If your tax planning consists of a shoebox, crumpled receipts and curse words, you could probably use some friendly financial advice. Here are three simple tax tips that will help take the frustration out of  your tax experience.

Spend less money
“For some strange reason, people never really think about spending less money as a way of reducing their tax bill,” says financial planner Ron Lavell. “Think about it, we’ve paid PST and GST. Now, we pay HST. That’s a lot of tax that we are paying. If you want to pay less tax, the easiest way is to spend less money.”

Why you should do it: The less you spend, the easier it will be to keep track of how much money you actually have and where it actually goes, as opposed to where it should go.

Make automatic RRSP contributions
“A great idea is to set up an automatic contribution plan that takes place throughout the year,” says Lavell. “Just like a car payment, have deductions taken directly from your bank account or from your paycheque and deposited into an RRSP.”

Why you should do it: Let’s assume there’s an annual return of six per cent. By contributing $100 each month, you’ll boost your retirement nest egg to $138,029 after 35 years.

Reject the refund
“This is going to seem strange to a lot of people, but it is a great idea not to get a tax refund,” says Lavell. “Although getting back a big refund may feel good, it’s actually a sign of poor financial planning. You’ve basically loaned the government an interest-free loan for 12 months.  Meanwhile, it could have been earning you interest in an investment.” To keep your cash in your own pocket, ask your employer for a T1213 form to reduce the amount of taxes taken off your paycheque each month.

Why you should do it: Putting an extra $150 a month on a $200,000 mortgage at six per cent amortized over 25 years, will help you pay things off five years earlier — and save you more than $40,000.

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