulk of the loan initially, and pay off the rest over the coming months. Once the loan is paid off, you could continue that cash flow routine, but now contributing directly into your RRSP to get ahead on this year’s contributions – and next year’s refund.

4. FHSA for first-home financing new

Available as of 2023, qualified individuals who do not currently own the property where they live may be eligible to contribute up to $8,000 annually (up to $40,000 lifetime) to a first home savings account (FHSA) to help with the down payment on a home. FHSA contributions are tax-deductible, accumulation is tax-sheltered, and withdrawals are tax-free when applied toward a first home purchase.

5. Mortgage reduction

A home purchase is likely the largest single financial event of your life, usually accompanied by a mortgage that will take years or decades to pay off. An annual top-up from your tax refund is a simple and effective strategy to get you mortgage-free sooner. Those extra payments can reduce both the time to retire that loan and the interest you pay, giving you more flexibility and control of your finances along the way. And remember, both the interest and principal repayment are in after-tax dollars, which is another way of saying they are non-deductible – and that brings us to …

6. Paying down discretionary non-deductible debt

There can be many points in life when available resources aren’t sufficient for current needs. That’s when the prudent use of credit can help you bridge the time until you have surplus money to work with. Still, you have to keep an eye on your debt, as it can easily compound against you faster than you can build savings if you’re not careful.
It helps to have a plan and commitment to eliminate debt as soon as manageable, to keep your finances on track.

7. TFSA for flexible savings

The tax-free savings account (TFSA) was introduced 2009, complementing the RRSP program that has been around for more than half a century. TFSAs allow after-tax investment dollars to grow tax-sheltered and to be withdrawn tax-free. Each Canadian resident over age 18 is entitled to $7,000 of TFSA annual room in 2024, and for someone who was over 18 when it began in 2009 (but hasn’t used it), the carryforward room is $95,000.

8. Life insurance for tax-smart family protection

Parents generally appreciate the value of life insurance, but may stall in putting it in place, being unsure where they’ll find the cash for the initial premium. A tax refund can be an ideal starter for systematically saving for and servicing that insurance, without disrupting the household budget. Once over that first hurdle, it becomes increasingly easier to sustain the routine. And if payment does come about, the insurance proceeds are tax-free.

9. RESP for education

Post-secondary education costs continue to rise at staggering rates. That’s why it’s so important to save early and save smartly for a child’s education – which is where the registered education savings plan (RESP) comes in. Your tax refund can start or sustain an RESP. Coupled with generous government matching grants of up to $1,000 a year, all invested dollars grow tax-sheltered, with the earnings taxed to the student when eventually withdrawn for education needs.

10. RDSP for disability needs

Significant government support and tax benefits are available through the registered disability savings plan (RDSP) for families with disability needs. Government matching grants can be as much as 300% of personal contributions, making this a prime place to consider for tax refund money. Depending on household income, up to $3,500 in grants may be received in a year. Be sure, however, to coordinate the RDSP within an overarching life program, of which financial management is of course a key component.

11. Non-registered investments

Though we tend to think first of saving in the tax-sheltered plans mentioned earlier, there is a legal limit on how much can go into each of them. Once those options have been exhausted, you can use non-registered accounts that don’t have such limits. And depending on your age and stage in life, it can make sense to complement or supplement current savings with non-registered investments even sooner.

12. Live it up … a bit

After all, saving is just spending-in-waiting – but try to keep it in balance.