Approximately 56% of Canadians are expecting an income-tax refund this year, according to a recent survey by Toronto-Dominion Bank.

“Many people will treat their tax refund almost as a windfall and tend to do something kind of fun and fanciful with it,” says Linda MacKay, senior vice president, retail savings and investing, with TD Canada Trust, the bank’s retail banking division, in Toronto.

Although it’s tempting for people to treat their tax refunds as “free money,” MacKay says, your clients can make better use of that money by having a strategy in place before the cheque arrives.

Here are three ways you can help your clients get the most from their tax refunds:

1. Offer your expertise
Half of respondents in the TD survey say they don’t plan on seeking any financial advice regarding their tax refund. Twenty-five per-cent say they will speak to a financial advisor, while another 25% say they will ask family or friends for advice.

This situation represents a big opportunity for advisors to connect with their clients, McKay says.

Because most people file close to the tax deadline — and it takes time for the Canada Revenue Agency to work through all of those tax returns — most people will be receiving their refunds in May, June and July. Now is a good time to contact your clients, MacKay says, before they become too busy with their summer holidays.

2. Provide advice
While many advisors focus on providing investment advice, make sure that you warn your clients about the cost of debt they are holding, MacKay says.

Advise your clients to consider ways they can reduce expenses incurred through debt. For example, if they have a mortgage, credit cards or a line of credit, they should be thinking about how this refund can help them eliminate or reduce the debts that have the highest interest.

You also can broach the topic of an emergency fund for unexpected life events, MacKay says. Ask whether your clients have enough money set aside, in cash or liquid assets, to cover at least three months of expenses if an emergency were to occur.

3. Build a nest egg
Make sure your clients are maximizing their ability to build their nest egg, MacKay says. Your clients might be in a position to take advantage of the increase in annual tax-free savings account deposits. Or, perhaps RRSP contributions would be more beneficial.

Either way, take the opportunity to discuss which savings plan is best for each client family.