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April 25, 2021

Canadians plan on paying down debt with tax refunds

1317230_29811116It's not quite like winning a lottery, but almost 8.8 million Canadians will be getting a tax refund so far this year.

To date, 13.1 million tax returns have been filed before the April 30 personal income tax deadline. About 86 per cent of those were filed electronically, and the average refund to date is about $1,585.

If you're one of the lucky ones receiving a tax refund windfall, how do plan on spending your new found wealth? 

Well, according to a new study by BMO Nesbitt Burns, many Canadians will be paying off household debt and making investments.

John Waters, vice-president, Head of Tax & Estate Planning, Wealth Planning Group, BMO Nesbitt Burns, says, "It's encouraging to see so many Canadians invest their tax refund or use it to lower their debt load.

"While it may be tempting to spend the money on a trip or a flat screen TV, paying off debt or investing for the future will be more beneficial in the long term."

Some of the plans of those expecting a refund are: paying household bills, credit card balances, mortgages and other debt (37 per cent); saving the money or investing in a Registered Retirement Savings Plan (RRSP), Registered Education Savings Plan (RESP) or Tax-Free Savings Account (TFSA) (20 per cent); spending it on travel, leisure or luxury goods (10 per cent); and doing home renovation projects (seven per cent).

Some other tips BMO offers to make the most of your refund include paying down your RRSP loan or make your 2013 contribution now; pay down credit card debt; make a lump sum mortgage payment; top up your savings; start an education fund; and make a donation to a registered charity.

Eight in 10 Canadians are expecting to receive a tax refund this year. Here's hoping you're one of the lucky ones.

By Donna Donaldson, MSN Money

Will you be getting a tax refund? If so, what do you plan on doing with the refund money?



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