The TFSA has become the most popular tax-efficient savings vehicle in this country.
New numbers drawn from last year’s tax filing data show that the average Canadian is shifting priorities – from retirement savings through the time-tested RRSP – to the flexibility of the TFSA or Tax-Free Savings Account.
And the newly minted First-time Home Buyers Account attracted half a million contributors with most putting in $8,000.
Just over 6 million Canadians made a contribution to an RRSP last year while 7.5 million chose the Tax-Free Savings Account option. And we are putting more money in the TFSA when we do contribute. The median contribution to the RRSP last year was $4,000. It was $6,500 for the TFSA.
Perhaps the most telling aspect of this shift towards the TFSA is that level of contribution. It really didn’t matter how much money participants were making.
Even those earning $20,000 a year maxed out at $6,500. In contrast, RRSP contribution were very income sensitive. Those earning $20,000 a year put in just over $1,000 a year while those making more than $80,000 put in nearly seven-times as much.
