TORONTO, ONTARIO--(Marketwired - April 10, 2015) - BMO Nesbitt Burns today announced the results of its fifth annual tax study, which found that 87 per cent of Millennials (those aged 18 to 34) in Canada are confident they take advantage of all tax deductions, credits or savings available to them.
More specifically, Canada's Millennials - on average - felt confident about key tax issues. However, they trailed their Boomer counterparts - those between the ages of 50 and 68 - in each category measured:
- How income is taxed (69 per cent confident, compared to 77 per cent of Boomers)
- The tax implications of contributing to a Registered Retirement Savings Plan (RRSP) (63 per cent, compared to 75 per cent of Boomers)
- The tax implications of contributing to a Tax-Free Savings Account (TFSA) (62 per cent, compared to 72 per cent of Boomers)
Millennials Are Unsure How Investments Are Taxed
Additionally, 18 to 34 year olds are less confident in their understanding of how investments are taxed, with only 41 per cent reporting that they are familiar with how capital gains are taxed and 40 per cent aware of how dividend income is treated from a taxation perspective.
"It's encouraging to see the high level of confidence Millennials have for the basics of preparing their tax returns," said John Waters, Vice-President, Head of Tax & Estate Planning, BMO Nesbitt Burns. "However, a lesser understanding was apparent when asked about specific tax implications around investments. Since navigating the tax system - including how it impacts investments - can be challenging, Canadians of all ages need to continue to educate themselves, through their own research or working with a professional. Tax planning should be a year-round activity for everyone, to make the most of valuable tax saving strategies."
According to the study, more than half (53 per cent) of Millennials plan to file their taxes before the April 30 deadline, with 44 per cent reporting they have already filed. When filing their taxes, the study found that more than half (54 per cent) of Millennials will be preparing their own tax returns. Among those filing their own taxes, 32 per cent will be using tax-specific software to file their returns this year rather than relying on someone else - such as a tax professional or family/friends - to do it for them.
Mr. Waters also highlighted the importance of consulting a financial professional who can help you understand your investment options and make your portfolio more tax efficient. For example, BMO Nesbitt Burns' investment advisors work with clients to determine investment solutions that best fit their specific needs and goals. This may include considering tax implications prior to making an investment decision.
Regional Breakdown:
| Region | % of Millennials who feel confident that their completed tax return takes advantage of all the tax deductions, tax credits or other tax savings that may be available to them | % of Millennials who are knowledgeable about how their income is taxed | % of Millennials who are knowledgeable about the tax implications of contributing to a RRSP | % of Millennials who are knowledgeable about the tax implications of contributing to a TFSA | |||
| National | 87 | 69 | 63 | 62 | |||
| Atlantic | 89 | 59 | 47 | 53 | |||
| Quebec | 87 | 63 | 60 | 56 | |||
| Ontario | 87 | 68 | 64 | 63 | |||
| Prairies | 87 | 59 | 57 | 51 | |||
| Alberta | 86 | 81 | 76 | 68 | |||
| B.C. | 85 | 79 | 65 | 73 |
The 2015 BMO Tax Survey was completed by Pollara between March 26 th and 28 th , 2015, with an online sample of 1,252 Canadians. A probability sample of this size would yield results accurate to ± 2.8 per cent, 19 times out of 20. Data has been weighted by region, gender, and age, based on the most recent Census figures, so that it is representative of all adult Canadians.
For more information on tax efficient investing and planning locate a BMO Nesbitt Burns Investment Advisor at www.bmo.com/nesbittburns .
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