Nearly one-half (47 per cent) of Canadians have a tax-free savings account (TFSA) but only one-half (47 per cent) of those have made a contribution so far this year and many said they have no plans for the money they have saved in the account, found a survey released by CIBC.
Among those Canadians holding a TFSA, 44 per cent have a savings account only, 27 per cent have an investment account only and 21 per cent said they have both.
"It is encouraging to see that almost half of Canadians have taken advantage of the tax-free savings account, which gives them an additional option to help them reach their financial goals," said Colette Delaney, executive vice-president of retail and business banking at CIBC. "Given how versatile the TFSA is, there is an opportunity for more Canadians to either contribute to their existing TFSA or to consider how opening a TFSA could help them achieve their savings goals sooner."
Many Canadians (41 per cent) said they have no plans for the funds they have invested in their TFSA, they just want to avoid paying tax on interest earned or investment returns, found the survey of 2,031 people.
More than one-third (36 per cent) of people with a TFSA said they plan to use funds in this account toward their retirement while 30 per cent of Canadians plan to use the funds toward their emergency savings and 17 per cent plan to use the funds toward major purchases (such as a home or car).
Canadians aged 18 to 24 were more likely to say they plan to use their TFSA savings for a major purchase (37 per cent), while those between 45 and 54 years of age plan to use their account for retirement (47 per cent), found CIBC.
Younger Canadians said they plan to use their TFSA for shorter term goals such as major purchases or emergencies, which explains why they are the most likely to have made a withdrawal from their TFSA in the last year. Among Canadians with a TFSA account, those between 18 and 34 years of age were among the most likely to say they have withdrawn money from their TFSA this year (25 per cent), compared to the national average of only 17 per cent.
Percentage of Canadians who have a TFSA, by region:
Among Canadians with a TFSA, percentage of those who have contributed to or withdrawn funds from their TFSA in 2012, by demographic:
18 to 24 years old
25 to 34 years old
35 to 44 years old
45 to 54 years old
55 to 64 years old
65 years old and older
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