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What to Do with Your Tax Refund: 5 Smart Moves for Canadians

  Tax Season · Personal Finance By MoneySavings.ca Editorial Team • May 7, 2026 • 7 min read Tax season is wrapping up across Canada, and for millions of Canadians, that means a refund cheque — or a direct deposit — is on its way. The average Canadian tax refund hovers around $1,800. That's real money. The question is: what's the smartest thing you can do with it? It's tempting to treat a tax refund like "found money" and splurge. But here's the truth — that refund was your money all along. The government was just holding it for you, interest-free. So before it quietly disappears into day-to-day spending, let's look at five moves that will make it work harder for you. $1,800 The average Canadian tax refund — enough to make a meaningful dent in debt, pad an emergency fund, or kick-start your TFSA for the year. 1 Pay Down High-Interest Debt First If you're carrying a balance on a credit card, this should be your very first call. Most Canadian credit car...
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5 Things Every Canadian Should Know About Their Money Today

                                     

Monday, May 4, 2026 · moneysavings.ca/canadian-money-brief

Good morning, Canada. Here are the five money stories shaping your financial decisions right now.

1. Bank of Canada Holds at 2.25% — But Warns of Possible Hikes

Last Tuesday, the Bank of Canada kept its overnight rate at 2.25% — a level it has maintained since October 2025. Governor Tiff Macklem signalled that the current rate "looks appropriate" for now, but was clear that the central bank is watching two major risks closely. If oil prices continue rising due to the conflict in the Middle East, the Bank could be forced into consecutive rate increases. On the flip side, new U.S. tariffs on Canadian goods could trigger cuts to support growth. The next rate decision is June 10, 2026 — mark your calendar.

What it means for you: Variable-rate mortgage holders are safe for now, but those approaching renewal should stress-test at higher rates just in case.

2. Inflation Is Back at 2.4% — Blame the Gas Pump

Canada's Consumer Price Index climbed to 2.4% in March, up from 1.8% in February, largely driven by gasoline prices posting their largest monthly increase on record following the escalation of conflict in the Middle East. The average price at the pump has jumped nearly 40 cents per litre since the war began. Core inflation — which strips out volatile items — has been easing but remains just above 2%. The Bank of Canada projects inflation could peak near 3% in April before gradually declining toward its 2% target in early 2027.

What it means for you: Budget more for fuel and heating this spring. Consider locking in utility contracts or prepaid gas cards where available.

3. Ottawa Launches Canada's First Sovereign Wealth Fund

The federal government's Spring Economic Update, released April 28, introduced the Canada Strong Fund — Canada's first-ever national sovereign wealth fund. The fund will invest in strategic infrastructure, energy, advanced manufacturing, and telecommunications. Uniquely, it will include a retail investment product, giving everyday Canadians the chance to invest directly and share in the financial returns of nation-building projects. The update also projects lower deficits over the fiscal horizon and targets recruiting 80,000 to 100,000 new skilled trade workers by 2030–31.

What it means for you: Watch for details on the retail product — it could become a new savings and investment vehicle for Canadians alongside RRSPs and TFSAs.

4. The Canadian Dollar Is Holding Steady Near 73.6 Cents US

The loonie is trading around $0.7359 USD today, relatively stable despite global volatility driven by the Middle East conflict and ongoing U.S.-Canada trade tensions. The Bank of Canada notes that while the U.S. dollar has strengthened against most major currencies since the war began, the Canada-U.S. exchange rate has remained comparatively steady — helped in part by Canada's status as a net oil exporter, which benefits from elevated crude prices now above $100/barrel.

What it means for you: Cross-border shoppers and travellers to the U.S. are still facing a meaningful discount — factor in roughly a 26% currency hit plus exchange fees when spending in USD.

5. The TSX Slipped Slightly — But Markets Are Recovering

The S&P/TSX Composite Index closed Friday at 33,891, down about 73 points (–0.22%). Energy stocks were among the harder-hit sectors, with the TSX Capped Energy Index falling over 1%, as crude oil prices pulled back slightly after a volatile stretch. However, the broader picture is one of recovery — equity markets had weakened sharply when the Middle East conflict first escalated but have since clawed back significant losses. The Bank of Canada's GDP forecast of 1.2% growth in 2026 reflects a cautious but stable economic outlook.

What it means for you: Long-term investors should stay the course. Market dips tied to geopolitical uncertainty have historically been temporary. Now may be a good time to review your portfolio's energy and international exposure.

This article is for informational purposes only and does not constitute financial advice. Always consult a licensed financial advisor before making investment or mortgage decisions.

© 2026 MoneySavings.ca · Canadian Money Brief

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