More than half of all Canadians say this year’s increase to the Tax-Free Savings Account (TFSA) contribution limit won’t affect their savings plans in 2015.
A CIBC poll found that 34% of those surveyed say they will not step up their investments despite the limit increasing from $5,500 to $10,000 because they don’t have the money to do so. A further 20% say they don’t have a TFSA and the new limit does not make a difference in their plans.
However, more than a quarter of those polled say the change will modify their savings plans and they will now be contributing more. Four per cent say they have already bumped their savings up to the maximum allowable amount this year, and 7% say they had not considered a TFSA until hearing about the higher limit.
Only 70% of those surveyed were aware of the limit increase. Most of these (84%), CIBC said, were Canadians over the age of 55, compared with 55% of respondents between 18 and 34 years old.
The Canadian government announced the contribution limit increase April 21. It applies to all TFSA contributions starting in 2015.
TFSAs differ from RRSPs in that contributions are not tax-deductible and withdrawals are tax-free. Withdrawals from a TFSA do not affect eligibility for income-based social benefits, such as the Guaranteed Income Supplement, the Canada Child Tax Benefit and Old Age Security, thus making them a more attractive option than RRSPs for some , including some middle-income workers without defined benefit pension plans.
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