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Early Access To Your Income Tax Refund

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Melody Wright is a Canadian business writer living the dream in South America. After almost 3 decades of training professionals in the finance industry, she semi-retired (early) to rescue dogs and enjoy life with no winters. She lives with her husband and 70 (or so) dogs, 3 horses, ducks, and chickens on 25 gorgeous tropical acres. She writes articles on personal finance to help others retire earlier and enjoy life to the fullest.

Melody Wright
Income Tax Refund

The end of the tax year looks different for everyone. Maybe you end up with a balance owing, or maybe you end up with an income tax refund. If you get a refund, tax time might include planning out big purchases or paying off debt. Maybe you want to go on vacation after all your hard work!

You’ve heard that many tax filing services can provide early access to your refund. But is it worth it?

Various Methods To Receive Your Refund

You gathered all your tax documents and used an online income tax calculator to get a rough estimate of your upcoming return amount. All you need to do now is file your taxes and get that refund in your hands!

There are a lot of ways to get your income tax refund:

Online With Direct Deposit

Filing online is the quickest way to get your income tax refund. You need to have an account set up with the Canada Revenue Agency (CRA) to file online. You can register easily for or access your CRA account online at

Online Without Direct Deposit

If you submit your return online but don’t have your direct deposit set up, you will need to wait for a cheque from the CRA. This process takes about two weeks.

Paper Tax Return With Direct Deposit

The CRA is encouraging people not to file paper tax returns anymore. Filing online is a greener and more efficient option. The processing time for paper returns will delay your refund significantly. It’ll take approximately eight weeks to see the deposit in your account, according to the CRA.

Paper Tax Return Without Direct Deposit

The CRA may take up to ten weeks to process and send you a refund when you submit a paper return without direct deposit.


When you file in person, you may receive an instant refund. These refunds are not from the CRA. That money comes directly from the tax filing service you are using. They give you an advance on your refund and then use your CRA deposit to cover the advance. While convenient, they usually charge hefty fees for an instant refund.

How Do Income Tax Refund Advances Work?

First, you bring your tax documents and information to a tax filing service or firm. They put this information into their software to prepare your return. They will usually ask if you would prefer to wait for the CRA to send your return or if you would like an instant refund.

If you go for the instant cash, you sign your income tax refund over to the tax filing service or firm. Once the CRA finishes your return, your refund gets sent to the tax filing service or firm that gave you the instant refund.

There is a catch with instant refunds though. The amount you get back is not the full amount of your income tax refund. You often pay a large fee to get your cash quicker. An instant income tax refund is a short-term loan that uses your income tax refund as collateral.

How Much Do Tax Filing Firms Charge?

The Federal Government of Canada sets the fees for instant income tax refunds. They are currently set at 15% for the first $300 on your return and 5% for the rest.

With a $1,000 refund, that means the tax filing service or firm keeps $80 to cover their fees, and you get $920.
It’s important to ask yourself how long you can wait for a tax refund and if the cost of an instant refund is worth it.

When Is It Worth Doing An Advance?

It’s worth getting an advance refund in some situations.

If you are desperate for money and can file your taxes by February 1, you might be able to get your return up to a month earlier by doing an instant refund. If that is the case and you have a $1,000 return, you’ll pay $80 to borrow $920 for a month. This is equal to a 104% annual interest rate.

Paying the $80 fee may be worth it if it means making rent or not.

For smaller refunds, the cost of an instant refund may be smaller than the actual tax preparation fee. That can make it a tempting way to go.

For example, on a $300 return, you pay a $45 instant refund fee, but that cost includes the preparation and filing fees. The $45 instant refund fee is less than most tax preparers charge, and you walk away with $255 the same day.

When Is It Not Worth Doing An Advance?

If you can’t file until the end of February, an instant refund might only get you your return two weeks earlier.

On a $1,000 return, that would mean you paid $80 to borrow $920 for two weeks. That is roughly the same as an annual interest rate of 226%, which is close to a payday loan rate.

It might be more useful to wait a couple of weeks and save that extra $80, even if you are short on cash.


The fastest way to get your income tax refund without extra fees is to have your CRA My Account set up with direct deposit and file online. Check the status of your CRA refund by using your CRA login, the MyCRA mobile app, or call 1-800-959-1956.

Whether you want to invest, save, or repay some debt, your income tax return can help get you closer to your financial goals. Wanting to spend some of your return is also ok! Experts recommend putting away at least 10% of your refund to spend. Consider it a reward for getting through another hard year.

It may be time for expert advice if you need help deciding what’s best to do with your tax refund. Contact us today to discuss building a stronger financial future with a Credit Counsellor.

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