Free PDF High Pass-Rate CSI - FP2 - Valid Financial Planning II (FPII) Test Sample

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CSI FP2 Exam Syllabus Topics:

SectionWeightObjectives
Topic 1: Investment and Tax Planning10%- Tax Planning Strategies
  • 1. Taxation of Business Structures
    • 2. Tax Shelters and Tax-Efficient Strategies
      • 3. Income Deferral and Income Splitting
        • 4. RESPs, RDSPs, TFSAs and In-Trust Accounts
          - Investment Management
          • 1. Modern Portfolio Theory and Asset Allocation
            • 2. Investment Selection and Risk Management
              • 3. Portfolio Performance Measurement and Benchmarking
                Topic 2: Estate Planning10%- Estate Distribution and Tax Planning
                • 1. Minimizing or Deferring Taxes at Death
                  • 2. Probate Fee and Estate Administration Cost Reduction
                    • 3. Will Preparation and Probate
                      • 4. Estate Planning for Individuals, Families and Business Owners
                        - Trusts and Powers of Attorney
                        • 1. Incapacity Planning and Substitute Decision-Making
                          • 2. Types of Trusts and Trust Establishment
                            • 3. Taxation of Trusts
                              • 4. Powers of Attorney for Personal Care and Property
                                Topic 3: Savings Planning and Debt Management10%- Debt Planning and Mortgages
                                • 1. Debt Refinancing and Debt Service Ratios
                                  • 2. Lease-versus-Buy Decisions and Borrowing to Invest
                                    • 3. Consumer Credit and Debt Management
                                      • 4. Mortgage Planning and Real Estate Ownership
                                        - Net Worth and Cash Management Planning
                                        • 1. Budgeting and Savings Strategies
                                          • 2. Emergency Funding
                                            • 3. Net Worth and Cash Flow Analysis
                                              Topic 4: Financial Planning for Small Business15%- Small Business Financial Planning
                                              • 1. Business Taxation
                                                • 2. Business Succession and Estate Freezes
                                                  • 3. Business Structures and Entity Selection
                                                    • 4. Business Valuation and Employment Law
                                                      - Business Law and Agency Relationships
                                                      • 1. Agency Relationships
                                                        • 2. Contract Formation and Types of Contracts
                                                          • 3. Contract Termination and Discharge
                                                            Topic 5: Financial Planning Practice10%- The Personal Financial Planning Process in Canada
                                                            • 1. The Financial Planning Business Today
                                                              • 2. Ethics and Financial Advisors
                                                                • 3. Identifying Client Goals and Risk Profiles
                                                                  • 4. Client Responsibilities and Professional Standards
                                                                    • 5. The Six Steps of the Financial Planning Process
                                                                      Topic 6: Retirement Planning20%- Retirement Income Needs Analysis
                                                                      • 1. Estimating Retirement Income Requirements
                                                                        • 2. Managing Retirement Income Shortfalls
                                                                          • 3. Old Age Security and Guaranteed Income Supplement
                                                                            • 4. Canada Pension Plan and Quebec Pension Plan
                                                                              - Registered Pension and Retirement Income Plans
                                                                              • 1. Registered Retirement Savings Plans
                                                                                • 2. Registered Retirement Income Funds and Life Income Funds
                                                                                  • 3. Registered Pension Plans and Deferred Profit Sharing Plans
                                                                                    • 4. Annuities and Retirement Income Products
                                                                                      • 5. Individual Pension Plans and Executive Retirement Arrangements
                                                                                        Topic 7: Insurance Planning10%- General Insurance
                                                                                        • 1. Liability and Professional Liability Insurance
                                                                                          • 2. Homeowners and Automobile Insurance
                                                                                            - Life Insurance
                                                                                            • 1. Life Insurance Needs Analysis
                                                                                              • 2. Personal and Business Applications of Life Insurance
                                                                                                • 3. Insurance Contract Provisions, Riders and Taxation
                                                                                                  - Disability and Health Insurance
                                                                                                  • 1. Critical Illness and Long-Term Care Insurance
                                                                                                    • 2. Extended Health, Travel and Group Insurance
                                                                                                      • 3. Disability Income Insurance
                                                                                                        • 4. Government Disability Benefits and Workers' Compensation
                                                                                                          Topic 8: Family Law15%- Fundamental Aspects of Family Law
                                                                                                          • 1. Spousal Support and Child Support
                                                                                                            • 2. Custody and Access
                                                                                                              • 3. Marriage, Cohabitation, Separation and Divorce
                                                                                                                - Financial and Property Issues
                                                                                                                • 1. Disclosure Requirements and Financial Obligations
                                                                                                                  • 2. Domestic Contracts
                                                                                                                    • 3. Property Division on Relationship Breakdown
                                                                                                                      • 4. Impact of Divorce on Financial Planning

