Investing tax refunds is low priority for Canadians amid high cost of living: poll

Most Canadians plan on keeping their tax refund available for spending instead of investing, the poll released Friday found.

Only one in 10 Canadians plan on investing their tax refund this year as other financial demands take priority, a new CIBC poll found.

Most Canadians are choosing to hold the funds as cash (39 per cent) or spend it on essentials (29 per cent). Some are planning on paying down debt (24 per cent) or putting it toward discretionary expenses (12 per cent), the poll released Friday found.

Investing was the least chosen option for handling tax refunds this year at 12 per cent.

Luka Marjanovic, managing director and head of CIBC Investor’s Edge, says more Canadians should consider investing their tax refund this year.

“There are more demands on money these days, but Canadians getting a lump sum this spring should consider the opportunity to put those funds to work for them as part of a broader investment plan—particularly given that higher inflation means the value of parked cash erodes more quickly,” Marjanovic said in a press release Friday.

“While many Canadians are planning to hold on to their refund as cash, it may not be a good long term strategy.”

CIBC’s figures on tax refund spending plans are similar to last year’s findings, as Canadians continue to feel the financial burden of the high cost of living and ongoing economic uncertainty.

Statistics Canada reported a 2.9 per cent inflation rate in March. Though the overall rate has cooled from the high of 8.1 per cent in the summer of 2022, the Bank of Canada’s policy rate remains elevated, forcing Canadians to cope with higher borrowing and shelter costs.