Canadians are reassessing the value of their tax returns as an immediate opportunity to improve their personal finances, according to a recent study commissioned by Dr Tax Software Inc., makers of UFile personal tax software.

The study found that 43% of Canadians plan to use their tax refund to pay down debt. Investing in retirement (9%) and house repairs/renovations (8%) ranked a distant second and third.

Recessionary fears are also creating uncertainty for many Canadians regarding their tax returns and personal finances. Over half of Canadians feel the recession will negatively impact (26%) their return, or are unsure (25%).

Despite these concerns, over a quarter of Canadians surveyed (28%) feel they do not have an adequate strategic approach in place to deal with their personal finances given the current economic situation, and a full 53% of Canadians stated that they will not be more disciplined in their approach to filing their returns this year. Worse, 86% intend to use the same overall strategic approach to filing their personal income tax as in previous years.

“Canadians clearly want to reduce their debt-load and view their tax refunds as an important opportunity to do this, but many lack an effective strategy to help to maximize their refunds,” says Malcolm Campbell, vp and general manager of Dr Tax.

Tax refunds play a key role in Canadians’ personal finances, regardless of age. According to the study, younger age groups are most likely to use tax refunds for paying down debt, with 55% of 18 to 34 year olds and 50% of 35 to 54 year olds naming debt repayment as their top priority for their tax refund. While paying down debt is also the number one choice for respondents aged 55 plus (22%), this age group also prioritized saving for retirement (15%) and home renovations (10%).

The study is based on poll data collected by Angus-Reid Strategies on behalf of Dr Tax Software Inc. All interviews were conducted among a random nationally representative sample of 1,000 Canadians, aged 18 and over. The data was collected on January 20. The results can be considered to be accurate to within +/- 3.1%, 19 times out of 20.

IE