Despite the high adoption rate, many Canadians remain unfamiliar with aspects of the TFSA program.

The percentage of Canadians who report having a tax-free savings account more than doubled during 2013, new research shows.

BMO Bank of Montreal published this finding in a summary of results from its third annual Tax Free Savings Account (TFSA) report. The survey, conducted by Pollara, finds that 48 percent of Canadians report having a TFSA, up from 23 percent in 2012.

Despite the high adoption rate, the study reveals that many Canadians remain unfamiliar with specific aspects of the TFSA program. Among the report’s findings:

  • 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-plus are more likely to have an account than Canadians in other age groups (53 percent);
  • TFSA adoption is strongest in Western Canada (Alberta at 55 percent, the Prairies and B.C. at 53 percent each) and weakest in Atlantic Canada (34 percent);
  • Canadians identify not having to pay taxes on withdrawals (33 percent) and the ability to withdraw funds at any time (27 percent) as being the key benefits of the TFSA;
  • TFSAs are being used most often as a vehicle to save for retirement (47 percent) and as an emergency source of funds (43 percent);
  • Cash is the most common instrument being held in TFSAs (57 percent), followed by mutual funds (25 percent), guaranteed investment certificates (GICs) (23 percent), stocks (14 percent) and exchange-traded funds (ETFs) (5 percent);
  • The report finds that, while 68 percent of Canadians claim to be knowledgeable about TFSAs — up from 60 percent in 2012 — many are still not familiar with specific aspects of the account;
  • Just 19 percent know that the new contribution limit is $5,500 (up from $5,000);
  • Only 11 percent correctly identify all six types of investments that are eligible to be held within a TFSA;
  • Around half of Canadians say they know when TFSA contributions are taxed (52 percent) and how much one is allowed to re-contribute after making a withdrawal (47 percent).

The following is an analysis of TFSAs by region:

Region Have a TFSA Knowledgeable about TFSA Know the new contribution limit Identify all investments within a TFSA
National 48% 68% 19% 11%
Atlantic 34% 64% 12% 7%
Quebec 40% 54% 13% 9%
Ontario 50% 74% 20% 12%
Prairies 53% 74% 24% 13%
Alberta 55% 73% 26% 14%
B.C. 53% 70% 22% 13%