Today, we e-filled our income tax return for the year 2013 and our accountant told us that we will get around $5000 tax return :). This is probably our last bigger tax return as we finished use our tuition and education credits.
We will use these refunds straight to pay down our credit card debts and this will help to reduce our credit cards debts by 15%. Currently, I have around $35 000 low interest (less than 1.99%) credit cards debts and I used this money to buy dividend stocks.
Here is the breakdown for our tax return:
Contributed around $7500 RRSP
I know RRSP tax refund is not a free money, it is the tax-deferred portion of our RRSP investment that we will eventually have to pay to the government; however, I am planning to retire early with the income from my dividend stocks, thus, I will be in the low tax bracket when I start withdraw my RRSP.Used our tuition credits
We used our last portion of our tuition credits to reduce our taxable income. We don’t have any more tuition or education credits left to use :(.Interest paid to investment loan
I use borrowed money to invest in stocks. The interest paid to these types of loan is tax detectable if you are using the loan to buy income generating assets. I took advantage of low interest credit card balance and used the money to invest in Canadian dividend stocks. I have paid around $1300 interest for the credit card balance and brokerage margin loan which is tax detectable. This is absolutely free money from government we are contributing the country’s economy.Interest paid to my student loan
I didn’t want to pay off my student right now as interest paid for the student loan also tax detectable. I have paid around $1500 interest for my student loan last year.Miscellaneous (public transit expensive)
I use bus/subway to go to work. My work is in a busy area and getting there using car is stress and very expensive. Public transit is stress free and gives sweet tax return at the end of the year. This may not possible if I buy a house little far from my work. :(.
Hopefully, we will get our tax return in May and this government money will boost our net worth by more than 10%. One less step to reach our million dollar net worth dream :).