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                                                                                                                        CSI Financial Planning II (FPII) Sample Questions (Q34-Q39):

                                                                                                                        NEW QUESTION # 34
                                                                                                                        Which resource will affect a pensioner's Guaranteed Income Supplement entitlement?

                                                                                                                        Answer: A

                                                                                                                        Explanation:
                                                                                                                        The Guaranteed Income Supplement is income-tested rather than asset-tested. Consequently, the relevant item is dividend income.
                                                                                                                        For GIS purposes, taxable investment income-including taxable Canadian dividends-forms part of the income used to determine entitlement. As income rises, GIS benefits may be reduced or eliminated depending on the recipient's marital status and applicable income threshold. Service Canada specifically includes interest, investment income, capital gains, and taxable Canadian dividends among the income sources relevant to income-tested OAS benefits.
                                                                                                                        By contrast, merely owning a cottage or holding investment assets does not directly reduce GIS because there is no general GIS asset test. Those assets become relevant when they generate reportable income-for example, rental income, interest, dividends, or realized taxable capital gains.
                                                                                                                        Old Age Security itself is specifically excluded when determining income for GIS purposes. Therefore, receiving the basic OAS pension is not treated in the same way as taxable investment income when calculating GIS entitlement.
                                                                                                                        This distinction is important in retirement planning because two clients with identical net worth can have very different GIS outcomes depending on the type, timing, and tax characterization of their retirement income.
                                                                                                                        FPII reference/topic: Retirement Planning - Old Age Security; Guaranteed Income Supplement; income testing; retirement-income taxation.


                                                                                                                        NEW QUESTION # 35
                                                                                                                        How long does an executor have to make a spousal Registered Retirement Savings Plan contribution on behalf of a deceased person?

                                                                                                                        Answer: D

                                                                                                                        Explanation:
                                                                                                                        A deceased person's legal representative cannot make a contribution to the deceased individual's own RRSP after death. However, a special rule permits the legal representative to contribute to a surviving spouse's or common-law partner's RRSP using the deceased person's available RRSP deduction room.
                                                                                                                        CRA confirms that this contribution may be made during the calendar year of death or within the first 60 days after the end of that year. The qualifying amount may then be deducted on the deceased individual's final income tax return, subject to the deceased person's available RRSP deduction limit.
                                                                                                                        For example, if an individual dies in July and has unused RRSP room, the executor does not have only 60 days from July. The relevant deadline extends through the year of death and into the first 60 days of the following calendar year.
                                                                                                                        Option A therefore applies the 60-day period from the wrong starting point. Option B ends the contribution period too early, while option D substitutes an arbitrary six-month period that is not the RRSP rule.
                                                                                                                        The strategy can be valuable because it creates a final deduction while simultaneously increasing tax-deferred retirement savings for the surviving spouse.
                                                                                                                        FPII reference/topic: Retirement Planning - RRSPs at death; spousal RRSP contributions; executor planning; final tax return.


                                                                                                                        NEW QUESTION # 36
                                                                                                                        Hannah would like to replace her current vehicle and is considering leasing instead of financing. Hannah commutes a considerable distance from outside the city each day for her work. She thinks leasing would allow her to always have a newer and more reliable vehicle. What is an important factor for Hannah to consider before making her decision?

