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| Section | Weight | Objectives |
|---|---|---|
| Savings Planning & Debt Management | 10% | - Savings strategies and cash flow management - Debt management techniques |
| Financial Planning Practice | 10% | - Professional standards and ethical practices - Financial planning process and client relationship management |
| Family Law | 15% | - Family property and financial considerations - Legal implications in financial planning |
| Estate Planning | 10% | - Wills, trusts and succession planning - Estate transfer strategies |
| Retirement Planning | 20% | - Retirement income sources and strategies - Government benefits and retirement plans |
| Financial Planning for Small Business | 15% | - Business ownership structures and planning - Small business financial strategies |
| Investment and Tax Planning | 10% | - Investment strategies and portfolio considerations - Tax planning concepts |
| Insurance Planning | 10% | - Risk management and insurance products - Insurance needs analysis |
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NEW QUESTION # 25
What is the maximum of the payor spouse's net income that may be deducted to fulfil child support obligations?
Answer: A
Explanation:
The applicable maximum is 50% of the payor's net amount under the ordinary support-deduction framework.
Ontario's Family Responsibility and Support Arrears Enforcement Act provides that the total amount deducted by an income source and remitted under a support deduction order generally must not exceed 50% of the net amount owed by the income source to the payor.
The "net amount" concept is important because the statutory limit does not simply mean 50% of gross salary.
Required statutory deductions are taken into account in determining the amount available for enforcement.
The support obligation itself continues to exist even where enforcement through a particular income source is limited. Arrears can accumulate and other enforcement measures may become available. There are also specific statutory exceptions applying to certain lump-sum amounts and enforcement circumstances, so the
50% figure should be understood as the standard deduction limit tested by the question rather than an absolute limit in every possible enforcement proceeding.
Accordingly, among the four alternatives, 50% correctly represents the general maximum deduction against the payor's net income source for support enforcement.
FPII reference/topic: Family Law - child-support enforcement; support deduction orders; garnishment; limits on deductions from income.
NEW QUESTION # 26
Maxwell is filing a rights or things tax return for his deceased mother. She had the following sources of income:
Debenture interest coupons.
Unpaid dividends declared before her death.
Old age security that was due before her death.
Income from a registered retirement savings plan (RRSP).
Which form of income will Maxwell have to exclude from the rights or things tax return?
Answer: D
Explanation:
Income associated with the deceased person's RRSP must be excluded from the optional Return for Rights or Things.
The rights-or-things return under subsection 70(2) of the Income Tax Act allows certain income amounts that had been earned or became receivable before death, but had not actually been received, to be reported separately from the deceased person's terminal return. CRA examples include matured bond coupons, accrued bond interest, qualifying pension amounts, and dividends declared before death but unpaid at death.
CRA's longstanding treatment specifically states that an annuitant is not considered to have a "right or thing" in respect of an RRSP. Instead, the tax treatment of the RRSP on death is governed by the separate RRSP death provisions, which generally bring the fair market value into income subject to applicable rollover and refund-of-premiums rules.
The unpaid dividend declared before death is a classic example of a right or thing. Accrued debenture or bond amounts can likewise qualify, as can eligible OAS amounts payable in respect of the period before death.
Therefore, the RRSP amount is the required exclusion.
FPII reference/topic: Estate Planning - taxation at death; rights or things return; RRSP taxation on death; optional tax returns.
NEW QUESTION # 27
Spouse A, age 69, has been making regular contributions to a spousal Registered Retirement Savings Plan for spouse B, age 65. Assuming Spouse A has sufficient unused contribution room to carry forward, how long can they continue making contributions on behalf of Spouse B?
Answer: C
Explanation:
The relevant age for determining how long contributions can continue to a spousal RRSP is the age of the spouse who is the annuitant of that RRSP-Spouse B.
CRA confirms that even after a contributor has passed the age at which contributions to the contributor's own RRSP are permitted, the contributor may continue making deductible contributions to a spouse's or common- law partner's RRSP, provided the contributor has RRSP deduction room and the spouse is 71 or younger on December 31 of the contribution year.
