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What Are You Planning to Do With Your Tax Refund?
Scotiabank Tax Expert Offers Tips to Make Tax Savings a Year-Round Priority
TORONTO, ON - May 05, 2014 /CNW - Among Canadians who expect to get a tax refund, more than one-third (37%) plan to deposit or reinvest it, followed by one-fifth (18%) who say they will use it to pay off debt, according to Scotiabank's annual Income Tax Refund Poll. Meanwhile, 22% of Canadians don't expect to get an income tax refund at all.
The poll also shows that British Columbians are the most likely to reinvest their tax refund (9%) compared to those in Alberta (1%). Residents in Quebec are significantly more likely to use their refund to pay off debt (25%) compared to residents of B.C. (9%).
Additional findings:
- Canadians are once again opting to deposit/reinvest their tax refund this year (37% in 2014 vs. 33% in 2013).
- Fewer Canadians said they do not expect to get a tax refund this year (22% in 2014 vs. 26% in 2013).
- When it comes to men and women, men (21%) are more likely than women (15%) to pay off debts with their refund, while women (17%) are more likely than men (11%) to pay bills.
- Fifteen percent of those aged 18-24 are using their tax refund to pay for school/tuition.
- Those aged 65+ are most likely to put their tax return in the bank (43%) and are least likely to say they are using it to pay off debts (6%).
"Many Canadians rush to file their taxes on time each year and don't think about it until the next year," says Kevin Tran, Director of Tax Advisory at Scotiabank. "Now that you've filed your taxes, it's the perfect time to plan for the next tax year and a great place to start is looking at your Notice of Assessment which summarizes the important information for the year ahead. In addition, meeting with a financial advisor to build a complete financial plan can give you a sense of not only your future cash flow, but also your after-tax cash flow."
Tran offers the following planning strategies Canadians can explore in an effort to reduce taxes for next year and beyond:
- Take a look at your Notice of Assessment. Your Notice of Assessment summarizes the information from your most recent tax filing and includes a number of important pieces of information for the year ahead such as your Tax Free Savings Account contribution room, quarterly income tax instalment reminders, your RRSP deduction limit, refund interest and any losses being carried forward.
- Maximize RRSP contributions. Your RRSP remains one of your most powerful tax breaks. Not only do you receive a deduction for the contribution you make, the earnings in your plan compound tax-free. To get the most out of your RRSP, consider "paying yourself first" by setting up a regular investment plan, which will help you maximize your refund for next year.
- Review tax loss opportunities. If the capital losses in your investment portfolio this taxation year exceed your gains, the net capital loss can be deducted against any capital gains. You are also permitted to carry back net capital losses to the preceding three taxation years and carry them forward indefinitely, which provides you with some tax planning opportunities.
- Open a Tax-Free Savings Account (TFSA). A TFSA provides another opportunity to save money and have it grow tax-sheltered like an RRSP with the flexibility of a savings account. A TFSA can be opened at age 18 and you can save $5,500 each year.
About the Poll
Data was collected by phone using Nielsen's (formerly Harris/Decima) national telephone omnibus (tVox). A total of 1,021 surveys were collected from March 27-March 29, 2014 with a margin of error of +/-3.1 percentage points 19 times out of 20.
About Scotiabank
Scotiabank is a leading financial services provider in over 55 countries and Canada's most international bank. Through our team of more than 83,000 employees, Scotiabank and its affiliates offer a broad range of products and services, including personal and commercial banking, wealth management, corporate and investment banking to over 21 million customers. With assets of $783 billion (as at January 31, 2014), Scotiabank trades on the Toronto (
BACKGROUNDER
2014 Plans for Income Tax Refund - By Province and Gender
(Among Canadians who expect to get a tax refund)
| Total (2014 vs. 2013) |
Atlantic Canada | Quebec | Ontario | Man/ Sask |
Alberta | B.C. | Male |
Female |
||
| Deposit/ Reinvest - NET | 37% vs. 33% | 26% | 32% | 38% | 43% | 41% | 41% | 39% |
35% |
|
| Put it in the bank | 27% vs. 24% | 22% | 19% | 28% | 31% | 38% | 26% | 29% | 25% | |
| Reinvest it | 6% vs. 4% | 4% | 8% | 7% | 5% | 1% | 9% | 6% |
7% |
|
| Contribute to RRSPs/RSPs | 4% vs. 4% | -- | 5% | 3% | 6% | 2% | 6% | 4% |
3% |
|
| Pay off some debts | 18% vs. 20% | 17% | 25% | 18% | 17% | 23% | 9% | 21% |
15% |
|
| Pay bills | 14% vs 11% | 23% | 7% | 16% | 14% | 17% | 10% | 11% |
17% |
|
| Go shopping/buy some things | 6% vs. 5% | 5% | 4% | 8% | 3% | 2% | 7% | 6% |
6% |
|
| Go on a vacation | 5% vs. 7% | 3% | 7% | 5% | 4% | 2% | 5% | 4% |
6% |
|
Media inquiries:
Kate Simandl
Scotiabank Media Communications
416.866.6218
kate.simandl@scotiabank.com