Canadians are tapping into the new tax-free savings account (TFSA), but some question the wisdom of introducing it during a recession, according to a new survey by TNS Canadian Facts.
The survey found that since January 14% of eligible Canadians have opened a TFSA and another 36% are likely to open one this year.
A strong advertising campaign by the federal government and financial institutions was cited as the key reason for the strong acceptance of the TFSA. The survey found that 79% of Canadians are aware of the new registered savings program introduced in last year's federal budget.
The awareness level is only somewhat behind awareness of the RRSP (94%) and the Registered Education Savings Plan (84%). Only 27% of survey respondents said they didn't understand the difference between TFSA and RRSPs.
Despite the strong acceptance of the TFSA, Canadians didn't think it was wise to encourage saving during an economic downturn. Almost half of respondents said the government should be encouraging spending rather than saving. A third of respondents said the TFSA will contribute to the federal government's projected budget deficit by diverting tax revenue from government coffers.
However, the survey found that not everyone was equally interested in opening a TFSA. Only 28% of low-income families with less than $35,000 in household income said they would open or plan to open a TFSA compared with half of all Canadians. Respondents aged 18 to 24, women and people living in Quebec or Atlantic Canada were the least likely to open a TFSA.
A lack of financial resources was the main reason people said they wouldn't be opening an account.