While some Canadians plan to save more, others say they don't
have the savings to take advantage of the higher limit
TORONTO, May 26, 2015 /CNW/ - A recent CIBC (TSX:
CM) (NYSE: CM) poll finds that one-quarter (27 per cent) 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 per cent) say they simply don't have
the funds to take advantage of the new maximum.
Highlights of the poll include:
- 27 per cent of Canadians say that the new TSFA
contribution limit will support their savings plans this year by
allowing them to contribute more
- 34 per cent say they lack the funds to top up their
TFSA
- 70 per cent say they were aware that the government
raised the annual TFSA limit to $10,000 from $5,500
-
- 4 per cent have already topped up their TFSAs to
$10,000
- 20 per cent say they don't have a TFSA and have no plans
to open one
- 7 per cent say they don't have a TFSA but now plan to
look into opening one due to the higher contribution limit
The poll also found that Canadians aged 55 and over demonstrated
much stronger awareness (84 per cent) about the new
contribution limit than younger Canadians aged 18-34 (55 per
cent). Canadians 55 and over were also twice as likely as
younger Canadians to say they typically contribute the maximum to
their TFSAs, while those in their highest spending years (35-54)
were least likely to contribute.
"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. "Awareness and intentions don't
always translate into action, which is why creating a savings plan
and following it is so important."
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 per cent 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 Ms. Iozzo. "All of
your investments grow tax free - and you can withdraw the money
when you need it."
Tips for TFSA investors
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. Here are a few
tips:
- Create a plan for your TFSA: You are more likely to
succeed in saving if you set clear goals. You can use a TFSA to
save for retirement, a car, a down payment on a home or a rainy day
fund - or you can use it to save for all of the above. You are not
limited to having one "account" for your TFSA as you can
simultaneously hold funds in a high interest savings account or a
GIC for the short-term and in mutual funds, stocks or bonds for the
longer term.
- Contribute regularly: Making regular contributions to
your TFSA is often easier than coming up with one lump sum for your
annual TFSA contribution. An advisor can help you set up an
automatic regular savings plan to coincide with your pay schedule
so that saving is easy.
- Be clear on the rules: You can withdraw funds from your
TFSA anytime and for any purpose without incurring tax, though
restrictions may apply depending on the investments that are held
in your TFSA. You cannot re-contribute the amount you withdraw
within the same calendar year but you can re-contribute the
withdrawn amount the following year.
- Meet with an advisor: An advisor can help you establish
a savings plan that aligns with your short- and long-term goals,
and can also help to identify opportunities to build savings and
structure a repayment plan that allows for debt reduction — both
key elements of a savings strategy.
Consult with your financial advisor or Canada Revenue Agency for
more information at
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html.
You can also find out more about TFSAs on the Tax-Free Savings
Account page on CIBC.com.
KEY POLL FINDINGS:
Awareness: Canadians aware that the Federal Government
increased the Tax-Free Savings Account (TFSA) contribution limit
from $5,500 to $10,000 a year, by age:
|
|
Age |
All Canadians |
18-34 |
35-54 |
55+ |
Yes |
70% |
55% |
68% |
84% |
No |
27% |
39% |
29% |
14% |
I don't know |
3% |
5% |
3% |
2% |
Awareness: Canadians aware of the new TFSA limit on
whether they will take advantage of the increase:
|
Are aware of the
new $10,000 limit |
I haven't yet, but I intend to |
38% |
No, and I don't intend to |
31% |
No I have not because I don't have a TFSA |
27% |
Yes, I've topped up my TFSA and have contributed
$10,000 |
4% |
Savings goals: The impact the new $10,000 annual TFSA contribution limit on
Canadians' savings goals:
|
All Canadians |
Canadians who say they will save
more in their TFSAs as a
result of the TFSA contribution limit increase |
27% |
|
I typically contribute the maximum and will now
contribute $10,000 a year |
10% |
|
I will try to increase my contribution above
$5,500 |
17% |
Canadians who say they don't have
the funds to contribute
more to their TFSA: |
34% |
|
The increase will not affect me, I will
probably contribute less than $5,500 |
18% |
|
I won't contribute to a TFSA because I
contribute to other savings instead (e.g., RRSP, RESP) |
4% |
|
I won't contribute to a TFSA because I don't
have enough savings this year |
12% |
Other |
39% |
|
I don't have a TFSA, and have no plans of
getting one |
20% |
|
I don't have a TFSA, but plan on looking
into/getting one now |
7% |
|
I don't know |
10% |
|
Other |
2% |
On April 30 and May 4, 2015, an online survey was conducted among
3,011 randomly selected Canadian adults who are Angus Reid Forum
panelists. The margin of error - which measures sampling
variability - is +/- 1.8 per cent, 19 times out of 20. The results
have been statistically weighted according to education, age,
gender and region (and in Quebec
language) Census data to ensure a sample representative of the
entire adult population of Canada.
Discrepancies in or between totals are due to rounding.
About CIBC
CIBC is a leading Canadian-based global financial institution with
nearly 11 million personal banking and business clients. Through
our three major business units - Retail and Business Banking,
Wealth Management and Wholesale Banking - CIBC offers a full range
of products and services through its comprehensive electronic
banking network, branches and offices across Canada with offices in the United States and around the world. You
can find other news releases and information about CIBC in our
Media Centre on our corporate website at
www.cibc.com.
SOURCE Canadian Imperial Bank of Commerce