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.”
Savings, investments take a hit from rising cost of living
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.
Another Ipsos poll released Friday, conducted for Global News, showed the cost-of-living crisis is only getting more bleak. Four in five Canadians (80 per cent) feel that owning a home is only for the rich, the poll found.
With a bigger chunk of the monthly budget going to cost-of-living expenses, the poll also found some Canadians have less to put away in savings.
Twenty-one per cent of respondents said they’re putting retirement saving on pause as life becomes more expensive, which is six percentage points higher than in March 2023.
Some 29 per cent said they’ve dipped into their personal savings to make ends meet, while 15 per cent are using the money they’ve put aside for retirement.
Both poll findings come after the 2024 federal budget’s release last week, promising to boost affordability for Canadians.
The Ipsos poll on behalf of CIBC Investor’s Edge was conducted between April 3 and 4. A sample of 1,001 Canadians aged 18 and over were interviewed.
The precision of the online poll is measured using a credibility interval, the release says. In this case, the findings are accurate to within ±3.8 percentage points, or 19 times out of 20, had all Canadians aged 18 and over been polled.
— with files from Global News’ Craig Lord