Forty per cent of Canadians rely on their tax refund to help with debt
What was once felt as a nice annual financial boost, tax refunds are now going straight towards paying off bills.
Author: Quinn Patrick
Over a third of Canadians now rely on their tax refund just to make ends meet amid an economy of rising living costs and inflation, according to a new study from software firm TurboTax.
What was once felt as a small financial boost early in the year, tax refunds are now going towards paying off bills and chipping away at debt for 40 per cent of Canadians.
Additionally, the study found that 69 per cent of Canadians who were surveyed said that not receiving a refund this year would financially impact them.
While refunds appear not to be what they used to be, the cost of taxes themselves continues to increase.
In 2024, the average Canadian spent more on taxes last year than they did on basic amenities such as shelter, groceries and clothing combined, according to a study conducted by the Fraser Institute.
“Taxes remain the largest household expense for families in Canada,” said co-author Jake Fuss, the institute’s director of fiscal studies.
The average Canadian family earned an income of $109,235 in 2023 but was also forced to fork over $46,988 in total taxes, meaning that 43% of income is lost to taxation, higher than the 35.6% Canadians spend on basic necessities.
The report, Taxes versus the Necessities of Life: The Canadian Consumer Tax Index 2024 Edition, noted the dramatic spike in taxation over the past 60 years.
The average Canadian family only spent 33.5 per cent of its income on taxes in 1961 and 56.5 per cent on basic necessities.
However, taxes have rapidly outpaced any other single expenditure for the average Canadian family, with the average family tax bill having increased by 2,705 per cent since 1961.
Annual housing costs increased over that time period as well, but remained 700 per cent lower than the increase in taxation.
In 1961, the average family paid 33.5 per cent of its income in taxes and 56.5 per cent on necessities. Today, those numbers have flipped. Since 1961, the total tax bill has risen by 2,784 per cent, outpacing increases in food, housing and clothing costs, as well as inflation, which has increased by 925 per cent in that time frame.
Food has increased by 901 per cent and clothing by 478 per cent since 1961.
“Considering the sheer amount of income that goes towards taxes in this country, Canadians may question whether or not we’re getting good value for our money,” said Fuss.
The study defined Canadians’ total tax bill as money paid in the combination of federal and provincial taxes, including income taxes, payroll taxes, health taxes, sales taxes, property taxes, fuel taxes, carbon taxes, vehicle taxes, import taxes, alcohol and tobacco taxes, “and the list goes on.”
Meanwhile, a survey conducted by the Montreal Economic Institute last year found that 72 per cent of Canadians believe their tax bill has lowered their quality of life.
These record-high increases for Canadians have coincided with the federal bureaucracy swelling to a record 445,000 employees in 2024-25.