Now that the tax filing deadline has passed, you might be eagerly awaiting a tax refund to land in your bank account. If so, what will you do with the money? According to a recent TD survey, Gen Zs are leading the charge when it comes to investing this year’s refunds.
While just under half of Gen X and 60% of Millennial respondents plan to invest their tax refunds this year, an impressive 76% of Gen Z Canadians are choosing to put their money to work through investment strategies.
Because of financial pressures like inflation and the rising cost of living, 90% of Canadians surveyed are changing their financial strategies. Sixty-seven per cent of respondents say that these pressures are having a direct impact on how they will use their tax refund this year.
Just over 50% of Canadians surveyed receiving a tax refund this year plan to invest the money for their future – with 44% saying they will contribute to a Tax-Free Savings Account (TFSA), and 31% to a Registered Retirement Savings Plan (RRSP).
Gen Zs are highest investors of this year's tax refund
"Economic pressures are pushing Canadians to rethink their financial and investment strategies," said Pat Giles, Vice President, Saving & Investing Journey at TD. "But based on our recent survey, it appears that there is still a strong desire for Canadians to put their tax refunds to work, especially amongst Gen Z Canadians."
Despite this intention, only half of Gen Zs surveyed have a TFSA. For those who don’t have TFSAs, 30% revealed that they don’t understand how they work.
"This knowledge gap could mean that Gen Z investors are missing out on valuable long-term, tax-free growth opportunities," Giles said. "A TFSA isn't just a savings account—it's a gateway to potential long-term, tax-free growth."
Knowledge gap and confusion about how TFSAs work
It's not only Gen Z Canadians who have a knowledge gap about TFSAs: In fact, 20% of survey respondents without a TFSA said they are confused about how TFSAs work. According to the survey respondents, some of the barriers to investing through TFSAs include thinking they don’t have enough money to contribute (51%) or preferring to use other methods to save (14%).
Thinking you need to have a certain amount to open a TFSA is a common misconception, said Giles. "While the maximum 2025 annual contribution limit for a TFSA is $7,000, you don't need thousands of dollars to get started. Even small contributions add up and can grow tax-free," Giles said.
"For young Canadians, the earlier you start, the more powerful the impact. And no matter how Canadians are looking to invest in their future, having the right information is key to making confident financial decisions."