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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Financial Planning Practice | 10% | - Client engagement and data gathering - Financial plan development process |
| Topic 2: Investment and Tax Planning | 10% | - Investment portfolio construction - Tax-efficient investing and income planning |
| Topic 3: Savings Planning & Debt Management | 10% | - Debt management and repayment plans - Savings vehicles and strategies |
| Topic 4: Retirement Planning | 20% | - Retirement income needs analysis - Retirement savings and withdrawal strategies - Government and private retirement programs |
| Topic 5: Insurance Planning | 10% | - Life, disability, and critical illness insurance - Property and liability risk management |
| Topic 6: Family Law | 15% | - Support obligations and asset division - Marriage, cohabitation, and separation agreements |
| Topic 7: Financial Planning for Small Business | 15% | - Business structure and financial considerations - Succession planning and exit strategies |
| Topic 8: Estate Planning | 10% | - Estate taxation and wealth transfer - Wills, trusts, and powers of attorney |
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NEW QUESTION # 36
Bonny is looking to lease a vehicle. Here is the information given to her by the salesperson:
Net capitalized value
$25,000
Monthly payments
$300
Term of the lease
48 months
Residual value
$13,450
Sales taxes on residual value
$1,749
Down payment (including taxes)
$4,500
What is the total cost of leasing?
Answer: D
Explanation:
The cost of leasing the vehicle during the contractual lease period consists of Bonny's lease payments plus the initial down payment.
Total monthly lease payments are:
$300 ร 48 months = $14,400
Add the initial down payment:
$14,400 + $4,500 = $18,900
Therefore, the total cost of leasing is $18,900, corresponding to option B.
The residual value of $13,450 represents the vehicle's contractual value at the end of the lease. It is relevant if Bonny elects to purchase the vehicle at lease-end, but it is not part of the cost of simply leasing and returning the vehicle.
Similarly, the $1,749 of sales tax associated with the residual value becomes relevant in connection with the purchase of the vehicle at the residual amount. Since the question asks for the cost of leasing-not the combined cost of leasing and subsequently purchasing the vehicle-those amounts should not be added.
This distinction is central when comparing leasing with financing. Lease analysis must separate the cash flows required to use the vehicle during the lease term from the optional amount required to acquire ownership when the lease terminates.
FPII reference/topic: Savings Planning and Debt Management - vehicle leasing; lease payments; residual values; lease-versus-buy analysis.
NEW QUESTION # 37
What is the tax treatment on disability assistance payments for Registered Disability Savings Plans?
Answer: C
NEW QUESTION # 38
Franco is retiring from his job as a high school principal at the end of the year, at age 66. He has $100,000 in his group Registered Retirement Savings Plan (RRSP). His wife will continue to work for another 10 years, and he does not need money from his group RRSP. What would be the best retirement option for Franco?
Answer: D
Explanation:
Franco should transfer the funds to his own RRSP and maintain the tax-deferred accumulation until the statutory RRSP maturity deadline, then convert the account to a RRIF.
Franco is 66. An RRSP must mature no later than the end of the calendar year in which its annuitant reaches age 71. CRA therefore allows approximately another five years of RRSP tax deferral before Franco must withdraw the funds, purchase an eligible annuity, or transfer them to a Registered Retirement Income Fund.
Because he does not currently require income, immediate RRIF withdrawals would unnecessarily accelerate taxable retirement income. However, option B cannot be maintained until his wife retires in 10 years: Franco would then be approximately 76, well beyond the age at which his RRSP must mature.
A direct transfer to a spousal RRSP is not the appropriate mechanism for moving his existing group RRSP retirement assets. Leaving the funds indefinitely in the group arrangement also fails to recognize the age-71 maturity requirement.
Option C precisely matches the available time horizon: preserve RRSP tax deferral for about five years, then establish a RRIF.
FPII reference/topic: Retirement Planning - group RRSPs; RRSP maturity; age 71 conversion requirements; RRIF planning.
NEW QUESTION # 39
Mr. and Mrs. Morrone are retired with two adult children, Joseph and Christine. The Morrones appointed Joseph as their power of attorney several years earlier but they have recently become concerned about him making decisions, particularly on some contentious family property. How can the Morrones address their concern?
Answer: C
Explanation:
Granting authority jointly to Joseph and Christine is the most appropriate response because the Morrones' concern relates to Joseph exercising decision-making authority alone, particularly over contentious property.
Where two attorneys are appointed jointly, important decisions ordinarily require participation or agreement by both attorneys unless the governing document specifically provides otherwise. This introduces oversight and reduces the risk of unilateral action by one child. Ontario's substitute-decision legislation, for example, provides that where two or more attorneys are appointed, they act jointly unless the power of attorney specifies another arrangement. Similar mechanisms exist in other Canadian jurisdictions.
Making the document continuing or enduring, as in option B, addresses whether authority survives subsequent incapacity; it does not solve the concern regarding Joseph's unilateral decisions. Restricting the power to a particular time period may eventually terminate his authority but does not provide ongoing shared oversight.
Option D is particularly unsuitable because the identified concern already involves property decisions; giving Joseph sole property authority would not address that risk.
Joint appointment therefore directly responds to the governance problem while allowing the parents to retain a family-based attorney structure.
FPII reference/topic: Estate Planning - powers of attorney; appointment of multiple attorneys; joint authority; protection of property.
NEW QUESTION # 40
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: C
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 # 41
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