Tax Avoidance, Financial Stress & Well Being

Earlier this month, Statistics Canada published a report titled Stretching the Loonie: a time series analysis of financial difficulty and quality of life. The report is based on a nation-wide survey and the results are concerning. They reveal a serious trend and it is possible this is contributing to the late filing trend we are seeing this tax season.

The Backdrop.  As of May 3, there were a significant number of tax returns still left to be filed.  Consider this update from CRA:

This compares to 31,946,050 current year returns filed in the 2025 tax filing season – so about 3 million short.  Some of these are returns for the self employed, due on June 15.  But what sticks out is that there is a lot of work left for EFilers and the fact that the needle has not moved much in terms of the SimpleFile automated tax filing option. 

In addition, for those who have to pay, the sum is high:  Over $8000, although, the government has not been precise here for the second year in a row:

Survey Says There is Considerable Stress:   This is where astute tax and financial advisors and their work as proactive, empathetic coaches comes in. From 2021 to 2025 the percentage of Canadians who report experiencing financial difficulty rose by 4.8 points each year:  39% of Canadians aged 15 and older report financial difficulty. In 2019, that figure was 19%. The stark reality of more than double the figure of just 7 years ago tells us that something has gone very wrong.

Perhaps unsurprisingly, younger adults, that is those in the 25-44 demographic, report an annual increase of 5.4% of those dealing with financial stress. Racialized groups also tend to report higher levels of financial difficulty, with 41% reporting difficulty.

Even seniors, statistically Canada’s wealthiest age group, are not immune. Nearly a quarter of our seniors are reporting financial difficulty.   Worse, more than 47% of those with a disability or a long-term condition say they have difficulty meeting their expenses.

The StatsCan survey presents some additional figures for us to ponder, in terms of emotional toll.

Life Satisfaction Declines - Here’s What Your Clients are Feeling:  Overall those reporting high life satisfaction declined by 2.2% per year from 2021 to 2025. In addition:

• Hopefulness for the future also declined by 2.4 percentage points per year for the same period. Overall, we’re struggling more, are less satisfied and less hopeful than we were in 2021.
• The report states “younger adults aged 25 to 44 experiencing financial difficulty were the least likely to report high life satisfaction (18% as of the spring of 2025)”. When fewer than one in five Canadians between 25 and 44 report being satisfied with their lives, it’s clear that financial stability, mental well being and life satisfaction are inextricably linked. 
• Canada’s older citizens report a much greater decline in overall life satisfaction. However, factors outside of finances may be at play when it comes to seniors such as their overall health, family dynamics etc.

The silver lining?  Your middle-aged clients are most likely to report a high level of life satisfaction at around 48%.   But, this is still low.

Regional Differences: Quebecers are least likely to report financial difficulty but nearly 30% of the residents of that province still say they are struggling. At the high end the figure in Alberta is more than 40% and more than 41% in New Brunswick.

The Bottom Line: In our current volatile economic climate, financial planning is more crucial than ever.  Tax planning is a natural trigger at this time.

 In your conversations with your clients, it’s important to discuss with them more than the hard numbers on their T1 forms. How much do you know about them and their families? What major changes have they experienced in the past year? Has there been a move, a birth, a death? 

Most important and probably the toughest questions:  Aside from CRA, do they owe money to others and how can you, as a financial professional, best help them address this?  It’s part of the very important work that you do, all year round.

Join us for the May 27 CE Summit where we will discuss these issues of financial trauma, the news at CRA and Finance Canada and the drill down on retirement and estate planning issues you can shore up on for more impactful conversations with your clients this post tax season. 

Also, be sure to check out our podcast Real Tax News with Evelyn Jacks and Friends.   This week we are launching a conversation with best-selling author and CES Summit Speaker, Doug Nelson.