Family‐level responses to the introduction of Tax‐Free Savings Accounts

Abstract This paper presents evidence on the effect of the introduction of Canadian Tax‐Free Savings Accounts (TFSAs) on the savings of families with children. Contributions to TFSAs are not tax‐deductible but capital income earned in the account accrues tax‐free and withdrawals are not taxed. Using a difference‐in‐differences instrumental variables research design that exploits the sharp change in a family's cumulative TFSA contribution room …