At a time when every dollar counts, Canadians are reassessing the value of their tax returns as an immediate opportunity to improve their personal finances. A recent study commissioned by Dr Tax Software Inc., makers of UFile personal tax software, found that 43 per cent of Canadians plan to use their tax refund to pay down debt. Investing in retirement (9 per cent) and house repairs/renovations (8 per cent) ranked a distant second and third.
Recessionary fears are also creating uncertainty for many Canadians regarding their tax returns and personal finances. Over half of Canadians feel the recession will negatively impact (26 per cent) their return, or are unsure (25 per cent).
Despite these concerns, over a quarter of Canadians surveyed (28 per cent) feel they do not have an adequate strategic approach in place to deal with their personal finances given the current economic situation, and a full 53 per cent of Canadians stated that they will not be more disciplined in their approach to filing their returns this year. Worse, 86 per cent intend to use the same overall strategic approach to filing their personal income tax as in previous years.
“Canadians clearly want to reduce their debt-load and view their tax refunds as an important opportunity to do this, but many lack an effective strategy to help to maximize their refunds,” says Malcolm Campbell, vice-president and general manager of Dr Tax.
Tax refunds play a key role in Canadians’ personal finances, regardless of age. According to the study, younger age groups are most likely to use tax refunds for paying down debt, with 55 per cent of 18 to 34 year olds and 50 per cent of 35 to 54 year olds naming debt repayment as their top priority for their tax refund. While paying down debt is also the number one choice for respondents aged 55 plus (22 per cent), this age group also prioritized saving for retirement (15 per cent) and home renovations (10 per cent).
When asked for her thoughts on the survey results, Evelyn Jacks, bestselling Canadian tax author and president of The Knowledge Bureau, a leading Canadian educational institute in financial services, agrees that paying down debt is a smart approach for Canadians.
“Canadians who are facing a credit crunch are wise to look to their tax refund for relief,” Jacks says. “In fact, most people leave money on the table by overpaying their taxes year after year. A strategic approach to maximizing tax advantages can really help Canadians at tax filing time and all year long.”
The report is based on poll data collected by Angus-Reid Strategies on behalf of Dr Tax Software Inc. All interviews were conducted among a random nationally representative sample of 1,000 Canadians, aged 18 and over. The data was collected on January 20, 2009. The results can be considered to be accurate to within +/- 3.1 %, 19 times out of 20.
Dr Tax Software Inc. is a privately-owned, Canadian company located in Montreal, Quebec. It is a leading provider of tax preparation products and has served the professional tax community with personal and corporate tax products for over 15 years. Dr Tax's UFile products include Ufile.ca (online tax software), UFile for Windows and UFile Pro. UFile for Windows is available exclusively at Future Shop, Best Buy and online at www.ufile.ca.
The Knowledge Bureau is an independent, national certified post-secondary educational institute, which provides continuing professional development to practicing professionals in tax and financial services leading to certification and designation. It is also the publisher of the Master Your Personal Finances series of books for consumers. For more information, please visit www.knowledgebureau.com.