TFSA contributions expected to rise

However, while contributions are increasing, many Canadians remain unfamiliar with the rules of holding a TFSA.

While 66% claim to be knowledgeable about TFSAs, only 22% correctly identified the $5,500 contribution limit, and 77% are unfamiliar with the overcontribution penalties.

Overall, 10% of TFSA holders says they have overcontributed to their account in the past, costing an average of $412.50 in penalties. TFSA holders cite not understanding the rules (46%) and losing track (33%) of their account as the primary reasons for overcontributing.

The use of TFSA accounts has remained stable since last year, with 48% of Canadians having an account. The survey also finds the following:

• on average, Canadians have $17,490 in their TFSAs;
• the investment mix in has also remained constant since last year; TFSAs are still primarily made up of cash (60%), followed by mutual funds (25%) and GICs (20%);
• TFSAs continue to be used most commonly for retirement savings (48%) and emergency funds (43%), followed by using them as savings for a major purchase (25% up from 19% last year) and saving for a vacation (19% up from 14% last year);
• the means of contributing to TFSAs remain the same this year, with 56% making lump sum contributions and 33% making regular contributions; and
• more than one-fifth of TFSA contributors plan to contribute the maximum amount of $5,500, up from the 18% who contributed the maximum last year.

There were 1,003 Canadians who participated in the survey.

Related articles:

• TFSAs remain popular
• More than half of Canadians don’t have a TFSA
• More Canadians have TFSAs, but few understand them