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| Section | Weight | Objectives |
|---|---|---|
| Financial Planning for Small Business | 15% | - Business ownership structures and planning - Small business financial strategies |
| Insurance Planning | 10% | - Insurance needs analysis - Risk management and insurance products |
| 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 |
| Investment and Tax Planning | 10% | - Investment strategies and portfolio considerations - Tax planning concepts |
| Estate Planning | 10% | - Wills, trusts and succession planning - Estate transfer strategies |
| Savings Planning & Debt Management | 10% | - Savings strategies and cash flow management - Debt management techniques |
| Retirement Planning | 20% | - Retirement income sources and strategies - Government benefits and retirement plans |
In today's competitive CSI industry, only the brightest and most qualified candidates are hired for high-paying positions. Obtaining FP2 certification is a wonderful approach to be successful because it can draw in prospects and convince companies that you are the finest in your field. Pass the Financial Planning II (FPII) to establish your expertise in your field and receive certification. However, passing the Financial Planning II (FPII) FP2 Exam is challenging.
NEW QUESTION # 24
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: D
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% ร 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 ร 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 # 25
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 # 26
What is the primary difference between a Life Income Fund (LIF) and a Registered Retirement Income Fund (RRIF)?
Answer: C
Explanation:
Both a RRIF and a LIF provide retirement income and are subject to prescribed minimum annual withdrawals. The distinguishing feature of a LIF is that it contains pension money that remains subject to locking-in legislation. Consequently, in addition to the minimum required withdrawal, the amount that may normally be withdrawn from a LIF is subject to an annual maximum.
The Office of the Superintendent of Financial Institutions confirms that federally regulated LIFs have minimum and maximum annual withdrawal limits. The minimum is governed by income-tax rules, while pension standards legislation determines the maximum.
A conventional RRIF does not impose this pension-based maximum withdrawal limit. Once the required minimum has been taken, the annuitant may generally withdraw additional amounts, although those amounts remain taxable.
Option A is incorrect because there is no universal rule requiring all LIF holders to purchase a life annuity at age 80. Option B incorrectly describes the permitted source of LIF assets; LIFs are primarily funded from locked-in pension arrangements, not simply retirement compensation arrangements. Option D is also incorrect because taxable RRIF withdrawals do not become tax-free merely because they represent the prescribed minimum.
FPII reference/topic: Retirement Planning - RRIFs; LIFs; locked-in pension assets; minimum and maximum retirement withdrawals.
NEW QUESTION # 27
What is a disadvantage of a corporation?
Answer: A
Explanation:
A significant estate-planning disadvantage of private corporate ownership is the potential for double taxation at the death of a shareholder.
At death, a shareholder is generally deemed to dispose of capital property, including shares of a private corporation, at fair market value immediately before death unless an available rollover applies. This can produce a capital gain on the deceased shareholder's terminal return.
A second layer of tax can subsequently arise when corporate assets are sold and the corporation's after-tax value is distributed to the estate or beneficiaries. Without appropriate post-mortem planning, tax may therefore arise once at the shareholder level on the deemed disposition of the shares and again at the corporate
/shareholder level as corporate value is extracted.
Option B is incorrect because one of the principal advantages of incorporation is limited liability, subject to guarantees, statutory liabilities, and exceptional circumstances. Option C is also incorrect because corporations are not categorically excluded from government assistance programs. Option D does not describe the principal disadvantage being tested and overstates the operation of attribution rules.
Post-mortem strategies such as loss carryback or pipeline planning may be considered to mitigate the potential double-tax exposure, depending on circumstances.
FPII reference/topic: Financial Planning for Small Business - incorporation; shareholder death; deemed disposition; post-mortem taxation and double-tax exposure.
NEW QUESTION # 28
Nelson Smith has hired Jackie Fraser to be his financial advisor. Jackie works for FP Inc. On Nelson's behalf, Jackie has placed an order for units of the QBR Balanced Fund from QBR Investments Inc., a subsidiary of the QBR Insurance Company. Who is the principal and third-party for this transaction?
Answer: B
Explanation:
In an agency relationship, the principal is the person on whose behalf the agent acts. The agent is the person authorized to act for the principal, while a third party is the external person or organization with whom the agent deals in carrying out that authority.
Here, Nelson Smith retained Jackie Fraser as his financial advisor. Jackie places the investment order on Nelson's behalf. Nelson is therefore the principal, and Jackie is acting as the agent in the transaction.
The transaction is placed with QBR Investments Inc., the entity offering the QBR Balanced Fund. QBR Investments is therefore the relevant third party with whom the agent deals for the principal.
Jackie's employer, FP Inc., does not replace Nelson as the principal in the client-advisor agency relationship described by the question. Similarly, QBR Insurance Company's status as the parent of QBR Investments does not make it the relevant third party because the actual fund transaction is with QBR Investments.
The legal distinction matters because an agent owes obligations to the principal and must act within the authority conferred by that principal.
FPII reference/topic: Financial Planning Practice - agency law; principal-agent relationships; authority; dealings with third parties.
NEW QUESTION # 29
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