Because I was expecting a tax refund this year, I’ve already filed and received my refund. The delay from filing electronically to having the refund deposited in my bank account was only 9 days. What does this say about the value of “instant cashback” from tax preparers?
To begin with, thanks to CRA for the fast turnaround. I’ve had some challenges in dealing with CRA, but this year has been a breeze (so far).
To those who would point out that I should arrange my finances so that I don’t have a tax refund, I say, “you’re right,” but events conspired against me this year.
On to the value of “instant cashback.” H&R Block offers to give you your tax refund immediately for a fee of 15% on the first $300 and 5% of the rest (http://www.hrblock.ca/services/benefits.asp). This would be a steep price to pay to get your money 9 days sooner. If I had used this option, my implied interest rate would have been (366/9)*5% = 203% per year (based on fictitious simple interest). Compounded out, this is a whopping 627% per year.
I realize that many people need help with their taxes and some have difficulty getting bank accounts or a reliable place to receive mail to get their refunds from CRA. But there must be a better solution than paying such a high price to get money right away. I’d be interested to know what efforts CRA is making to give people an option other than giving away 5% of their refunds.