Monday, 16 April 2007

I Hate It When the Government Owes Me an Income Tax Refund

Am nearing completion of preparing my 2006 tax return and have discovered to my horror that the government owes me money! That's the intellectual reaction at least, based on the logic that when the government owes me a refund, it means I have, in effect, made an interest-free loan to the government for most of 2006 (since the government does not pay any interest on refunds to a taxpayer). It's strange that despite knowing this and thinking it for years, there's a residual emotional reaction of pleasure that I am getting money back. The reaction reminds of buying fries from a chip stand - when the vendor puts in too little initially and then adds some, it's more satisfying then when the vendor puts in too much then removes the excess even though you may end up with less in total in the former case.

The way to prevent the government owing a refund is to request that less tax be withheld at source from your pay cheque by one's employer using the TD1 form that is distributed and filled-in annually at work. It is even possible to contact the CRA district office to request that the employer be permitted to reduce tax withheld for items like RRSP contributions that one is planning, which are not normally on the TD1 form.

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