A survey finds that nearly half of Canadians have a tax-free savings account (TFSA), yet many still aren’t familiar with the rules.
The study, conducted by Pollara for BMO Bank of Montreal, reveals that 48% now report having a TFSA compared with 39% last year.
The adoption rate is strongest in Western Canada (Alberta at 55%; the Prairies and B.C. at 53% each) and weakest in Atlantic Canada (34%).
TFSAs are being used most often as a vehicle to save for retirement (47%) and as an emergency source of funds (43%).
The report also finds that, while 68% of Canadians claim to be knowledgeable about TFSAs—up from 60% in 2012—many are still not familiar with specific aspects of the account.
- Just 19% know that the new contribution limit is $5,500 (up from $5,000).
- Only 11% correctly identified all six types of investments that are eligible to be held within a TFSA.
- Around half of Canadians stated that they know when TFSA contributions are taxed (52%) and how much they are allowed to re-contribute after making a withdrawal (47%).
- One in 10 of TFSA holders has overcontributed since opening an account.
“Being unaware of some of the specific rules around the TFSA can potentially lead to complications down the road,” says Christine Canning, head of everyday banking products with BMO Bank of Montreal.