Tax rebate discounting

Tax rebate discounting is a process in Canada where a tax preparation firm purchases the right to the anticipated tax rebate in exchange for a percentage of the rebate amount. Canada Revenue Agency rules establish the maximum discounting fee as 15% of the first 300 C$ and 5% of any remaining amount. No other fees for preparation or filing the return are permitted. This commonly works out to a high effective interest rate, although in a small number of cases the discount may be comparable or even less than an ordinary tax return preparation fee.

This process is somewhat similar to a refund anticipation loan in the United States.