Accordingly, Spouse A's reaching age 71 does not by itself terminate the ability to contribute to Spouse B's spousal RRSP. Since Spouse B is currently 65, contributions can continue until December 31 of the calendar year in which Spouse B turns 71, assuming Spouse A continues to have available RRSP deduction room.
The "first 60 days" concept concerns which taxation year certain RRSP contributions may be deducted against; it does not extend an RRSP's statutory contribution eligibility beyond the end of the year in which its annuitant turns 71.
Therefore, option B correctly identifies the deadline.
FPII reference/topic: Retirement Planning - spousal RRSPs; contribution age limits; contributor deduction room; age-71 rules.
NEW QUESTION # 28
A Canadian resident, age 57, is self-employed and earns $74,000 in yearly income. The year's basic exemption and maximum pensionable earnings are $3,500 and $61,600, respectively. Assuming a contributory rate of 5.45%, how much will the resident pay in Canada Pension Plan premiums (rounded to the nearest dollar)?
Answer: C
Explanation:
Because the individual is self-employed, both the employee and employer portions of the CPP contribution must be paid. Although the stated employee contributory rate is 5.45%, the effective self-employed rate is therefore:
5.45% × 2 = 10.90%
Income above the Year's Maximum Pensionable Earnings does not attract ordinary CPP contributions.
Pensionable earnings are therefore limited to $61,600. The Year's Basic Exemption must then be deducted:
$61,600 # $3,500 = $58,100
Apply the self-employed rate:
$58,100 × 10.90% = $6,332.90
Rounded to the nearest dollar:
$6,333
Therefore, option A is correct.
The figures in the question correspond to the 2021 CPP parameters. Official federal figures confirm a 2021 YMPE of $61,600, basic exemption of $3,500, employee/employer rate of 5.45% each, and maximum self- employed contribution of $6,332.90.
This question demonstrates an essential distinction between employees and self-employed individuals: an employee pays only the employee share, whereas a self-employed person effectively bears both sides of the CPP contribution.
FPII reference/topic: Retirement Planning - Canada Pension Plan; YMPE; Year's Basic Exemption; self- employed CPP contributions.
NEW QUESTION # 29
Fiona and Stanley have provided the following data in order for their advisor to proceed with a capital needs analysis:
Fiona ($)
Assets
Stanley ($)
5,000
Cash
3,000
150,000
Life insurance
125,000
30,000
Investments
30,000
Fiona ($)
Estate obligations
Stanley ($)
15,000
Last expenses
15,000
10,000
Car loans
5,000
75,000
Mortgage outstanding
75,000
Assuming their required net monthly income is $3,000, and the discount rate is 6%, how much additional life insurance should Fiona and Stanley obtain respectively?
Answer: C
Explanation:
The capital-needs approach first determines how much capital is required to generate the desired survivor income.
Required annual income is:
$3,000 × 12 = $36,000
At a 6% capitalization rate:
$36,000 ÷ 0.06 = $600,000
For Fiona, estate obligations total:
$15,000 + $10,000 + $75,000 = $100,000
Total capital requirement:
$600,000 + $100,000 = $700,000
Available assets are:
$5,000 + $150,000 + $30,000 = $185,000
Additional insurance required:
$700,000 # $185,000 = $515,000
For Stanley, obligations are:
$15,000 + $5,000 + $75,000 = $95,000
Total requirement:
$600,000 + $95,000 = $695,000
Available resources:
$3,000 + $125,000 + $30,000 = $158,000
Additional insurance required:
$695,000 # $158,000 = $537,000
Thus, Fiona requires $515,000 and Stanley requires $537,000 of additional insurance.
The capital-needs method integrates immediate estate obligations, survivor-income requirements, existing insurance, and other available capital to establish the insurance shortfall.
FPII reference/topic: Insurance Planning - capital needs analysis; income replacement; estate obligations; existing financial resources.
NEW QUESTION # 30
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