Higher TFSA limit prompts Canadians to save more
Others say they don't have the savings to take advantage of the higher limit, according to CIBC poll.
Canada Revenue Agency
Tax free savings account
TORONTO — A CIBC poll finds that one-quarter (27%) of Canadians plan to contribute more annually to their Tax-Free Savings Account (TFSA) following the federal government’s decision to increase the annual contribution limit to $10,000 from $5,500.
The poll, conducted less than two weeks after the April 21 Federal Budget announcement, also found that another third (34%) say they simply don’t have the funds to take advantage of the new maximum.
“It’s encouraging to see Canadians are well aware of the increased TFSA limit, and that some are focused on increasing their contribution, though not everyone is able to,” says Veni Iozzo, senior vice=president, deposits, GICs and client solutions at CIBC.
According to the poll, some Canadians say they already had trouble reaching the $5,500 limit; others are saving in their RRSPs and RESPs instead; or they just don’t have enough extra money. Many others don’t have a TFSA.
Previous CIBC research has found that Canadians are still focused on reducing household debt.
A recent CIBC poll found that only 13% of those expecting a tax refund this year plan to save or invest their windfall.
“Some people might not understand that, little by little, you can put money away in a TFSA – whether it’s for your emergency fund, a down payment on a home or for retirement – even as you’re working on other financial priorities,” added Iozzo. “All of your investments grow tax free – and you can withdraw the money when you need it.”
The new TFSA contribution limit means Canadians can save significant amounts over time through a variety of investments, including savings accounts, GICs, mutual funds, stocks, bonds and certain shares of small business corporations.