As recession fears loom, a “staggering” number of Canadians say they are in financial debt and many are banking on their tax refunds to pay that down.
In a recent poll by Toronto-based licensed insolvency trustee firm Remolino & Associates, 55 per cent of Canadians reported carrying financial debt.
The increased overall cost of living and income decline post-pandemic in recent years have contributed to a “staggering” percentage of Canadians carrying debt load, said Francisco Remolino, licensed insolvency trustee and principal of Remolino & Associates.
“People for the last many years have accumulated an amount of debt that is getting a little out of control,” he said in an interview with Global News.
Meanwhile, U.S. President Donald Trump’s global trade war, which has rattled stock markets and raised recession concerns, is only adding to the financial uncertainty, Remolino said.
“It’s a volatile environment because we don’t really have a clear structure of how to better prepare for that and how we’re going to move forward.”
For Canadians, affordability and the cost of living are the top issue in this federal election campaign.
An Ipsos poll conducted exclusively for Global News that was released Sunday found that four in 10 Canadians want affordability issues addressed by the next government and 46 per cent said they want lower income taxes.
The online poll that was conducted by Angus Reid late last month found that 51 per cent of Canadians expect to receive a tax refund this year and 25 per cent said they plan to pay off their debts using money returned from the federal government.
Canadians who have already filed their tax returns this season can expect a refund if they are owed one within two weeks of online filing and up to eight weeks for paper returns, according to the Canada Revenue Agency.
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Using this money to pay off debt is “always a great idea,” said Clay Jarvis, financial expert and spokesperson at NerdWallet Canada.
“Carrying a credit card balance, that’s not really doing you any favours. It’s really only helping your credit card company or your bank, so you should really try to pay down your debt at any point.”
Remolino advised prioritizing the highest interest rate debt first.
He said paying off debt leaves people with less interest and more income available to put towards daily or monthly expenses.
It can also offer “peace of mind,” allowing people to move forward with other aspects of their lives, Remolino said.
The CRA says it received more than 33 million returns last year and issued more than 19 million refunds – an average of $2,294.
A tax refund is “your money” that you’re getting back from the government and “it’s not a windfall,” Jarvis said.
“I would just encourage people not to blow through their refund even if it’s higher than you expected and it does feel like a bonus — it is not,” he said.
“It’s your money, so spend it in a responsible way that you would have done with it if it had never been taken from you in the first place.”
Depending on how much is available, Remolino said there’s no need to spend all of the refund in one place.
He advised dividing it to pay a debt, contribute to a registered retirement savings plan (RRSP) account if you have one, and put some cash aside into an emergency fund.
“There’s several options. Everybody will probably choose whatever works for them the most,” Remolino said.
© 2025 Global News, a division of Corus Entertainment Inc.
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