25% of those polled are not sure or didn't know they are required to pay
tax on interest earned in a regular bank account
TORONTO, Sept. 10 /CNW/ - The Tax-Free Savings Account, coming in 2009,
is the first tax savings vehicle the government has made available since RRSPs
were introduced more than half a century ago, yet more than three-quarters of
Canadians polled said they don't know what a Tax-Free Savings Account is, or
only have limited knowledge of it. Of those with some or full understanding of
the tax-free account, less than seventy percent knew about the key product
features, namely the $5,000 annual tax free maximum and that funds are not
taxed even when withdrawn.
Lack of understanding about the taxes paid on interest earned in a
regular bank account seems to be one of the reasons many people don't
understand the opportunity to earn interest tax free. The survey found that a
quarter of Canadians are not sure or didn't know they are required to pay tax
on interest earned and close to another half of those polled said they have
never paid tax on the interest earned in their bank account, mainly because
they don't earn enough interest.
"We feel there's a lot of education that needs to take place between now
and January, so that Canadians are fully aware of their options for saving
come peak investment season," said Peter Aceto, President & CEO of ING DIRECT.
"The sooner people understand, the sooner they can start to plan for their
savings goals. The tax-free account really is a gift that every Canadian
should embrace, regardless of the amount they are able to contribute. It can
be used to save for any financial goal, whether in the short- or long-term.
Over time, as the annual contribution amounts begin to compound, these
accounts will offer significant tax savings for the average Canadian."
Even those with a good understanding of the product were unaware that the
tax-free accounts offer the ability to carry forward unused contribution room
and that any amounts withdrawn can be put back into a tax-free account at a
What Canadians Want in a Tax-Free Savings Account and Why They'll Use One
When asked what they are looking for in a tax-free account, in addition
to the tax savings, more than half of Canadians said they want an account with
no fees and a high interest rate.
Aceto said, "As Canada's savings bank, we are thrilled about the
opportunity to offer the Tax-Free Savings Account because it allows us to give
Canadians even more value for their money. High rates, no fees and no minimums
are at the heart of ING DIRECT's promise to Canadians. We can't think of
anything better than our clients being able to keep even more of the money
they save with us."
One of the main advantages of Tax-Free Savings Accounts is the ability to
withdraw funds without paying tax, and without foregoing contribution room.
When asked when they plan to withdraw money from a tax-free account, 20% of
respondents said between two and 10 years. Roughly one-in-five respondents
said they plan to withdraw the money to make purchases, such as buying
property, a car, house or cottage and 19% said they would use it to save or
Perspectives on Tax-Free Savings from Coast to Coast
- Respondents in Quebec are most inclined to say they have never paid
taxes on the interest earned in their bank account (54%).
- Respondents in Quebec are significantly more likely than respondents
everywhere else to say they will not contribute to a tax-free account
in 2009 (32%).
- Respondents in Manitoba and Saskatchewan are most likely to say a Tax-
Free Savings Account will not impact the amount they contribute to
RRSPs (46% vs. 33% nationally).
- Three-quarters (76%) of those living in Alberta said they do not pay
tax on their bank account because they earn little interest or they
don't have a high enough balance to earn interest.
- 20% of those living in Ontario are most prone to withdrawing money
from a tax-free account to put it towards payments and expenses.
- 26% of respondents in the Atlantic Provinces are most likely to use
the money to make purchases.
From August 15 to August 20, 2008, Angus Reid Strategies conducted an
online survey among a randomly selected, representative sample of 1,014 adult
Canadians. The margin of error for the total sample is +/- 3.1%, 19 times out
of 20. The results have been statistically weighted according to Statistics
Canada's most current education, age, gender and region Census data to ensure
a representative sample of the entire adult population of Canada.
Discrepancies in or between totals are due to rounding.
About ING DIRECT
ING DIRECT is Canada's largest direct bank with over 1.6 million Clients
and more than $23 billion in total assets. ING DIRECT is giving the power of
saving to all Canadians by offering high-value, simple products such as high
interest savings accounts with no fees or service charges and low rates on
mortgages. ING DIRECT has been operating in Canada since 1997, and since that
time Clients have earned more than $3 billion in interest. Clients can bank
with ING DIRECT 24 hours a day, 7 days a week, at www.ingdirect.ca or by
calling 1-800 ING DIRECT.
For further information:
For further information: or to arrange an interview, please contact Lisa
Naccarato, ING DIRECT, Office: (416) 758-5072, Mobile: (416) 885-0348,
firstname.lastname@example.org; Annette Robertson/Hailey Miles, MAVERICK Public
Relations, (416) 640-5525 ext. 231/238,