Seventy-three per cent of Canadians consider themselves at least somewhat knowledgeable about Tax-Free Savings Accounts, up from 70 per cent last year, according to BMO’s annual TFSA report, released Feb 28.
The report, conducted by Pollara, also showed that the average annual contribution amount of $4,989 has increased 8.6 per cent from last year's $4,592. In addition, at 17 per cent, the number of Canadians maxing out their contributions rose two per cent.
However, this year’s report found that areas where Canadians have knowledge gaps remain similar. Thirty-four per cent of those surveyed still aren't aware that over contributing will result in a penalty tax; 42 per cent believe that contribution limits are linked to income and 45 per cent aren't aware or incorrectly identified what investments are eligible to be put in a TFSA.
Furthermore, while 82 per cent of Canadians have a TFSA account or say they plan to open one, only 25 per cent correctly identified the maximum annual contribution amount of $5,500. Thirty-five per cent were not aware that there is a contribution limit.