Most Canadians remain confused about the tax treatment of their investments, according to a survey released by Toronto-based BMO Nesbitt Burns Inc. on Wednesday.

The study found that 59% of Canadians do not understand how dividend income is taxed, down from 63% in 2013. Another 59% do not understand how capital gains are taxed, compared to 58% in last year’s survey.

While the survey shows some improvement, John Waters, vice president, head of tax and estate planning, BMO Nesbitt Burns is still concerned that six out of ten Canadians remain confused about the tax treatment of dividends. According, to Waters, that confusion typically starts with the dividend gross-up.

Advisors have a role to play in educating clients about the tax treatment of investments, says Waters, and should start conversations on the basics and provide clients with educations materials on how different investments are taxed.

“You’re generally breaking it down into interest, dividend or capital gains, and maybe return of capital as a fourth,” says Waters, “and just trying to help [clients] understand the difference between those categories.”

The timing of these conversations is also important, according to Waters, as it’s important clients understand all the facts, including tax treatment, before purchasing a specific investment.

Furthermore, only half (51%) of survey participants regularly seek out tax efficient investment options when considering a new investment.

“Obviously tax is just but one component of the investment decision,” says Waters. “But just to go into [investments] with your eyes wide open and to help you make those decisions, it is a consideration.”

Survey results were compiled by Pollara from 1,007 online surveys, which were completed between March 14 and 17.