Canadians are conscientious and responsible with their taxes, according to a study released by BMO Nesbitt Burns. Ninety-four per cent of respondents said they file a personal income tax return every year.
Nearly one-half of Canadians prefer preparing their own tax returns rather than relying on someone else — such as a tax professional or family and friends, the study also showed. This year, more than one-third of Canadians (35 per cent) will be using tax software to file their returns.
"While many Canadians are familiar with the basics of tax preparation, there appears to be a knowledge gap, particularly on investment income," said John Waters, vice-president and head of tax and estate planning at BMO Nesbitt Burns.
More than one-half of Canadians (58 per cent) are not sure about how capital gains are taxed, while almost two-thirds (62 per cent) are not knowledgeable about how dividend income is taxed, according to the study.
One-third of respondents also indicated a lack of knowledge on how charitable donations are taxed and one-quarter have trouble understanding the tax implications of a registered retirement savings plan (RRSP). Approximately 36 per cent acknowledged lacking knowledge on the tax implications of a tax free savings account (TFSA).
The online survey was conducted with a sample of 1,002 Canadians between March 15 - 19. The margin of error for a probability sample of this size is plus or minus 3.1 per cent, 19 times out of 20.
Canadians paid more than $119 billion in federal income tax in 2012, according to the Federal Department of Finance.