Facts, Facts and More Facts: 2012 TFSA Wrap-up

Tax-free savings account (TFSA) assets reached $80 billion, in more than 10 million active accounts. Investor Economics’ retail deposit clients have hinted that TFSAs are a zero-sum game, as growth acts to cannibalize taxable account holdings. A study published by the Department of Finance Canada (http://www.fin.gc.ca/taxexp-depfisc/2012/taxexp1202-eng.asp#toc346014054) noted an 8% drop in the share of adult taxfilers reporting taxable interest and dividends between 2008—pre-TFSA introduction—and 2011.

Tax-free savings account (TFSA) assets in bank branches and branchless institutions reached $52.7 billion at December 2012. Savings deposits ceded 4.2% share of the product mix in 2012; mutual funds gained 2.4% and accounted for 20% of TFSA assets in the retail banking channels.

Complex rankings of TFSA assets in the branch channels saw BMO Financial Group surpassing ING Direct Asset Management and moving into the sixth spot. Four of the top five TFSA competitors are Big Six banks.

The newly-minted budget included a significant TFSA development—an increase in the annual contribution allowance for 2013 to $5,500. TFSAs were introduced in 2009 with an annual contribution allowance of $5,000. Further contribution limit increases will be mandated inOttawa(in $500 increments), as dictated by changes in the consumer price index (CPI).

For more information on TFSAs, please refer to the upcoming edition of our Deposit and Fixed Income Advisory Service http://investoreconomics.com/issue/deposit-and-fixed-income-advisory-service-2. Posted by Andrew Dranfield Andrew@iei.ca.