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CIBC Poll: Canadians focused on paying down debt with tax refunds

Time to stop thinking of refunds as windfalls to pay off credit cards and bills, tax expert says

TORONTO, May 23, 2014 /CNW/ - With the majority of Canadians expecting or having already received a tax refund, a recent CIBC (TSX: CM) (NYSE: CM) poll finds that almost half (44 per cent) plan on using their windfall to pay off credit cards, debt or bills rather than saving or investing it.

Key findings of the poll include:

  • Of the 54 per cent of Canadians expecting a refund this year, more than one in five (22 per cent) plan to use the refund to reduce high-interest debt like credit cards;
  • An almost equal number (21 per cent) don't know what to do with it; and,
  • Just 10 per cent plan to save or invest the funds.


"A tax refund isn't really a windfall," says Jamie Golombek, Managing Director, Tax and Estate Planning, CIBC. "It's simply a sign that you've been lending your hard-earned money to the government and now you're getting your own money back, interest-free. It's time Canadians reevaluate how they think about refunds."

"While using the refund to cut debt remains top of mind for most Canadians, it's important to sit down with your financial advisor to plan the most tax efficient way of saving and spending your money," says Mr. Golombek.

"What excites people most about making an RRSP contribution is the prospect of getting a big tax refund, but there's an easy way to get that refund essentially in advance," he says.

If you're an employee, subject to tax withholding at source, and you make regular registered retirement savings plan (RRSP) contributions, you don't have to wait until next spring for that refund, he says. By making contributions directly from your gross pay, you immediately reduce the amount of tax withheld from your paycheque. You can also complete Canada Revenue Agency Form T1213, Request to Reduce Tax Deductions at Source, in which you can list, among other items, RRSP contributions to be deducted from your income when your employer calculates the tax that will be withheld from your pay.

For those receiving a tax refund this year or saving taxes with each paycheque, Mr. Golombek provides guidance on how to make the most of the money in his report, The RRSP, the TFSA and the Mortgage: Making the Best Choice . "Canadians should consider their current and future anticipated marginal tax rates, rates of return and cost of borrowing before deciding whether it makes more sense to save or pay down debt," says Mr. Golombek.

"Paying down debt, and contributing funds towards short and long-term goals are all important elements of a comprehensive financial plan," he says. "Whether you decide to save or pay off debt, the most important thing is to make an informed decision."


Percentage of Canadians who expect a 2013 tax refund:


Yes 54%
No 34%
Don't know / Prefer not to answer 12%


Percentage of Canadians planning to spend their tax refund on:

Make a credit card or loan payment 22%
I haven't decided yet/putting it aside 21%
Use for day to day expenses (e.g., groceries, bills, gas, etc.) 19%
Contribute to investments 10%
Other 9%
Put towards a major household purchase (e.g., appliances, furniture, home repairs) 7%
Travel 5%
I'm going to splurge a little (e.g., clothes, jewelry, electronics) 3%
Pay down mortgage 3%
Prefer not to answer 2%


From April 8th  to April 9th 2014 an online survey was conducted among 1,517 randomly selected Canadian adults who are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 2.5%, 19 times out of 20. The results have been statistically weighted according to education, age, gender and region (and in Quebec language) Census data to ensure a sample representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.

About CIBC
CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Media Centre on our corporate website at

SOURCE Canadian Imperial Bank of Commerce

For further information:

Caroline Van Hasselt, Director, External Communications, 416-784-6699 or