As much as Canadians gripe about the ritual of filing taxes, a good chunk of us end up getting a tax refund. Between February 2024 and January 2025, the federal government paid out $43.8 billion in refunds to 19.1 million Canadians. That’s nearly half the country’s population. And the average return was $2,295. (The filing deadline for self-employed Canadians and their spouses isn’t until June 16 this year, but any balance owing was due April 30.)

Everybody loves getting a tax refund. But if it’s a sizable amount, consider whether you’re paying too much tax to begin with. A refund isn’t a gift—it essentially means you loaned the government money for the year, and the Canada Revenue Agency (CRA) is returning it to you, without interest. A hefty refund is emotionally more satisfying, but paying less tax up-front might be the better option. (Chat with HR to find out if you can.)

Getting a tax refund isn’t the only incentive to file your return. The CRA uses it to assess whether you’re eligible for some benefits and credits, such as the Canada Child Benefit, Canada Workers Benefit and GST/HST credit.

But, getting back to our original point, let’s assume you’ll receive (or have already received) some money back this year. What should you do with it?

Spend, save or invest? What to do with a tax refund

It’s easy to imagine all the things you could do with a small windfall, from splurging on a fancy dinner to finally repairing your vehicle or doubling down on your favourite ETF.

In the first article below, MoneyFlex columnist Alicia Tyler breaks down 10 of the best, most sensible ideas. (If you’d rather read about 10 ways to squander your money, you’ll have to look elsewhere, sorry!) Tyler also addresses a burning question for Canadians still waiting for the money to hit their bank accounts: How long does it usually take?

If you’re unsure how to use that money, high on the list of options should be paying off debt. Many Canadians find themselves in a precarious financial position right now. Eliminating high-interest debt, like an overdue credit card balance, is a great way to defend against the financial unknown. To see how long it could take to pay off your balance, check out MoneySense’s new credit card interest calculator (second article below).

Creating or adding to an emergency fund is another smart move. Right now, you can easily find high-interest savings accounts offering 2% or more on cash savings. One account offers up to 3.50% interest for those with direct deposit—that’s as high as the best GICs right now (third article below).