                                                                                                                        Answer: D

                                                                                                                        Explanation:
                                                                                                                        Hannah's long daily commute makes the lease's kilometre allowance a critical consideration. Vehicle leases normally specify a maximum number of kilometres that may be driven during the lease term. Where actual usage exceeds the contractual allowance, the lessee can be charged an excess-kilometre fee when the vehicle is returned. Because Hannah travels a considerable distance each day, her annual driving is likely to be substantially higher than that of a typical driver, increasing the risk of a material end-of-lease charge.
                                                                                                                        Leasing may provide access to a newer vehicle and can produce lower periodic payments than financing an equivalent vehicle, but this advantage can be offset by kilometre charges, wear-and-tear charges, and the absence of vehicle ownership at the end of the term.
                                                                                                                        Option A is not generally correct because routine maintenance remains the lessee's responsibility unless a specific maintenance package is included. Option B is not inherently true; lease payments are frequently lower than financing payments because the lessee finances primarily the vehicle's depreciation during the lease term. Option D is similarly not a general leasing requirement.
                                                                                                                        For Hannah, expected annual mileage should therefore be calculated before selecting leasing over financing.
                                                                                                                        FPII reference/topic: Savings Planning and Debt Management - vehicle acquisition; leasing versus financing; cash-flow and contractual considerations.


                                                                                                                        NEW QUESTION # 37
                                                                                                                        What is outside the statutory requirements of a domestic contract between parties?

                                                                                                                        Answer: B

                                                                                                                        Explanation:
                                                                                                                        Independent legal advice is highly advisable when parties enter into a domestic contract, but it is not itself one of the statutory formal execution requirements for a valid domestic contract under Ontario's Family Law Act.
                                                                                                                        Section 55 of the Act provides that a domestic contract is unenforceable unless it is in writing, signed by the parties, and witnessed. Independent legal advice significantly strengthens the reliability and enforceability of an agreement because it helps demonstrate that each party understood the rights being surrendered and entered the agreement voluntarily. Its absence, however, does not automatically mean that the statutory form requirement has not been met.
                                                                                                                        Financial disclosure has a different legal significance. Under the statutory framework, failure to disclose significant assets, debts, or liabilities existing when the contract was made may provide grounds for the court to set aside the agreement. Consequently, complete and accurate disclosure is a critical component of defensible domestic-contract planning.
                                                                                                                        For financial planners, the practical distinction is important: planners should not provide legal advice on drafting the contract, and clients should normally be referred to separate family-law counsel even though independent legal advice is not technically one of the execution formalities.
                                                                                                                        FPII reference/topic: Family Law - domestic contracts; marriage and cohabitation agreements; disclosure; independent legal advice; enforceability.


                                                                                                                        NEW QUESTION # 38
                                                                                                                        From the perspective of self-employment, how are personal benefits treated for the purposes of calculating child support?

                                                                                                                        Answer: C

                                                                                                                        Explanation:
                                                                                                                        Personal benefits paid through a self-employed individual's business are generally added back to income and grossed up when determining appropriate income for child-support purposes.
                                                                                                                        The purpose of the child-support income calculation is to identify the parent's true financial capacity rather than simply accept taxable income reported under the Income Tax Act. A business may legitimately deduct an expenditure for tax purposes while all or part of that expenditure provides a personal benefit to the owner- for example, personal vehicle use, housing expenses, meals, utilities, or other personal consumption paid by the business.
                                                                                                                        Where such expenditures effectively replace expenses the parent otherwise would have paid personally from after-tax income, the benefit is added back. A gross-up may then be necessary to express that tax-free or after- tax economic benefit as an equivalent amount of pre-tax income. Canadian child-support jurisprudence has repeatedly applied this approach to personal benefits funded through a business.
                                                                                                                        This prevents a self-employed support payor from artificially depressing guideline income by routing personal consumption through deductible business expenses.
                                                                                                                        Therefore, option D correctly reflects both required adjustments: add the personal benefit to income and gross it up where appropriate.
                                                                                                                        FPII reference/topic: Family Law - Federal Child Support Guidelines; determination of self-employment income; personal benefits; imputed income.


                                                                                                                        NEW QUESTION # 39
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