2022 TFSA survey results

The results are in! HighInterestSavings.ca ran an online survey for 4 weeks between January and February 2022 about how Canadians use their TFSAs. We received 455 responses.

High uptake for both TFSAs and RRSPs

98% of respondents currently have a TFSA, compared to 85% who currently have an RRSP or RRIF.

95% of respondents intend on contributing to a TFSA this year, whereas only 46% of eligible respondents (those who can contribute to an RRSP) intend on contributing to an RRSP.

The emphasis on the TFSA continues with the results around maxing out your contributing room. 76% of respondents max out their TFSA contribution room every year, whereas only 39% of eligible respondents (those who can contribute to an RRSP) max out their RRSP contribution room every year.

More than a savings account, despite its name

4% of respondents (20 out of 455 people) did not previously know that they could use their TFSA for more than just a savings account or GIC. For everybody else, despite knowing that they can hold other investments in their TFSA (such as stocks, bonds, mutual funds, ETFs, and options) only 40% of them actually do so.

The most common use case for the TFSA (at 64%) is for retirement or long-term savings. 6% have a specific short- or medium-term use in mind, and 27% aren’t sure, but are just making use of the tax-free aspect.

The TFSA has room for improvement

15% of respondents have over-contributed to their TFSA!

The only open-ended question on our survey was about how to improve the TFSA, and 337 people had thoughts on this. 4% of them specifically said that the TFSA is good as-is. Two people said to scrap the TFSA altogether.

The overwhelming most popular suggestion (at 61%) was to increase the contribution limit. Some of these suggestions had an additional comment that seniors should be able to contribute more than others.

Given that a meaningful number of Canadians have over-contributed to their TFSA, it’s no surprise that many suggestions were related to this. 10% of suggestions were about allowing re-contributions within the same year, or allowing easier transfers between financial institutions (since the only real trick otherwise is to do the “December manoeuvre“). 9% of suggestions were about having better reporting; the CRA’s online portal has a summary of your TFSA contributions, but this is known for being very slow to update. Technically, financial institutions do not have to send your TFSA contribution information for a given year until the end of February of the following year, and even then this information is not always complete.

7% of suggestions were related to better educating Canadians about the TFSA. This could include calling it a TFIA (Tax Free Investment Account); educating people on what investments can go in the TFSA; promoting it better; and making the rules around contributions and re-contributions clearer. Three respondents want a clearer definition of what is considered inappropriate stock trading in a TFSA.

We received 6 or 7 suggestions each (2% of suggestions) for these ideas:

• Offer higher interest rates in a TFSA (although that’s up to each financial institution), including an idea to force TFSA rates to be guaranteed for a year (outside of a GIC)
• Expand what investments can be put in a TFSA, such as a business, or a property, or metals
• Make USD dividends tax exempt in a TFSA, just like they are in an RRSP

Other ideas include:

• Remove or reduce the over-contribution penalty
• Set a lifetime contribution limit cap
• Allow Canadians to claim a capital loss made within a TFSA
• Have the government match a certain percentage of contributions to encourage new deposits
• Allow the transfer of TFSA funds to dependents
• Increase the CDIC insurance coverage limit so that you are less likely to need to open multiple TFSA accounts
• Allow people under 18 to contribute