Getting a tax refund from the CRA? Here's how you can get the most out of it

It's worthy remembering that a taxation refund from the Canada Revenue Agency (CRA) is nary antithetic from the alteration you get astatine the supermarket aft handing implicit immoderate cash, says Ameer Abdulla, a taxation spouse astatine EY Canada.

“Functionally, a refund is your money, and it ever has been your wealth — you are conscionable present getting your change,” Abdulla said successful an interrogation with Yahoo Finance Canada. “Over my years of experience, radical bash dainty refunds otherwise than conscionable getting their change. They dainty it arsenic escaped wealth oregon bonus money, and they typically bash antithetic things with it than they would if it was conscionable their change.”

If you get a taxation refund this year, having a strategy for what you bash with it whitethorn marque sense, particularly fixed higher-than-usual marketplace volatility and wide economical uncertainty.

Technically, anyone who files a taxation instrumentality with the CRA could get a refund. A refund is owed if the magnitude of taxes you paid during the taxation twelvemonth — mostly done payroll deductions — exceeds the magnitude you really beryllium aft different deductions, credits and calculations.

Whether oregon not you get a refund depends wholly upon your circumstances, but CRA information suggest astir radical extremity up getting wealth back. For the 2023 taxation year, implicit 33 cardinal returns were filed and implicit 19 cardinal refunds were issued, Charles Drouin, a CRA spokesperson, told Yahoo Finance Canada successful an email. The mean instrumentality magnitude was $2,294, Drouin says. For the 2022 taxation year, astir 32 cardinal returns were filed and astir 18 cardinal refunds issued, with an mean worth of $2,262.

If you’re successful the number that beryllium money, CRA information accidental the mean magnitude is higher; truthful acold successful the 2025 tax-filing play (which began connected February 8, according to the CRA), astir 18 per cent of assessed returns person had a equilibrium owing, with the mean astir $5,000. (Those returns could beryllium for immoderate taxation year, not conscionable the existent one.)

As tempting arsenic treating your refund similar escaped wealth whitethorn be, fiscal experts mostly suggest being much prudent. Most suggest paying disconnected indebtedness should beryllium a priority, or, if indebtedness isn’t an issue, investing the wealth according to your fiscal plan.

“I've ever utilized the regularisation of thumb of let's tackle the biggest fig first,” said EY’s Abdulla. “What is that involvement complaint that we're dealing with, oregon what's that complaint of return, oregon what's the accidental cost?”

For example, Abdulla says, idiosyncratic with immoderate recognition paper indebtedness incurring 19 per cent interest, a car indebtedness astatine 12 per cent and a owe astatine 5 per cent would beryllium advised to usage immoderate refund wealth to wage the recognition paper indebtedness first. “That would pb to the highest maturation of nett worthy implicit time, and that would surely pb to the champion result implicit time,” helium said.