Half of Canadians (48%) now report having a TFSA, up 23% from 2012, according to BMO Bank of Montreal.
However, the study found that many Canadians remain unfamiliar with specific aspects of the program.
The study, conducted by Pollara, revealed:
- TFSA holders plan to contribute an average of $3,625 this year
- Canadian men and women are equally likely to have a TFSA, while those aged 65+ are more likely to have an account than Canadians in other age groups (53%)
- TFSA adoption is strongest in Western Canada (Alberta at 55%, the Prairies and B.C. at 53% each) and weakest in Atlantic Canada (34%)
- Canadians identified not having to pay taxes on withdrawals (33%) and the ability to withdraw funds at any time (27%) as being the key benefits of the TFSA
- TFSAs are being used most often as a vehicle to save for retirement (47%) and as an emergency source of funds (43%)
- Cash is the most common instrument being held in TFSAs (57%), followed by mutual funds (25%), Guaranteed Investment Certificates (GICs) (23%), stocks (14%) and Exchange Traded Funds (ETFs) (5%)
Read: What clients find on Google: TFSAs
The report found 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 you are allowed to re-contribute after making a withdrawal (47%)
- 10% of TFSA holders have over-contributed since opening an account
Read: Faceoff: TFSA vs RRSP