Canadians Still Confused about TFSAs

By Andrew Rickard | June 19 2015 09:38AM

photo_web_1389Half of Canadians don't know what the new Tax Free Savings Account (TFSA) contribution limit is, and close to the same percentage are unaware of the fact that they can hold stocks, bonds, and mutual funds in a TFSA.

A survey of 1,558 Canadians conducted by Leger for Mackenzie Investments reveals that Canadians still have a lot to learn about Tax Free Savings Accounts. The pollsters asked people five true or false questions about TFSAs, and 51% of respondents answered three or more correctly. Mackenzie points out that this is slightly better than the results of the 2009 survey, in which 41% of Canadians were able to answer three or more correctly.

The five questions and the corresponding results were as follows:

  1. Like an RRSP, contributions to a TFSA are tax-deductible. (False, 53% correct; 2009: 43% correct)

  1. The TFSA contribution limit is $10,000 per year, if you don't contribute the full $10,000 in a year, the remaining contribution room is lost. (False, 49% correct; 2009: 36% correct)

  1. TFSA contribution room does not depend on earned income. Regardless of income level, all Canadians age 18 or older will receive $10,000 of contribution room each year. (True, 55% correct; 2009: 63% correct)

  1. A broad range of investment options are available within a TFSA including stocks, bonds and mutual funds. (True, 46% correct; 2009: 41% correct)

  1. An individual can own multiple TFSAs. (True, 39% correct; 2009: 22% correct)
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    "There is so much discussion surrounding TFSA's but when it comes to understanding them, Canadians are still bewildered," says Carol Bezaire, Vice President of Tax and Estate and Strategic Philanthropy for Mackenzie Investments. "In five years Canadians still have misunderstandings about the basics of the program. For example, many people don't realize you can hold TFSA's outside of banks and the accounts can hold a broad range of investment options such as stocks, mutual funds and bonds."