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REPEAT-BMO Annual TFSA Report Shows Majority Plan to Maximize

REPEAT-BMO Annual TFSA Report Shows Majority Plan to Maximize Contributions Within Five Years

- However, 2012 contribution levels remain flat year over year

- Report reveals gaps remain in TFSA knowledge - even among those with an account

- One-in-five TFSA holders have made withdrawals in 2012

TORONTO, ONTARIO -- (Marketwire) -- 11/26/12 -- While fewer than half (44 per cent) of Canadians are making the maximum contribution of $5,000 per year to their Tax-Free Savings Account (TFSA), a new poll released today from BMO Bank of Montreal reveals the majority (57 per cent) plan to contribute the maximum allowable amount within the next five years. For 2012, the report shows Canadians plan to contribute an average of $3,778 to their TFSA.

Additionally, the report revealed:

--  One-in-five (21 per cent) TFSA holders has made an account withdrawal
    this year, with 39 per cent withdrawing less than $1,000 
--  Since its introduction in 2009, 39 per cent of Canadians have opened a
--  Intentions to open a TFSA have increased in the last year; 29 per cent
    of Canadians who do not have a TFSA plan to open one, compared with 22
    per cent in 2011 
--  The most common TFSA investment is cash, with the majority (60 per cent)
    including cash in their TFSA; mutual funds and Guaranteed Investment
    Certificates (GICs) are the second most popular TFSA investments, with
    one quarter (26 per cent and 25 per cent respectively) including them 
--  The least common are stocks (18 per cent), bonds (12 per cent) and
    Exchange Traded Funds (ETFs) (three per cent)

"Anyone who earns taxable interest can turn it into tax-free interest with a TFSA, making it a suitable and sensible option for just about any type of investor," said David Heatherly, Vice President, BMO Bank of Montreal. "Furthermore, the flexibility of this product allows Canadians to use a TFSA to its full advantage for any financial goal, be it short or long term."

Gaps Remain in TFSA Knowledge

However, since the TFSA's introduction in 2009 by the Federal Government, a lack of knowledge about it persists. While 60 per cent of Canadians say they are knowledgeable about this savings and investing vehicle, only 44 per cent of Canadians correctly identified t he annual maximum contribution limit of $5,000. Furthermore, 37 per cent of Canadians say they do not know what investments can be held within a TFSA, and the majority of TFSA holders are unaware that bonds, stocks, and ETFs can be included in their account.

"Federal Finance Minister Jim Flaherty introduced the TFSA four years ago and it is a fantastic savings vehicle. However, the findings suggest it's still a fairly new concept for some," added Mr. Heatherly. "With Financial Literacy Month upon us, now is an ideal time for Canadians to learn more about how TFSAs can help to grow savings tax-free and offset the taxes they pay on their overall investment profits."

TFSA Basics:

--  Canadians aged 18 and older can contribute up to $5,000 per year into a
    TFSA. Any unused contribution room from the previous year can be added
    to the contribution room for the following year. In addition, any
    withdrawals can be re-contributed the following year without affecting
    the annual contribution limits. 
--  You can hold the same investments in a TFSA as you could in a Registered
    Retirement Savings Plan (RRSP), including GICs, bonds, cash, mutual
    funds and stocks. 
--  Contributions to TFSAs are not deductible for tax purposes, and
    withdrawals of contributions and earnings from the account are not

To learn more about BMO's TFSA offering, please visit

The Pollara online survey was completed between October 11 and October 16, 2012, with a sample of 1,000 Canadians. A probability sample of this size would yield results accurate to +/- 3.1 per cent, 19 times out of 20.

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at July 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions. Contacts: Media Contacts: Matt Duffin, Toronto (416) 867-3996

Valerie Doucet, Montreal (514) 877-8224

Laurie Grant, Vancouver (604) 665-7596

Internet: Twitter: @BMOmedia

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