Instant Cash Back on Tax Refunds: Is it Worth It?

What is an Instant Cash Back on Tax Refund?

Getting instant cash back on tax refunds sounds like a dream.

You’ll have your money in-hand right away without having to wait weeks.

With the average consumer debt in Canada reaching nearly $73,000, it’s no surprise that anyone would want to have cash on the spot to pay off loans, credit card debt, or even to stimulate the economy with a sizable purchase.

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Many popular tax preparation companies offer this service after they file your tax return.

But, is it worth it?

What are the potential drawbacks to consider?

How to Receive an Instant Tax Refund

The first step to receiving instant cash back on your tax refunds is to take your information to a tax preparer.

If you’re not sure what you’ll need to bring in order to get started, you can check out this helpful video from H&R Block Canada for an easy checklist.

As your tax preparer works with your documents, they will likely ask you at some point if you’re interested in an instant refund.

If not, your refund will be sent through the CRA once it’s fully processed.

With an instant refund, you’ll sign your refund amount over to the tax preparer and the CRA will send your full refund amount to them once it’s been processed.

If it sounds easy, that’s because it is!

So, what’s the catch?

The Risk of an Instant Cash Refund

There really isn’t a “catch,” since everything about an instant cash refund is fairly straightforward.

But, it’s important to know the details.

When you get an instant refund, you’re essentially borrowing money against your refund from the tax preparer.

While they will eventually get paid from the CRA, you’ll have to pay a fee in order to get the money right away.

These fees aren’t something sneaky or tricky your tax preparer is trying to hold over you.

In fact, they are set in place by the Federal Government of Canada.

The fee is 15% of the first $300 of your refund, followed by 5% on the rest.

A simple way to look at that is to think about your refund being $1,000.

Your tax preparer would take $80 for an instant cash refund, and you would take home $920 that day instead of waiting for the full amount from the CRA.

But, no matter when you file, you should still expect to see your refund in a timely manner.

Just how long will you have to wait?

How Long Does it Take to Get a Return from the CRA?

According to the CRA itself, how long it takes to receive your return depends on how you file:


  • Filing online: 2 weeks
  • Filing a paper return: 8 weeks


One of the benefits of using a tax preparation company is that they don’t use paper returns.

Almost everything is done online, so you can expect your return sooner.

You can even choose a direct deposit option and usually receive your refund sooner.

So, what’s the best option?

Should you go for an instant cash refund from your tax preparer?

That depends…

Think of the process as taking out a loan from the tax preparer.

Let’s go back to the $1,000 refund.

If you pay your tax preparer $80 (the fee they are taking) to borrow $920 for a month, that’s a 104% interest rate.

Chances are, you wouldn’t go for that on a standard personal loan.

The bottom line is whether you need cash immediately or not.

Of course, it’s nice to have cash in hand at any given time and to be able to get your refund right away.

But, there is a price, and it’s a price you don’t need to pay if you can just wait two weeks.

If you’re in dire need of money now, then an instant cash refund can give you what you need.

But, if you have the ability to wait, being patient for two weeks until your money arrives is usually the better option – especially if you choose direct deposit.

You’ll receive the full amount of your tax refund and it will be right in your bank account for you to use as you wish.

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