Canadians plan to use refunds to pay down debt, but many lack strategy to maximize their after-tax returns
January 24, 2011
Survey reveals that 43% of Canadians plan to use their tax refunds to pay down debt, while only 9% plan to invest it for retirement
Survey reveals that 43% of Canadians plan to use their tax refunds to pay down debt, while only 9% plan to invest it for retirement
At a time when every dollar counts, Canadians are reassessing
the value of their tax returns as an immediate opportunity to
improve their personal financial. A recent study commissioned
by Dr Tax Software Inc., makers of UFile personal tax
software, found that 43% of Canadians plan to use their tax
refund to pay down debt. Investing in retirement (9%) and
house repairs/renovations (8%) 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%) their return, or are unsure (25%).
Despite these concerns, over a quarter of Canadians surveyed
(28%) 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% of Canadians stated that
they will not be more disciplined in their approach to filing
their returns this year. Worse, 86% 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. “Personal tax software like UFile can play
an important role in Canadians’ tax strategies by helping
individuals identify available tax credits, deductions and
transfers.”
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% of 18 to 34 year olds and 50% 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%), this age group also
prioritized saving for retirement (15%) and home renovations
(10%).
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 said. “In fact, most
people leave money on the table by overpaying their taxes
year over year. A strategic approach to maximizing tax
advantages can really help Canadians at tax filing time and
all year long.”
UFile 2008 offers users the opportunity to better understand
tax advantage available to Canadians with an exclusive
feature, MaxBack, which automatically analyzes each
individual return for the greatest possible refund. UFile
also offers a unique pension-splitting calculation for senior
couples, and the ability to import from other tax software at
no charge.
Dr Tax Software Inc.
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