Despite an increasing amount of attention on Tax-Free Savings Accounts (TFSAs) in recent weeks, a recent survey by Tangerine online bank found that 28% of Canadians are still unsure of how these accounts work.
In addition, just 56% of respondents could identify the new TFSA contribution limit of $10,000 and only 14% could identify the effective date of this new contribution limit (January 1, 2015).
Of those Canadians surveyed, 51% reported that they have a TFSA. But even among these account holders, the survey found confusion when it comes to contribution limits and rules.
According to the findings, 31% of the TFSA holders surveyed are unaware you can carry over contribution room from previous years, and the same amount (31%) are unaware they can contribute to their TFSA at any time throughout the year.
When it comes to contributions, of those Canadians surveyed who have a TFSA, 62% reported that they only contribute to it once a year. When asked what they are currently using this account for, the majority (38%) indicated they are using it to save for retirement. In addition, 42% reported that they have previously maxed out their account — but when asked if they plan on maxing it out now that the limit has increased to $10,000, this number decreased to 30%.
For those Canadians who don’t have a TFSA, 9% reported that they plan on opening one this year, and 40% are undecided. Over half (51%) reported they don’t plan on opening a TFSA this year and the majority of these respondents (66%) cited that it’s because they don’t have enough money.
From April 27-28, an online survey was conducted among 1,509 randomly selected Canadian adults who are Angus Reid Forum panelists.
Tangerine operates independently as a wholly owned subsidiary of The Bank of Nova Scotia.