Here are five smart ideas to make your tax refund work for you:

1. Start an emergency fund

Everyone needs an emergency fund for – well, emergencies.

Your roof might leak during the spring thaw. Your car will suddenly need a big repair right before that road trip you’ve been planning. Or you might lose your job. It’s a good idea to have enough money saved to cover about three to six months of living expenses. That way you’re prepared for what comes your way, and you won’t have to rely on credit.  

How do you start building an emergency fund? One way is to use your tax refund. And consider keeping the money in an easily accessible, high-interest savings account. Or you can use your tax-free savings account (TFSA) if you have the contribution room

2. Open a TFSA

So, about the above: If you don’t have a TFSA yet, now’s a great time to open one. You can use your tax refund to contribute to a TFSA. This can help you build that emergency fund, save for a wedding or reach another of your financial goals. TFSA contributions aren’t tax deductible. Any income earned in the account (including interest, dividends and capital gains) is tax-free. And you don’t have to pay tax when you take out the money. This is a good thing!

Don’t know what your TFSA contribution limit is? You can find that information on MyAccount through the Canada Revenue Agency (CRA).

3. Put the money in your RRSP

If you haven’t reached your registered retirement savings plan (RRSP) contribution limit for the current year, consider topping up your RRSP. Even a small contribution is better than none to help build your retirement savings. Putting money in at tax time can also give you a jump on your contributions for the year.

Don’t know what your RRSP contribution limit is? You’ll find that information on your Notice of Assessment from the CRA or once you sign in to your CRA account.

4. Pay down your credit card debt

Paying down or paying off your credit card debt is a wise move. Credit cards often charge interest at a high interest rate. Using your tax refund to pay down your balance can free up money you could use to boost your retirement savings or build your emergency fund.

5. Pay down your mortgage

Consider using your tax refund to make a lump sum payment against your mortgage. Such payments can often be made once a year, but may be limited (e.g. 10% of your original mortgage amount). This will result in savings over the term of your mortgage. But there may be penalties and market value adjustments. Speak with your mortgage provider to make sure you know any costs or fees associated with paying down or paying off your mortgage.

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The original version of this article appears on This article is meant to provide general information only. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.