In a recent report, the Canada Revenue Agency (CRA) revealed that for the 2023 taxation year, it issued more than 19 million tax refunds, with each refund averaging around $2,294. This substantial figure highlights the fiscal landscape for many Canadians, particularly during a time of heightened economic uncertainty and market volatility.

Ameer Abdulla, a tax partner at EY Canada, emphasizes the importance of understanding what a tax refund truly represents. He likened a tax refund to the change one receives after a purchase at the grocery store. Functionally, a refund is your money, and it always has been your money you are just now getting your change, Abdulla explained during an interview with Yahoo Finance Canada. He noted that many people perceive tax refunds differently, often treating them as unexpected windfalls or bonus money, leading to varied approaches in how they decide to spend or invest these funds.

When it comes to managing a tax refund wisely, experts recommend having a clear strategy in place. Given the current economic climate, marked by increased market fluctuations, it is more critical than ever to make sound financial decisions. Abdulla points out that anyone who files a tax return with the CRA may be entitled to a refund, provided that the total taxes withheld throughout the year surpass the actual tax liability after applying any deductions, credits, and other calculations.

According to data from the CRA, over 33 million tax returns were submitted for the 2023 taxation year, with around 19 million resulting in refunds. A spokesperson for the CRA, Charles Drouin, confirmed that the average refund was approximately $2,294. Comparatively, the previous year's statistics showed that about 32 million returns were filed, yielding around 18 million refunds with an average value of $2,262.

For those who find themselves in the minority who owe money when filing their taxes, CRA data indicates that the average balance due is significantly higher. As of the 2025 tax-filing season, which began on February 8, approximately 18% of assessed returns reported an outstanding balance, with the average amount owed being around $5,000. Its important to note that these figures can pertain to any tax year, not just the most current one.

So, what should taxpayers consider doing with their refunds? Although it may be appealing to view this money as a bonus, financial advisors generally advocate for a more strategic approach. Experts recommend prioritizing debt repayment or, if debt is not a concern, investing the funds in alignment with ones financial goals.

Abdulla follows a simple rule of thumb when advising clients on how to utilize their refunds: Let's tackle the biggest number first. He encourages individuals to assess the interest rates associated with their debts. For instance, if someone has credit card debt at a staggering 19% interest, a car loan at 12%, and a mortgage at 5%, Abdulla advises that the refund should first be directed toward eliminating the highest-interest debttypically the credit card debt. This strategy not only leads to greater overall wealth accumulation but also fosters a more beneficial financial outcome in the long run.