Taxes 2022: 1 in 3 Canadians worry they are leaving money on the table

Nearly all Canadians are planning to file their taxes on time this year, a new survey has found, but more than one-third are worried they will be leaving money on the table.

According to an IG Wealth Management tax study released on Thursday, 96 per cent of Canadians say they plan to file their 2021 tax return ahead of the May 2 deadline, up two per cent from last year. But while almost all Canadians will file their taxes on time, many are concerned they are not taking advantage of all available tax deductions.

Of the 1,501 Canadians surveyed, 40 per cent say they feel very confident they are taking advantage of tax deductions, while 36 per cent say they believe they are not doing their taxes efficiently and leaving dollars on the table.

"The overwhelming majority of Canadians are being responsible and intend to file their taxes before the deadline," Damon Murchison, IG Wealth Management's president and CEO said in a news release.

"However, the findings also reveal that many may not be preparing their tax returns in the most efficient manner and remain unclear about many tax-related matters."

The deadline for filing 2021 taxes falls on May 2 this year, since the usual April 30 deadline is on a Saturday.

The survey also found that 60 per cent of respondents expect to receive a refund this year, with the average amount coming in at $2,400. When it comes to refunds, 29 per cent say they plan to save or invest it, and 28 per cent say they will use it to pay down debt. Another 14 per cent say they will use the influx of cash towards travel, while 9 per cent will spend it on home renovations and 6 per cent towards paying down a mortgage.

"With interest rates going where they are, paying down debt is not a bad idea," Aurele Courcelles, assistant vice-president of tax and estate planning at IG Wealth Management, said in an interview.

"I'm hoping that the fact that 28 per cent of people are using (their refunds) to pay down household debt and bills is an indication people are wisely considering where this money should go."

Still, many Canadians feel anxious going into the tax season. An H&R Block survey released last month found that changes in employment have fuelled a sense of confusion ahead of this year's tax deadline, with 40 per cent of those polled reporting they have "no idea" whether they will owe money or receive a refund. Changes to COVID-19 benefits have also spurred concerns, with half (49 per cent) of those who received government benefits due to the pandemic reporting they are unclear about the tax implications of doing so. Another 41 per cent say they are concerned they may owe money on those benefits.

Courcelles says his most important piece of advice for filers is to remember that a tax filing is not tax planning.

"A tax filing is dealing in the past and there is nothing you can do about it today," he said.

"Now's the time to (ask yourself) what tax planning strategies you can implement to try to minimize taxes when you do this exercise next year... tax planning is an important component of financial planning."

The IG Wealth Management survey was conducted between March 31 and April 7 and has an estimated margin of error of +/- 2.5 per cent, 19 times out of 20. Results were weighted by gender, age, and region, using the latest census data, to be representative of the Canadian population as a whole.

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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