Tax-Free Savings Account: Focus Testing

Prepared for the:
Canada Revenue Agency
FINAL REPORT
November, 2010
POR #041-10
46558-110634/001/CY
Contract award date: 2010-07-05

Prepared by:
Sage Research Corporation

Ce rapport est aussi disponible en français sur demande.

To request a full copy of this report, please contact Library and Archives Canada at: 613-996-5115 or 1-866-578-7777 or www.collectionscanada.ca.

Media Enquiries:
Media Relations
Canada Revenue Agency
4th Floor 555 MacKenzie Avenue
Ottawa ON K1A 0L5
media.relations@cra-arc.gc.ca

Executive Summary

The 2008 Federal Budget announced the creation of a new product, the Tax-Free Savings Account (TFSA). The Canada Revenue Agency (CRA) has been assigned the task of administering the TFSA initiative with the goal of facilitating the delivery of the service to Canadians.

The purpose of the proposed research was to identify common misconceptions associated with contributing money to and withdrawing money from a TFSA, and to assess ease of finding TFSA information on the CRA website and online My Account service. Specific research objectives included:

• Current and preferred sources of information about the TFSA
• Awareness and understanding of key rules associated with contributions to and withdrawals from TFSAs
• Ease of finding information on various select topics in the TFSA website
• Ease of using the online My Account service to access select types of personal information related to TFSA contributions and transactions

Six focus groups were conducted September 29-30, 2010 in Montreal, Toronto, and Calgary. All participants had a TFSA. It is important to note that this research was qualitative in nature, not quantitative. As such, the results provide an indication of participants' views about the topics explored, but cannot be statistically generalized to the full population.

This research was contracted at $41,769 (HST excluded).

Sources of information about the TFSA

Participants often initially learned about the Tax-Free Savings Account (TFSA) through the media, either through ads or news stories. However, their more detailed understanding of the TFSA typically was based on what they learned when setting up their TFSA. In this regard, by a wide margin the most common source of detailed information was the bank where they set up their TFSA, or for some a financial advisor. Notably, only a small number of participants said they looked at a Government of Canada (GC) web site when setting up their TFSA. Within this small subgroup, only a couple thought they had been on the Canada Revenue Agency (CRA) web site. Others who had been to a GC web site could not recall which particular site they had visited.

Participants were asked what they would do or where they would go if for some reason they needed to learn more about TFSAs. The most common method mentioned by participants was that they would search for the information on the internet. Typically they said they would use a general search engine such as Google, while some said they would look at bank web sites specifically. The second most commonly mentioned method of getting information in the future was to talk with their bank or financial advisor. Only a small number said they would deliberately search for information on a GC web site. An overall implication of these results is that financial institutions have been and will continue to be a very important source of information for the general public about TFSAs.

Participants were asked if they recalled any stories in the news media over the past year about "any problems or issues with the TFSA." Most participants said they did not recall any such stories. These results suggest a hypothesis that general public attention to and understanding of the media coverage of the overcontribution issue may be relatively low. If true, it would mean this coverage did not have a large impact on educating the public about overcontribution scenarios and the rules associated with overcontribution.

Participants were asked whether they would be interested in watching a video about the TFSA on, for example, YouTube or their bank's web site. While there was no interest in going to YouTube for this sort of information, some said they would be interested in watching such a video on their bank's web site, providing the video is short (i.e., less than 5 minutes). For those interested in a video, the perceived benefits were that it could be easier than sorting through written text, the video would hopefully focus just on key points, and compared to written materials the video would hopefully use simple, easy to understand language.

Understanding of contribution and withdrawal rules

There was widespread awareness of the $5,000 annual contribution limit, and of the ability to withdraw money from a TFSA without "penalties" or "taxes." Awareness that unused contribution room can be carried over to subsequent years was more mixed. Very few participants spontaneously mentioned rules associated with withdrawing money and subsequently putting it back in, or rules associated with overcontribution. Further, most participants had no top-of-mind questions about contribution/withdrawal rules for TFSAs.

The moderator posed a question about a scenario involving withdrawing money from a TFSA and then putting it back in within the same calendar year. The results indicated substantial uncertainty and confusion around how withdrawals affect contribution room, as the majority of participants were either unsure how the rules would apply in this case or were wrong in their understanding of the rules.

Finding TFSA information on the cra web site

Finding the TFSA home page starting from the CRA home page

Overall, about half the participants found the TFSA home page within the time allotted. Further among those who did find the page: (a) only a few found it quickly, and (b) none of the participants initially clicked on an Individuals link, which was the intended navigational path.

Most participants first clicked on the TFSA box in the Highlights section, as this appeared to be a link to the TFSA section of the web site. In fact, this leads to the page described in the text link next to the box (Did you receive a TFSA return?), which gives information specific to TFSA returns. Some participants managed to figure out how to get to the TFSA home page from here (e.g., by clicking on the TFSA "breadcrumb" on the page), while others did not.

Virtually all of the participants recommended that the TFSA "box" in the Highlights section link to the TFSA home page. Note, though, that this would only be a temporary solution to the navigation problem, because at some point the TFSA box will be removed from the Highlights section. It should be noted that participants were not presented with a version of the CRA Home page without the TFSA box, and therefore we cannot say how people would respond to the "find the TFSA home page" assignment in the latter context.

Find the TFSA guide

Overall about half the participants found the guide, but only a small number found it quickly. The basic problem is that the wording of the relevant link, RC4466, Tax-Free Savings Account (TFSA) is not perceived to contain any language clearly indicating that it is a link to a guide. Further, among those who clicked on RC4466, Tax-Free Savings Account (TFSA), some assumed from looking at the resulting web page that this was not the correct link because there was still no reference to a "guide."

Virtually all participants strongly felt the link RC4466, Tax-Free Savings Account (TFSA) should be reworded to explicitly include the word "guide." There was also widespread support for putting a reference to the guide in the top section of the page which contains overview paragraphs about the TFSA.

Find information on why a person might receive a TFSA return: Overall, less than half the participants arrived at the intended information page within the time allotted, and only a small number arrived at this page quickly. The reason why most did not quickly click on the intended link, Tax payable, is that participants typically focused on the wording of the links themselves, and paid less attention to the text underneath the links. They were looking for the word "return" in the wording of the links or for a reference to "excess TFSA amounts" (a phrase used in the first paragraph of the cover letter accompanying a TFSA return).

Participants made two sorts of suggestions to make it easier to find the relevant information:

• In the cover letter accompanying a return, state the actual path of links to be clicked on.
• Reword the Tax payable link to include explicit reference to the TFSA return, or at least make the reference to the return in the text underneath stand out more.

Finding information on the tax implications of overcontributing to a TFSA

Overall, the majority of participants did not make it to the relevant web page within the time allotted. Most participants first clicked on TFSA contribution room on the TFSA home page, rather than Tax payable. While the TFSA contribution room page does contain a link to the relevant page, the link is at the bottom of a quite long web page, and the majority of participants did not see the link. A possible solution would be to put a short menu of links at the top of the TFSA contribution room page, so that a person can quickly see the various topics addressed on the page and be able to jump to the topic of interest.

Finding TFSA information on My Account

Participants were given several assignments to explore ease of finding TFSA information on the CRA's My Account, including:

• Starting from the My Account home page, find the TFSA "main" page
• Starting from the TFSA "main" page, find the following information for the fictitious person:
  • 2010 TFSA contribution limit
  • Summary of contributions and withdrawals for 2009
  • Information from a 2010 TFSA return

Most participants found all of the assignments to be easy and completed them quickly. Overall, no changes to the navigational design of the site are indicated.

Date modified:

2011-01-28