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Dale Jackson

Personal Finance Columnist, Payback Time


After 10 years the tax-free savings account (TFSA) has become the most effective tax saving tool for the average investor since the registered retirement savings plan (RRSP). Gains on a wide range of investments in the TFSA are never taxed, leaving more money in the account to generate further gains.  

With the 2019 contribution limit of $6,000 coming Jan. 1, a new study from Bank of Montreal and Pollara reveals just how much Canadians have taken to the TFSA. It found that in 2018, 69 per cent of Canadians now have a TFSA — up 23 per cent from the previous year. The total amount held in TFSAs was also up 23 per cent in 2018 to an average of $27,053. Contributions were down slightly this year but TFSA holders still managed to squirrel away $4,826 on average. 

However, the study also revealed many misunderstandings about TFSAs that could wind up resulting in penalties for account holders including:        

  • 33 per cent of respondents were not aware of the accumulative contribution limit of $63,500 since the TFSA was launched in 2009.
  • Only 11 per cent were able to identify the new $6,000 contribution limit for 2019 correctly, while 66 per cent of respondents did not know that there was a change.
  • 40 per cent did not know about the over-contribution penalty of one per cent of the over contribution amount per month.

Perhaps the most revealing finding in the study related to how Canadians are using their TFSAs. It found 39 per cent of respondents use it as an emergency fund, while half consider it a retirement savings tool.